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Thread: The Bailout That Worked

  1. #21
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    [QUOTE=long island leprechaun;4026184]You're the CPA, but why not get rid of dependent exemptions and equalize the tax without distinguishing between married filed jointly/separately and singles? Get rid of childcare credits. That alone would probably allow a lower overall tax while requiring anybody with earned income to pay something. The tax code currently rewards people for having more children and being married... why would the government be interested in doing that, unless of course it's a family-values issue.... ;)[/QUOTE]

    I'm fine with all that............... my kids are grown now!;)

  2. #22
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    [QUOTE=FF2®;4025987]If Obama was involved then it must suck that the auto industry is recovering.

    I guess.

    You're all sheep. Warblegorble. Hypocrisy.[/QUOTE]

    Talk about clueless sheep who wouldn't know sh!t from Shinola

    It escapes libs everywhere that no US bankruptcies before Chrysler and GM was ever handled such as our government and justice system did, threatening then screwed secured shareholders and bondholders (.28/$1) in favor of unsecured creditors ((100%) and a union whose health care trust fund alone ended up with about 18 percent of GM (traded in for 10% of new GM)

    GM used some left over money from the loan to pay off the loan!

    [URL]http://www.nytimes.com/2010/05/02/business/02gret.html?_r=1&ref=business[/URL]

    Furthermore for GM to hand out bonuses to 76,000 American workers (management & workers both) totalling more than $400 million was unconscionable

    B. Hussein's thuggish yet incompetent reign of error (not Bush's or anyone else's) has lost in excess of $29 billion on GM alone-the stock has to go to $50+ for the US to break even - today's close ....[B]$31.30[/B]

  3. #23
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    [QUOTE=Jungle Shift Jet;4026483]Talk about clueless sheep who wouldn't know sh!t from Shinola

    It escapes libs everywhere that no US bankruptcies before Chrysler and GM was ever handled such as our government and justice system did, threatening then screwed secured shareholders and bondholders (.28/$1) in favor of unsecured creditors ((100%) and a union whose health care trust fund alone ended up with about 18 percent of GM (traded in for 10% of new GM)

    GM used some left over money from the loan to pay off the loan!

    [URL]http://www.nytimes.com/2010/05/02/business/02gret.html?_r=1&ref=business[/URL]

    Furthermore for GM to hand out bonuses to 76,000 American workers (management & workers both) totalling more than $400 million was unconscionable

    B. Hussein's thuggish yet incompetent reign of error (not Bush's or anyone else's) has lost in excess of $29 billion on GM alone-the stock has to go to $50+ for the US to break even - today's close ....[B]$31.30[/B][/QUOTE]


    Still, if not for the Obama Administration's intervention, the entire American auto industry might very well have collapsed and taken the Midwest with it. Instead, the industry is on the rebound, at least for now.

  4. #24
    [QUOTE=Jungle Shift Jet;4026483]Talk about clueless sheep who wouldn't know sh!t from Shinola

    It escapes libs everywhere that no US bankruptcies before Chrysler and GM was ever handled such as our government and justice system did, threatening then screwed secured shareholders and bondholders (.28/$1) in favor of unsecured creditors ((100%) and a union whose health care trust fund alone ended up with about 18 percent of GM (traded in for 10% of new GM)

    GM used some left over money from the loan to pay off the loan!

