Tuesday, June 09, 2009

What's Behind The Chrysler Deal Hold Up? Ever Hear Of Far Right Loon Richard Mourdock?


Richard Mourdock (R-IN), batshit crazy

Last time we caught up with Gary Peters (D-MI) he was trying to help his congressional colleagues understand that the excuse for paying out millions and millions of dollars in bonuses to failed corporate executives-- the sanctity of contracts-- never seem to apply when anyone is talking about the employment contracts regular working Americans have... like the auto workers, for example. But no sooner did that die down-- corrupt members of the Senate moving the protect their corporate paymasters-- when Gary took on General Motors in a way that I would have thought the Obama Administration would have-- demanding that they do not take American taxpayer bailout money and build cars in China.

You see, that was General Motors plan and they announced they were going to build a new subcompact car in China and re-import it here. Addressing GM management, Gary was very clear. “I am extremely concerned with the affect this plan will have here in Michigan. Our state has been hit hard enough already and we cannot afford to be disproportionately impacted by GM job losses. The purpose of providing General Motors taxpayer funded loans was not just to keep GM in business, but to preserve American jobs and bolster the U.S. economy.  We all know that GM must make cutbacks, but preserving as many American jobs as possible must be the primary goal of all restructuring efforts.” And GM paid attention, scrapping their plans to build the cars at a Chinese factory and promising to build them here in the U.S.

That hardly gave Oakland County's most proactive Representative ever a chance to relax. Suddenly the Chrysler deal started to unravel-- and Chrysler world headquarters sits right in the middle of Gary's district. Today's Washington Post explained the ruling from Supreme Court Justice Ruth Bader Ginsburg that is holding up, at least temporarily, the sale of Chrysler to Fiat.
Fiat can back out of the deal if it is not finalized by Monday, and the government has warned that the only alternative would be to force the nation's third-largest automaker into liquidation, throwing the industry in turmoil and leaving tens of thousands of people without jobs.

The stakes may be higher for the Obama administration: If the court backs some of the claims, it could disrupt plans to rescue General Motors and weaken the government's hand in stabilizing the troubled economy.

"Every day that Chrysler remains in bankruptcy without consummating the sale threatens to postpone the resumption of production even further and to prolong the period of $100-million-per-day losses" financed by taxpayers, Elena Kagan, the U.S. solicitor general, said in a 26-page filing with the high court.

Behind the trouble, an extreme right-wing ideologue from the Rush Limbaugh fringe of the GOP, Indiana state Treasurer Richard Mourdock, who's as crazy as they come and sees more than willing to put his lunatic fringe ideologue ahead of the best interests of the people of his state (and the rest of the states). Chrysler debt was trading at 20 cents on the dollar.  Moody’s estimated it was worth 20 cents in liquidation.  The government offered secured lenders nearly 30 cents on the dollar, and most took it.  It was a good business decision.  Mourdock is making a really egregious business decision, at the expense of his state and his people. Bankruptcy law requires the court to ensure that secured lenders receive at least as much as they would in liquidation-- and in this case they likely get more. So, as the bankruptcy court and appeals court have said, the Indiana Treasurer’s case does not hold water and should not stop Chrysler from emerging from bankruptcy.

Mourdock says he represents working peoples’ pension funds-- why were those funds buying highly speculative securities at a discount?  These pension funds were turned into one of the vulture funds hoping to profit off of Chrysler’s demise.  Now he's pushing them towards liquidation.  Knowing Gary would be more in touch with this looming catastrophe than anyone else in Congress, we called him and got this response:
“What we have here is a State Treasurer who doesn’t know how to count.  He is willing to give up tens of millions of dollars in a fight over less than five million, and put four thousand workers out of a job in the process.  The legality here is clear; the bankruptcy judge and the appeals court are in agreement on that, and experts expect the Supreme Court to follow suit.  His actions are based on ideology rather than the best interest of his state and his country.  His case is wrong on the legal merits, it’s a bad business decision and it’s bad for the people he’s supposed to be representing.”

UPDATE: Supreme Court Tells Mourdock To Go Back And Study Economics 101

Gary was on Bloomberg today. He predicted the Supreme Court would end this delay immediately. And they did: "The U.S. Supreme Court lifted the stay on the Chrysler-Fiat deal on Tuesday, ending its role in the case. Earlier in the day, a bankruptcy judge on Tuesday approved Chrysler’s plan to terminate 789 of its dealer franchises."

Gary's response to the fast Supreme Court action was one of greta optimism. "Today’s decision is good news for the country. Chrysler’s swift emergence from bankruptcy has put the company in position to become more globally competitive and continue to support hundreds of thousands of American jobs. These proceedings were able to move so swiftly because Chrysler, the president’s auto task force, autoworkers, majority debt holders and others worked to help Chrysler undergo extraordinary restructuring prior to the bankruptcy filing. Major stakeholders realized that shared sacrifice was in their best interest, as a Chrysler liquidation would have caused massive job losses and ultimately cost secured lenders far more. The legally sound decisions of the U.S. district court and court of appeals provide an encouraging sign that General Motors can also emerge from bankruptcy quickly and continue supporting hundreds of thousands of jobs across the country.”

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