SOCIALISM Step 7 - Bank Error, Bankruptcy

But now the two men, along with a handful of other financiers, are being blamed for precipitating the bankruptcy of an American icon. As Chrysler’s fate hung in the balance Wednesday night, this group refused to bend to the Obama administration and accept steep losses on their investments while more junior investors, including the United Automobile Workers union, were offered favorable terms.

In a rare flash of anger, the president scolded the group Thursday as Chrysler, its options exhausted, filed for bankruptcy protection. “I don’t stand with those who held out when everyone else is making sacrifices,” Mr. Obama said.

Chastened, and under intense pressure from the White House, the investment firm run by Mr. Weinberg and Mr. Perella, Perella Weinberg Partners, abruptly reversed course. In a terse statement issued shortly before 6 p.m. Thursday, Perella Weinberg Partners announced it would accept the government’s terms.

It was too late.

The approval came over the objection of a group of Chrysler secured lenders, calling itself Chrysler’s non-TARP lenders, in reference to the Troubled Assets Relief Program. The group’s attorney, Thomas Lauria, said the loan would be a bridge to an illegal sale of assets that would pay lower-ranking creditors more than senior lenders.

Bridge, Pier

“We’re concerned we’re starting construction of a bridge that may turn out to be a pier,” he said, adding the bankruptcy loan was inextricably tied to Chrysler’s proposed sale.

17. Finally, that the Treasury Department would take these unconstitutional actions to help the United States address difficult economic times is not an answer. Indeed, the same justification was expressly rejected in Radford, where Justice Brandeis noted that a statute which violated secured creditors’ rights, but which was passed for sound public purposes relating to the Great Depression, could not be saved because “the Fifth Amendment commands that, however great the nation’s need, private property shall not be thus taken even for a wholly public use without just compensation.” Id. at 602.

18. What is really striking here is that what is being proposed by the Sale Motion would strip the Collateral away and allow it to be put to use as new capital in New Chrysler for the benefit of existing and other creditors – even though the Chrysler Non-TARP Lenders have been given no opportunity to realize upon that Collateral to the point of full repayment ahead of at least $14 billion of selectively identified unsecured creditors.
 

Chrysler’s union plans to sell its shares in the struggling carmaker as quickly as possible, the United Auto Workers’ (UAW) president revealed today, as the company prepared for its third hearing in bankruptcy court.

Under a restructuring plan set out by Chrysler, the UAW would receive a 55 per cent stake in the reorganised company in return for wiping out about half of the $10 billion that Chrysler owes a union-affiliated healthcare trust.

"GM is getting funding from U.S. taxpayers to help save the company," Sen. Sherrod Brown, D-Ohio, said. "Taxpayers deserve more than Chinese imports in return. Taxpayer funds should be used to build the next generation of fuel-efficient vehicles in the U.S., not abroad. This is about creating jobs and rebuilding our economy."

GM, though, says the percentage of cars made and sold in the U.S. will remain stable

The Federal Reserve, already arguably the most powerful agency in the U.S. government, will get sweeping new authority to regulate any company whose failure could endanger the U.S. economy and markets under the Obama administration's regulatory overhaul plan.

The final plan due to be released on Wednesday -- which originally aimed to streamline and consolidate banking and securities regulation in one or two agencies -- now is expected to sidestep most jurisdictional disputes and simply impose across the board standards to be applied by all financial regulators, according to administration and industry sources.

"If we do not fix our healthcare system, America may go the way of GM; paying more, getting less, and going broke," Obama said, likening the healthcare system to struggling carmaker General Motors, which has filed for bankruptcy protection.