    [URL]http://www.nytimes.com/2010/05/02/business/02gret.html?_r=1&ref=business[/URL]

    Furthermore for GM to hand out bonuses to 76,000 American workers (management & workers both) totalling more than $400 million was unconscionable

    B. Hussein's thuggish yet incompetent reign of error (not Bush's or anyone else's) has lost in excess of $29 billion on GM alone-the stock has to go to $50+ for the US to break even - today's close ....[B]$31.30[/B][/QUOTE]


    the Obama Administration screwed over Oppenheimer & Co. & Perella Weinberg Partners...they were SECURED bank debt holders of General Motors debt...they were higher in the capital structure of the company than even bond holders! They invest money for pension funds...yes, mom & pop. All for political payback to the unions. Those are the facts

  5. #25
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    [QUOTE=Tucker134;4026655]the Obama Administration screwed over Oppenheimer & Co. & Perella Weinberg Partners...they were SECURED bank debt holders of General Motors debt...they were higher in the capital structure of the company than even bond holders! They invest money for pension funds...yes, mom & pop. All for political payback to the unions. Those are the facts[/QUOTE]

    You mean THIS Perella Weinberg? :rolleyes:

    [B]Treasury Taps Perella Weinberg To Advise On Ally Sale[/B]


    Published January 27, 2011 | Dow Jones Newswires
    [IMG]http://tags.bluekai.com/site/668[/IMG]
    WASHINGTON -(Dow Jones)- The U.S. Treasury selected Perella Weinberg Partners LP to advise it on management and the eventual sale of its stake in Ally Financial Inc., formerly known as GMAC Financial Services Inc.
    In an agreement signed Jan. 18 and posted on the Treasury's web site, Treasury designated the privately-owned financial services firm as the government's financial agent, as it looks toward publicly listing its stake in the former financial arm of General Motors Co. (GM).
    Perella will receive a monthly fee of $500,000--or $6 million over the one-year term of the contract--for its services.
    Treasury through 2009 invested $17.2 billion in Ally Financial as part of the Troubled Asset Relief Program, or TARP, the government's $700 billion program to stabilize financial markets. An initial public offering would mark the first step in the unwinding of Ally's federal bailout.
    The company is interviewing bankers this week for its IPO, according to people familiar with the matter. The banks being interviewed as potential underwriters include J.P. Morgan Chase & Co. (JPM), Citigroup Inc. (C), Goldman Sachs Group Inc. (GS) and Morgan Stanley (MS), the people said. The meetings, held in New York City Wednesday and Thursday, are with Ally officials, including Chief Executive Michael A. Carpenter, said one of the people.
    The timing and size of the IPO are yet to be determined. Ally said in 2010 that it is mulling the stock offering for sometime this year.
    As with almost any IPO, only a fraction of Ally's shares will be sold in its offering. The U.S. government, a majority owner of Ally, likely will have to sell its shareholdings over months or years to be fully repaid. The money the government ultimately realizes will depend on Ally's operating results and the market's evaluation of them.
    At the end of last year, Treasury restructured its investment, leaving it with a 73.8% common equity stake, as well as trust preferred securities and preferred shares. The move was intended to make it easier for Ally to launch an IPO and repay its government debt.
    Ally provides financing for dealerships and customers of General Motors and Chrysler Group LLC. Ally has spent the last two years trying to establish itself as a stand-alone company.
    The lender's efforts include phasing out its old name, GMAC; expanding its core auto-lending activities beyond former parent GM, which is still its biggest auto partner; dismantling its hefty book of souring mortgages; and raising deposits and regaining access to the debt markets from which it was cut off during the credit crisis.
    Ally became a bank-holding company at the end of 2008 to survive the credit crisis. The change made it eligible to receive federal aid. It was bailed out by the government as part of efforts to rescue GM and Chrysler.
    For GM, the auto lender financed 83.7% of inventory in U.S. dealerships in the third quarter. During the same period, Ally funded 76.2% of new vehicles on lots of Chrysler dealers in the U.S.
    Treasury is selling stakes it bought in companies during the financial crisis as it winds down TARP.
    Most recently, Treasury said it would record a net $312.2 million from its sale of its 465.1 million warrants to purchase common shares of Citigroup.
    The sale of the warrants, expected to close Monday, will enable the government to dispose of its remaining stake in Citigroup obtained through TARP.
    [B]Overall, taxpayers are expected to end up with a $12.3 billion profit on the government's $45 billion investment in the bank. [/B]

