Free Markets, Free People


SCOTUS Temporarily Halts Chrysler Sale To Fiat

And Ruth Bader Ginsberg granted the halt (I wonder if she issued the stay on empathetic grounds or legal grounds?).

The “greedy speculators” who requested the stay were somewhat happy:

Indiana Treasurer Richard Mourdock said the ruling was a small victory for Indiana pensioners, who brought the request for an injunction for fear of losing their stake.

But, like I said, this is a very temporary stay:

In order for the stay to have a more lasting effect, five justices need to sign on it. That has not happened, or at least not yet. The court may yet deny the emergency request or grant it and await arguments about why it should actually hear an appeal.

However, that should be more than enough time for the usual suspects to demonize the firemen, police officers, teachers and blue collar workers greedy speculators and their desire to destroy the UAW auto industry for their pension funds 20 pieces of silver.

In fact, it has already begun:

Rep. Gary Peters, D-Mich., whose congressional district is home to Chrysler world headquarters, said the state of Indiana pension funds’ attempt to stop the sale is an effort to prevent a swift emergence from bankruptcy in the name of a small sum.

Indiana’s pension funds would lose $4.8 million if Chrysler is allowed to emerge from bankruptcy, Peters said, while the state will lose more than $20.7 million in tax revenue if Chrysler is liquidated, as well as incur tens of millions in lost revenue, expenses and new unemployment claims.

“Other stakeholders, including other secured lenders and Chrysler’s autoworkers, accepted shared sacrifice because they recognized their interest was better served keeping Chrysler alive rather than forcing liquidation. Why the officials who decided to take their objections all the way to the Supreme Court can’t recognize this is beyond me,” Peters said.

IOW, Michigan’s greed is much more acceptable than is Indiana’s. And besides, the powers to be have already made up their mind that the “greedy speculators” in Indiana should just shut up and accept the rape of their pension funds because the interests of others are “better served” if they get screwed vs. Michigan.

Nice.

~McQ

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10 Responses to SCOTUS Temporarily Halts Chrysler Sale To Fiat

  • Well in all honesty I think it needs to be remembered that unlike several other creditors who weren’t happy but whom could be ‘encouraged’ to ‘go away and shut up’ the state of Indiana is actually one of the few with the political ability to withstand this battle win or lose… others are quietly hoping that they’ll win but are in no position to speak publicly anymore.  The point being that the 4.8 million owed to Indiana is probably a small percentage of the total which almost certainly dwarfs the 20.7 million that the state of Michigan stands to ‘gain’ in tax revenue.

  • If Bush had tried this the Congress would have impeached him in a second …

    The Obama Administration argued Monday that no court, including the Supreme Court, has the authority to hear a challenge by Indiana benefit plans to the role the U.S. Treasury played in the Chrysler rescue, including the use of “bailout” (TARP) funds. The Indiana debt holders, U.S. Solicitor General Elena Kagan wrote, simply have no right to raise that issue, thus putting it out of the reach of the courts.

  • Indiana’s pension funds would lose $4.8 million if Chrysler is allowed to emerge from bankruptcy, Peters said, while the state will lose more than $20.7 million in tax revenue if Chrysler is liquidated, as well as incur tens of millions in lost revenue, expenses and new unemployment claims.

    Unless you’re questioning the accuracy of this statement, I don’t really see where Indiana finishes ahead in a Chapter 7.  And I think its the pragmatism of the Indiana Treasurer that’s being assailed with that statement and not firemen, teachers, etc. 

    • I don’t understand your argument.  Are you claiming that the results of bankruptcy should be apportioned to favor the bigger potential  loser rather than honor the commitment to a secured lender?  In that case, why would anyone take on senior debt?  It would be better to take on loads of junior debt, get a much larger interest payment, and then claim “greater harm” in the case of bankruptcy.  Is that how you want the system to work?

      Rick

      • Indiana’s best financial interest appeared to be allowing Chrysler survive its bankruptcy.  They were not obligated to press their complaint.  They could fund the loss themselves (and in some cases that may be automatic) and be out $5 million.  Or, they could press the complaint and be out $20 million.

        • jpm,
          I think you might be misreading that.  The State of Indiana loses nothing if Chrysler is liquidated… They are fully compensated.  On the other hand if liquated the state of Michigan potentially fails to collect 20 million in taxes - the key here is the state of Michigan’s potential loss is of no concern to the state of Indiana’s pension funds.  Their fund manager is following his fiduciary responsibility to protect their investment.

          • Michigan’s tax hall from income taxes alone of direct employees would exceed that $20 million figure several times over.  Combining dealership and Indiana direct employees as well as other taxes the 20 million number seems more appropriate for Indiana. 

  • The Chrysler situation cannot be successfully resolve by the Obama administration.  Chapter 7 is the only viable pathway from here.

    Obama and the federal government have no idea how to run a business, much less how to instruct others to do so.  They stepped in with billions in taxpayer dollars, but that doesn’t change the fact that few want to purchase Chrysler products.  Until that part of the situation changes, any other tactic will just waste more taxpayer money. 

    Still, Obama thinks he can save the company.  He really only wants to save the UAW jobs until 2012, but that is another matter.  ( for a top ten list of the reasons Obama wants a quick sale of Chrysler, you can look at  Chrysler Fire Sale )

  • No sane person will ever lend money to a unionized company again if this stands. 

    • Ah, not a problem, we will MANDATE that lenders lend them money or else.   

      Hmmmmmm, sound familiar… 

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