Obama Administration Extorted Concession from Chrysler Lenders with Threats
Corky Boyd over at Island Turtle posted an incredibly revealing morning talk radio interview with bankruptcy attorney Tom Lauria who represents a handful of hedge funds holding Chrysler debt. In the interview, Tom Lauria revealed that the Obama administration threatened to destroy his client’s reputation via “the full force of the White House Press Corps” if the client didn’t accept the government’s proposed Chrysler restructuring plan.
Here is the tape of Beckman’s interview of Lauria. The relevant portions begin at the 1:30 mark. Listen to it.
Lauria: Let me tell you it’s no fun standing on this side of the fence opposing the President of the United States. In fact, let me just say, people have asked me who I represent. That’s a moving target. I can tell you for sure that I represent one less investor today than I represented yesterday. One of my clients 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.
Beckman: Was that Perella Weinberg?
Lauria: That was Perella Weinberg.
Naturally, the White House denies the claims. It appears that so does Perella Weinberg (bold text added for emphasis)?
Suggestions have been made that the Perella Weinberg Partners Xerion Fund changed its stance on the Chrysler restructuring due to pressure from White House officials. This is incorrect. The decision to accept and support the proposed deal was made by the Xerion Fund after reflecting carefully on the statement of the President when announcing Chrysler’s bankruptcy filing. In considering the President’s words and exercising our best investment judgment, we concluded that the risks of potentially severe capital loss that could arise from fighting this in bankruptcy court far outweighed any realistic potential upside.
We have a very specific mandate from our investors, and that is to carefully weigh investment risks and rewards. It is not our investment mandate to pursue political or risky legal campaigns with our investors’ money. This was our assessment of investment risk and reward, nothing else.
While we did and still do believe that the lenders would be justified in pressing their objections under conventional bankruptcy law principles, we believe a settlement would now be in the best interests of all parties in the context of avoiding a drawn out contested bankruptcy litigation proceeding, and we encourage our colleagues in the loan syndicate to pursue this immediately.
In outlining the plan for Chrysler’s Chapter 11 bankruptcy announced on Thursday, April 30 and Obama’s recent statements about shrinking the financial sector by heavily regulating risk-taking, there is no mistaking Obama’s position.
When Obama wants to change the fundamentals of what makes America the strongest economy in the world, when he looks to lesser economies for direction, and he punishes individuals for the benefit of others, it’s clear the Obama doesn’t think very highly of capitalism or those who practice it.