Detroit, Mich. — The scandal over White House threats to Chrysler debt holders got deeper yesterday — and its MSM cover-up more inexcusable — as two more representatives of creditors corroborated lawyer Tom Lauria’s account that the Obama administration threatened them with ruin if they did not accept Chrysler’s restructuring terms giving 55 percent of the company to the UAW.
Media outlets like MSNBC pooh-poohed Lauria’s account over the weekend by noting that Perella Weinberg — the firm allegedly threatened for not taking the administration’s forced deal of 29 cents on their investment dollar — denied the allegation. Others noted that Perella Weinberg had since caved to the administration, and therefore had every reason to deny earlier threats.
But Jim Carney of Business Insider reported Tuesday that “sources familiar with the matter say that other firms felt they were threatened as well. None of the sources would agree to speak except on the condition of anonymity, citing fear of political repercussions.”
“The sources, who represent creditors to Chrysler, say they were taken aback by the hardball tactics that the Obama administration employed to cajole them into acquiescing to plans to restructure Chrysler,” continues the Insider story. “One person described the administration as the most shocking ‘end justifies the means’ group they have ever encountered. . . . Both were voters for Obama in the last election.”
The administration’s bullying tactics are reverberating through the investment world. Cliff Asness, a managing partner at AQR Capital Management, writes that “the President’s attempted diktat takes money from bondholders and gives it to a labor union that delivers money and votes for him. . . . Shaking down lenders for the benefit of political donors is recycled corruption and abuse of power.”
Obama may ultimately win this power play to deliver Chrysler to the UAW. But it is not healthy for Chrysler in the long run. Desperate for investment, Chrysler (and other UAW shops) will be shunned by investors that perceive it is just an extension of the Democrat/UAW mafia that can change contract terms and ride roughshod over the law anytime it wants.