Lauria represented one of the bondholder firms, Perella Weinberg, which initially rejected the Obama deal that would give the bondholders about 33 cents on the dollar for their secured debts while giving the United Auto Workers retirees about 50 cents on the dollar for their unsecured debts.Oh, say, does that star-spangled banner yet wave?
This, of course, is a violation of one of the basic principles of bankruptcy law, which is that secured creditors — those who loaned money only on the contractual promise that if the debt was unpaid they'd get specific property back — get paid off in full before unsecured creditors get anything.
The White House denied that it strong-armed Perella Weinberg. The firm issued a statement saying it decided to accept the settlement, but it pointedly did not deny that it had been threatened by the White House. Which is to say, the threat worked.
Think carefully about what's happening here. The White House, presumably car czar Steven Rattner and deputy Ron Bloom, is seeking to transfer the property of one group of people to another group that is politically favored.
08 May 2009
Yes We Can . . .
. . . do whatever we want, we're the White House: