“The White House threatened to use the White House press corps to besmirch the reputation of one of the financial firms that holds Chrysler debt, according to a prominent New York bankruptcy lawyer. If true, the explosive charge shows that the White House was willing to go much further than is widely known to have its way in the attempt to restructure the Detriot automaker. . . .
Perella Weinberg had been one of the firms that was resisting the Obama administration’s plans for restructuring, alongside Stairway Capital and Oppenheimer Funds. The group had argued that their position as senior creditors gave them legal rights to be paid in full before junior creditors were paid. They had put forth a counter-offer under which they would have received far less than the face-value of the debt they held, but more than the Obama adminstration had proposed. This compromise deal was rejected by the administration, and the holdouts were characterized by the president himself as unwilling to make sacrifices for the common good.” (Read more from businessinsider.com)
If Chairman Obama insists on renegotiating the terms of loans “for the common good,” there will be many fewer loans.
This reminds of how Herbert Hoover called captains of industry to the White House and convinced them to “voluntarily” keep wages and prices high, thereby ensuring the highest unemployment America has ever seen (and wide-spread malnutrition).