    Copyright © 2011 Dow Jones Newswires

  6. #26
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    [QUOTE=FF2®;4026496]Still, if not for the Obama Administration's intervention, the entire American auto industry might very well have collapsed and taken the Midwest with it. Instead, the industry is on the rebound, at least for now.[/QUOTE]

    I sympathise with that sentiment to a degree but a Conrail-like rationalization could have come at a much lower cost with a better result.
    A Big 2 of Ford and a reconstituted GM-Chrysler (Cadillac-Buick-Chevy-Jeep) would have served America just fine.

    It's very hard for me to feel sorry for people whose generous union packages and protections could have allowed them early retirement instead of continued employment on my dime.

    I had always bought American cars exclusively until recently, but like everyone else I was let down tremendously by shoddy quality and indifferent service over the years-by the time they started caring about customers many had moved on to superior foreign brands. I have a Honda
    SUV my 1st and only foreign brand purchase (made in AL w/ predominantly US components) and it's the finest vehicle I ever owned. Compared to the execrable, dangerous Jeep model I traded it in for it's the finest car ever built!

    My local GM dealer franchisee in business since the 40s swore as the reorganization came down that they would continue in business as they had done as they took my 20K cash to convert a lease to a buyout in March 2009-they then closed their doors a few months later deciding to exit the business for - their plan was in the works for months

    The problem with the left is their warped idea of fairness - their designated protected classes must stay protected come hell or high water to preserve political power and damn our Constitution and the costs to the rest of America. If you complain about the unfairness and immorality if it all you're anti-this that and the other.

  7. #27
    [QUOTE=FF2®;4026496]Still, if not for the Obama Administration's intervention, the entire American auto industry might very well have collapsed and taken the Midwest with it. Instead, the industry is on the rebound, at least for now.[/QUOTE]

    Total speculation. You have no idea what would have been the result of a bankruptcy. Companies in this country go into bankruptcy and come out all the time.

    We have a process for companies to shed debt and restructure. Circumventing that and declaring victory for government subsidized companys after a couple of quarters where profits were terrific because of a failing dollar and offshore profit gains being outsized is shortsighted at best.

  8. #28
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    [QUOTE=Winstonbiggs;4026738]We have a process for companies to shed debt and restructure.[/QUOTE]

    That's why I made myself a corporation at my job. No responsibility or liability. When I submit shoddy work, I politely ask my supervisor to take it up with my board of directors and then I quietly close the corporation and start a new one under a slightly different name.

  9. #29
    [QUOTE=PlumberKhan;4026749]That's why I made myself a corporation at my job. No responsibility or liability. When I submit shoddy work, I politely ask my supervisor to take it up with my board of directors and then I quietly close the corporation and start a new one under a slightly different name.[/QUOTE]

    Your State allows you to work without liability insurance? You can get loans with no covenants?

    There is no quietly getting credit, insurance and all the things you need to operate unless you are operating off the books.

  10. #30
    Ford didn't take the bailout and they didn't fail. Obama bailed out the Auto Workers Union not GM and guess what the people who bought stock got nothing. So please don't give me Obama. He loves taking it from the Unions!
    What will happen when GM goes belly up again? No more bailouts!

  11. #31
    [QUOTE=long island leprechaun;4026660]You mean THIS Perella Weinberg? :rolleyes:

    [B]Treasury Taps Perella Weinberg To Advise On Ally Sale[/B]


