Saturday, May 02, 2009

NYT Thinks Socialism Is Nifty

From the story:
Because Chrysler was already the most marginal of what were once called the Big Three — this will be its third corporate reincarnation in a decade — Mr. Obama could afford to take a hard line. But when dealing with a company as politically sensitive and as large as G.M., the administration will have a far harder time separating the economic decisions from the political challenges.

In Chrysler’s case, a handful of the company’s 46 lenders presented the biggest roadblock. Mr. Obama could portray them as obstructionists who put their demands for repayment ahead of preserving the company.

But General Motors’ creditors number in the tens of thousands and include pension funds that bought the company’s unsecured bonds. G.M. bondholders have no claim on its plants or inventory, but they will probably attract more sympathy than Chrysler’s Wall Street lenders did.

Cheerful burble from the political side. Despite Obama's squawking, he's merely the President of the United States; a bankruptcy judge will still put a secured creditor ahead of unsecured creditors in the repayment line. THAT is why they could hold out. Whatever politics decrees, they can obey their fiduciary duty to their investors, and seek the best terms in federal court.

For now.

No comments: