Terms of the Chrysler Bankruptcy:
Out of the 4 big players (read: creditors)---stockholders, Daimler, the US taxpayer and the UAW---everyone gets totally screwed by the administration's bankruptcy terms except darling UAW which comes out relatively smelling like a rose.
First of all, recall that lawyer Thomas Lauria, representing a Chrysler creditor, accused Obama's Car Czar Steven Rattner of threatening to use the White House Press Office to destroy the reputation of Perella-Weinberg if the investment bank did not cease its opposition to the UAW payoff which is the Chrysler bankruptcy, which Parella-Weinberg performed an immediate about-face and complied.
The point---this precise Chrysler bankruptcy deal appears to be smudged all over with Obama's fingerprints. Indeed, dents delivered by hammer blow might make a more meaningful metaphor.
And the UAW is obviously the admin's golden child.
While banks, investors and the US taxpayer are clearly Rattner's red headed adoptees.
Freckled all over.
Stockholders: owed 6.9 billion dollars by the obsolete auto, private investors have been promised 2 bil, or 29 cents on the dollar.
Daimler, holder of 2.0 billion dollars of useless claim, experiences the very expression of emptiness, the former makers of Mercedes-Benz receiving not a deutschmark, totally dissed, to the delight of Detroit's riveters and welders.
The taxpayer put up 4 billion TARP dollars, plus an additional 300 million in fees. Not only were you and I deeded the same nada dealt to Daimler, we're all committed to an extra 3.2 billion going forward.
And if Chrysler by some phony miracle continues to crank out cars, Obama has promised to pony up another 4.7 billion of public support.
The taxpayer does, though, hold 8% of Chrysler's remaining equity, however questionable the quality.
The UAW, in contrast, was awarded ownership of 55% of whatever existing assetts there are---cars already produced, physical plant, capital, presumably the Chrysler Building in New York.
The UAW was owed 10.5 billion dollars by Chrysler. The underworked, overpaid riveters, the very assassins of the golden goose, get 4.6 billion in cash, 43 cents per sawbuck.
The UAW also won 600 million from Daimler towards those exact legacy costs that more than any single factor murdered our domestic auto industry.
Our legacy costs alone render us unable to compete with foreign manufacturers.
The UAW also gets to pick one of the 9 directors of whatever Chrysler product, hypothetically, I presume, persists from this point on.
Congress, ie, the Democratic Party, chooses 4 for the Board, giving the riveters a majority.
The Canadian government gets to select a director, as well. Chrysler ran a couple factories north of the border, and Ottawa put up a few hundred mil Canadian in some mapley version of TARP.
Canada also controls 2% of Chrysler's equity, counting on FIAT to come to the company's rescue.
Fix-It-Again-Tony would get 35%.
The US taxpayer, promised rich rewards when TARP was put out there, gets nothing for his billions bailed IN except ownership of 8% of a car company which looks only to lose more money, and the commitment to contribute billions more.
The UAW was given almost 50 cents on the dollar, while stockholders saw less than .30, and Daimler and Uncle Sam got squat. And the riveters receive 55% of the equity to poor Sam's 8%.
The workers killed the goose, then greedily gobbled the greatest portion of the affluent fowl's final fruit.
While Obama smiled on.
(first posted may 11)