    Published January 27, 2011 | Dow Jones Newswires
    [IMG]http://tags.bluekai.com/site/668[/IMG]
    WASHINGTON -(Dow Jones)- The U.S. Treasury selected Perella Weinberg Partners LP to advise it on management and the eventual sale of its stake in Ally Financial Inc., formerly known as GMAC Financial Services Inc.
    In an agreement signed Jan. 18 and posted on the Treasury's web site, Treasury designated the privately-owned financial services firm as the government's financial agent, as it looks toward publicly listing its stake in the former financial arm of General Motors Co. (GM).
    Perella will receive a monthly fee of $500,000--or $6 million over the one-year term of the contract--for its services.
    Treasury through 2009 invested $17.2 billion in Ally Financial as part of the Troubled Asset Relief Program, or TARP, the government's $700 billion program to stabilize financial markets. An initial public offering would mark the first step in the unwinding of Ally's federal bailout.
    The company is interviewing bankers this week for its IPO, according to people familiar with the matter. The banks being interviewed as potential underwriters include J.P. Morgan Chase & Co. (JPM), Citigroup Inc. (C), Goldman Sachs Group Inc. (GS) and Morgan Stanley (MS), the people said. The meetings, held in New York City Wednesday and Thursday, are with Ally officials, including Chief Executive Michael A. Carpenter, said one of the people.
    The timing and size of the IPO are yet to be determined. Ally said in 2010 that it is mulling the stock offering for sometime this year.
    As with almost any IPO, only a fraction of Ally's shares will be sold in its offering. The U.S. government, a majority owner of Ally, likely will have to sell its shareholdings over months or years to be fully repaid. The money the government ultimately realizes will depend on Ally's operating results and the market's evaluation of them.
    At the end of last year, Treasury restructured its investment, leaving it with a 73.8% common equity stake, as well as trust preferred securities and preferred shares. The move was intended to make it easier for Ally to launch an IPO and repay its government debt.
    Ally provides financing for dealerships and customers of General Motors and Chrysler Group LLC. Ally has spent the last two years trying to establish itself as a stand-alone company.
    The lender's efforts include phasing out its old name, GMAC; expanding its core auto-lending activities beyond former parent GM, which is still its biggest auto partner; dismantling its hefty book of souring mortgages; and raising deposits and regaining access to the debt markets from which it was cut off during the credit crisis.
    Ally became a bank-holding company at the end of 2008 to survive the credit crisis. The change made it eligible to receive federal aid. It was bailed out by the government as part of efforts to rescue GM and Chrysler.
    For GM, the auto lender financed 83.7% of inventory in U.S. dealerships in the third quarter. During the same period, Ally funded 76.2% of new vehicles on lots of Chrysler dealers in the U.S.
    Treasury is selling stakes it bought in companies during the financial crisis as it winds down TARP.
    Most recently, Treasury said it would record a net $312.2 million from its sale of its 465.1 million warrants to purchase common shares of Citigroup.
    The sale of the warrants, expected to close Monday, will enable the government to dispose of its remaining stake in Citigroup obtained through TARP.
    [B]Overall, taxpayers are expected to end up with a $12.3 billion profit on the government's $45 billion investment in the bank. [/B]

    Copyright © 2011 Dow Jones Newswires[/QUOTE]

    So what, all this shows is that Obama had a back room deal to compensate Perella for their loss on Chrysler bank debt- It still didn't address the pension fund holders of Chrysler who got screwed to benefit the unions....political payback from Obama

    I work in high yield bonds, & any auto analyst on the street will tell you the problem with the US auto makers is the pensions..

  12. #32
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    [QUOTE=Tucker134;4027253]So what, all this shows is that Obama had a back room deal to compensate Perella for their loss on Chrysler bank debt- It still didn't address the pension fund holders of Chrysler who got screwed to benefit the unions....political payback from Obama

    I work in high yield bonds, & any auto analyst on the street will tell you the problem with the US auto makers is the pensions..[/QUOTE]

    You mean these lenders? I don't think you can get anything right.... :rolleyes:

