The Obama Administration is now seeking to give the United Auto Workers Union a big chunk of General Motors, at the expense of taxpayers and bondholders (including non-union retirees). If Obama gets his way, the UAW will receive at least ten times as much value ($10 billion plus 39 percent of the company) as the bondholders (who get no money and 10 percent of the company) even though the bondholders are owed more ($27 billion vs. $20 billion). This is neither legal nor fair: under the bankruptcy laws, the UAW is not supposed to get preference over the bondholders; and it is the UAW, not the bondholders, which helped bring GM to its knees through its rigid work rules and excessive wages and benefits. The Administration will seek to get around the bankruptcy laws through a sham sale of GM’s assets to a shell company owned by the Administration and the UAW.
There are retirees — including white-collar, non-union, former GM employees — who depend on their holdings of GM bonds to pay for life’s necessities. Others bought GM bonds to put their kids through college.
The Obama Administration earlier engaged in similar tactics in the Chrysler bankruptcy, fleecing taxpayers, and the secured lenders who loaned the cash-strapped company money, in order to give the UAW union control of Chrysler. Veteran political commentator Michael Barone called it “gangster government.” Law professor and bankruptcy expert Todd Zywicki called it an attack on “the rule of law.”
Earlier, the Treasury Department bullied perfectly-healthy banks into accepting bailout (TARP) money, and then sought to conceal the evidence that it did so, fighting Freedom of Information Act requests.
Among the officials who helped bully the banks was the FDIC’s Sheila Bair. Bair has used banks taken over by the FDIC to engage in politically-correct social engineering, modifying the mortgages of irresponsible borrowers to reduce their payments to just 31 percent of their income — less than many thifty, responsible homeowners currently pay, without difficulty, on their mortgages in high living-cost areas. Deadbeats have had their principal balances reduced, and had their interest rates cut to as low as 3 percent. For that gratuitous waste of taxpayers’ money, she recently received an award from the Leadership Conference on Civil Rights (an ironically-named organization that recently pushed federal legislation to circumvent constitutional protections against double-jeopardy, by allowing innocent people to be tried all over again in federal court).