One of the interesting threads in the Chrysler bankruptcy was Obama's evident fury at the hedge funds and investment banks that refused the deals the government offered. The reason for their reluctance was simple enough: Bondholders don't want to lose money. But the strategy behind their intransigence proved poor: They didn't think the government would send Chrysler into bankruptcy. And that gave them leverage. Out-of-court debt restructurings generally require consensus. But they were wrong. Not only did the administration let Chrysler fall to the bankruptcy courts, but Obama called the investors out by name:
While many stakeholders made sacrifices and worked constructively, I have to tell you some did not. In particular, a group of investment firms and hedge funds decided to hold out for the prospect of an unjustified taxpayer-funded bailout. They were hoping that everybody else would make sacrifices, and they would have to make none. Some demanded twice the return that other lenders were getting.
I don't stand with them. I stand with Chrysler's employees and their families and communities. I stand with Chrysler's management, its dealers, and its suppliers. I stand with the millions of Americans who own and want to buy Chrysler cars. I don't stand with those who held out when everybody else is making sacrifices.
You're seeing, some say, the hidden hand of Ron Bloom here. Bloom is an inside player often called Labor's investment banker. A Harvard Business School grad who spent a decade in private finance, he eventually joined the labor movement as a special assistant to the president of the United Steelworkers. Now he's one of the key players on Obama's automobile task force. And you can see his perspective informing some of Obama's decisions.
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