    MICHELE NORRIS, host:
    And I'm Michele Norris. Chrysler Corporation filed for bankruptcy protection today. Bankruptcy would enable the company to clear the final hurdles of a merger with Italian automaker Fiat. President Obama announced today that those merger negotiations have concluded. The president said the move will likely save the jobs of tens of thousands of autoworkers and employees of supplier companies. NPR's Don Gonyea reports from the White House.
    DON GONYEA: This was deadline day for Chrysler, the end of the 30-day period that President Obama gave the automaker to enter into a marriage with Fiat. The company has also been involved in intense negotiations with debt holders and with the United Autoworkers Union, all overseen by administration officials. Here's the president.
    President BARACK OBAMA: And today, after consulting with my auto task force, I can report that the necessary steps have been taken to give one of America's most storied automakers, Chrysler, a new lease on life.
    GONYEA: As part of the deal, Mr. Obama also pledged $8 billion more in taxpayer money. He said Fiat will help distribute Chrysler products, including Jeeps and minivans, to a global market.
    Pres. OBAMA: Fiat has already agreed to transfer billions of dollars in cutting-edge technology to Chrysler to help them do the same. Fiat's also committed to working with Chrysler to build new, fuel-efficient cars and engines right here in America.

    [B]GONYEA: But the president also used the bully pulpit today, scolding those Chrysler debt holders who did not make the kind of concessions the United Autoworkers and some of the major banks did. The failure to reach an agreement to reduce all of Chrysler's debt is what is forcing the company to go into bankruptcy to complete the Fiat merger. [/B]
    [B]Pres. OBAMA: A group of investment firms and hedge funds decided to hold out for the prospect of an unjustified, taxpayer-funded bailout. They were hoping that everybody else would make sacrifices, and they would have to make none. Some demanded twice the return that other lenders were getting. I don't stand with them. I stand with Chrysler's employees and their families and communities. [/B]

    GONYEA: Bankruptcy is the part of this that makes a lot of people close to Chrysler nervous.
    Representative GARY PETERS (Democrat, Michigan): We've been fighting very aggressively to keep Chrysler out of bankruptcy, and that was certainly the preferred option.

    Or this?

    [B]Obama says “speculators” helped force the carmaker into Chapter 11.[/B]

    [B]By [URL="http://www.thebigmoney.com/users/matthewdebord"]Matthew DeBord[/URL][/B]

    [B]Posted Thursday, April 30, 2009 - 4:42pm[/B]

    Ever since the negotiations between the government and Chrysler's debtholders began to bog down, ultimately leading to today's bankruptcy announcement, I've been trying to figure out who the holdouts are. Big banks that took TARP funds accepted the government's offer, but a group of smaller players, including a trio of hedge funds specializing in [URL="http://www.investopedia.com/articles/bonds/08/distressed-debt-hedge-fund.asp"]distressed debt[/URL] refused to play ball.
    A previously [URL="http://dealbook.blogs.nytimes.com/2009/04/30/chrysler-lenders-fault-government-as-bankruptcy-looms/"]unknown consortium[/URL] of debtholders—calling themselves "The Committee of Chrysler Non-TARP Lenders" (yes, it sounds like the name was invented sometime between midnight and dawn this morning) and saying that they're composed of "approximately 20" small investors—released a statement prior to the president's "new lease on life" bankruptcy announcement. The group says it represents "many of the country's teachers unions, major pension and retirement plans and school endowments who have invested through us in senior secured loans to Chrysler." Their total exposure is $1 billion, out of a total of $6.9 billion in secured Chrysler debt.
    Among the CCNTL—now that they have a name, they should also have an acronym ("Com-Sin-Tel?")—is OppenheimerFunds, which is part of MassMutual, a company that last year [URL="http://www.massmutual.com/aboutmassmutual/newscenter/pressreleases/articledisplay?mmcom_articleid=a9490f691458d110VgnVCM100000c07106aaRCRD"]declined TARP funds[/URL]. [B]CCNTL may represent teachers and schools, but Oppenheimer manages 529 college savings accounts, and several states are so enraged with the [/B][URL="http://moneywatch.bnet.com/investing/blog/fund-watch/oppenheimers-bond-fund-blowup-worse-than-you-think/185/"][B]dreadful bond gambles[/B][/URL][B] that the firm has taken that [/B][URL="http://www.bloomberg.com/apps/news?pid=conewsstory&refer=conews&tkr=AB%3AUS&sid=asGB7cAom.gY"][B]they've begun investigating them.[/B][/URL][B] Oppenheimer holds Chrysler debt in its [/B][URL="https://www.oppenheimerfunds.com/commonJhtml/fund_info/profile_base.jhtml?fundcode=00291&catId=null&view=facts"][B]Senior Floating Rate B Fund[/B][/URL][B] (XOSBX), which was down almost 30 percent in 2008. The fund itself is now worth $1.2 billion, with Chrysler's debt making up 1.1 percent, or $13,200,000, reduced from a [/B][URL="http://www.fundmojo.com/mutualfund/fund_report/mutualfund/XOSBX"][B]larger holding in late 2008[/B][/URL][B]. Was Oppenheimer looking at a wipeout on its Chrysler investment? Did its fiduciary responsibility to investors include functioning as hedge fund? As part of CCNTL, it evidently offered to take 40 percent on its debt, which of course it had acquired as junk in the first place. The government said no, the Chapter 11 filing ensued, and the president wasted no time in chastising the holdouts as a "small group of speculators."[/B]

