More abusive actions by the government

The list of abuses from government coercion is getting too long to keep track of. Here is another example from Jake Tapper at ABC News.

White House Denies Charge By Attorney that Administration Threatened to Destroy Investment Firm's Reputation
May 02, 2009 3:17 PM

A leading bankruptcy attorney representing hedge funds and money managers told ABC News Saturday that Steve Rattner, the leader of the Obama administration's Auto Industry Task Force, threatened one of the firms, an investment bank, that if it continued to oppose the administration's Chrysler bankruptcy plan, the White House would use the White House press corps to destroy its reputation. . . . .

Perella Weinberg Partners, Lauria said, "was directly threatened by the White House and in essence compelled to withdraw its opposition to the deal under the threat that the full force of the White House press corps would destroy its reputation if it continued to fight. That’s how hard it is to stand on this side of the fence."

Perella Weinberg Partners, which owned Chrysler debt through its Xerion Fund, was one of Lauria's clients in this bankruptcy, but no longer is. Before the Thursday deadline, Joseph Perella and Peter Weinberg tried to join the larger creditors -- JP Morgan Chase, Citigroup, Morgan Stanley, and Goldman Sachs -- who are owed roughly 70% of Chrysler's debt and had already agreed to participate with the administration's plan.

All four financial institutions are recipients of up to $100 billion in federal government bailout funds, though the Obama administration insists the matters were kept completely separate. . . . .

President Obama singled out Lauria's clients for criticism when he announced the Chrysler plan on Thursday.

"While many stakeholders made sacrifices and worked constructively, I have to tell you some did not," the president said. "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."

Lauria said the president's assertion that his clients weren't willing to make any sacrifice is false. The clients were willing to take 50 cents on the dollar from Chrysler for their debt, he said. . . .

1) Well, the President appears to have carried out his threat at the press conference.
2) The large creditors that the government owns did what the government wanted, but the ones it doesn't own didn't. And there is no connection between these actions and government ownership? Dubious.
3) $27 billion loaned by both the government and creditors to GM, yet gov is supposed to get 50 percent and the creditors are to get 10 percent of the stock. It is then surprising that the non-government owned creditors are upset by the deal?

UPDATE: The Detroit News mentions the consequences for the companies that Obama criticized.

Creditors objecting to Chrysler LLC's efforts to speed the company's move through bankruptcy won a delay in a key hearing today, and a lawyer said some had received death threats.
The major proposal on tap for today was winning approval of the company's plan to establish bidding procedures -- in an effort to quickly allow the "good" assets of Chrysler to be auctioned off so the company can quickly emerge from bankruptcy. . . . .

A lawyer for the objecting creditors, Thomas Lauria, told Gonzales that some creditors had received death threats -- and those had been referred to the FBI and local police. Lauria wants court permission to keep the identities of some of those creditors secret. . . . .

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