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« Dechert Grows White-Collar Group with Justice Recruit | Main | The Morning Wrap »

June 08, 2009

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Comments

Brian

"They took the risk to invest, the investment is now in the tank, it's time to move on."

That's the point. When people "invest" in debt they are eschewing a lot of risk for safety and more consistent but less flashy returns.

Equity holders know going in that if and when the organization tanks, they will probably lose their entire investmrent. Debt holders have more security in knowing that they'll be among the first in line to claim the organization's assets.

If something like this goes through it will deal a blow to organizations' efforts to capitalize in the future. Investors are hesitant to buy stocks due to uncertainty. And now that our government is in the business of arbitrarily throwing out the advantages associated with owning debt, investment money won't go there either.

And these aren't wildcat investors looking to get rich, by the way. These are pension funds - government workers' retirement money, hence the desire for safety and expectations that the law will be followed.

NS

If they let the BK go through this will be the biggest scam in our history! Let them fail!

reliapundit - the astute blogger

the only things the us taxpayer got as a result of "bailing out" chrysler was a uaw controlled chrysler.

the bail out accomplished nothing else except giving ownership to the union.

it would have been better for most everyone if the obama adminstration had let the freemarket takes its course - chap 7 or 11.

i hope and trust the scotus will maintain the rule of law and decide for the pension funds and against obama.

Calvin W

The needs of many outweigh the needs of the few. Look, let's call this scheme by Indiana for what it is, this is nothing more than an attempt for investors to get more money from the taxpayers. "We don't like the current compensation for our investors". They took the risk to invest, the investment is now in the tank, it's time to move on. And no it's not the best possible solution, it just happens to be the best one that has been worked out...more time?....There Is No More Time.

gigi621

Now the wailing has begun on how much this stay is going to "cost" Chrysler and the economy---which only proves Mother's advice that it always pays to try to get things right the first time.

The White House was completely arrogant here in believing that this stealth reorganization (as opposed to a bona fide sale) would go through because "Obama said so."

It may yet survive legal challenge, but it's important to nip in the bud the pernicious mentality that "too big to fail" means "too big to follow the law."

FDR attempted to pack the Court because he thought private contractual rights should be trashed if the Prez said the economic recovery required it - interesting fireside chat excerpt here, chilling really - http://tinyurl.com/nsxaq5

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