    Or this:

    The bankruptcy also has significant repercussions on the corporate bond market. Chrysler's bankruptcy filing was preceded by tough negotiations among creditors and the government to conclude an out-of-court restructuring in which lenders would receive 29 cents on the dollar in cash in exchange for wiping out about $6.9 billion of Chrysler's debt.

    [B]A group of about 20 secured creditors refused to sign off on the deal, arguing that their stakes were worth more and demanding that their seniority rights be observed. [/B][B]However, recent empirical evidence shows that as default rates increase, recovery rates are falling fast in this cycle. [URL="http://finapps.forbes.com/finapps/jsp/finance/compinfo/CIAtAGlance.jsp?tkr=MCO"][COLOR=#003399]Moody[/COLOR][/URL]'s ( [/B][URL="http://finapps.forbes.com/finapps/jsp/finance/compinfo/CIAtAGlance.jsp?tkr=MCO"][COLOR=#003399][B]MCO[/B][/COLOR][/URL][B] - [/B][URL="http://search.forbes.com/search/CompanyNewsSearch?ticker=MCO"][COLOR=#003399][B]news [/B][/COLOR][/URL][B]- [/B][URL="http://people.forbes.com/search?ticker=MCO"][COLOR=#003399][B]people [/B][/COLOR][/URL][B]) reported that in the past seven months, completed CDS auctions resulted in a recovery rate of 30 cents on the dollar for loans and about 15 cents on the dollar for bonds, compared with 85 cents and 70 cents on the dollar, respectively, for all of 2008. [/B]

    The latest research by Edward Altman yields similar results, stressing that distressed exchanges to avoid bankruptcy have surged since 2008, and that they usually yield significantly higher recovery rates to participating bondholders. In fact, S&P warns that, due to loose covenants and missing early-warning triggers, the losses even for secured creditors in this cycle might turn out to be substantial if a company cannot reorganize and liquidate.

    Henry Hu of Texas University points to the "empty creditor" phenomenon to explain why some lenders prefer to hold out and force a bankruptcy seemingly against the company's--and thus their own--best interests. In short, creditors with enough credit default swaps may simultaneously have control rights and incentives to cause the debtor firm's value to fall. And if bankruptcy occurs, the empty creditor may undermine proper reorganization, especially if his interests (or non-interests) are not fully disclosed to the bankruptcy court.
    Last edited by long island leprechaun; 05-12-2011 at 10:02 PM.

  13. #33
    [QUOTE=long island leprechaun;4027273]You mean these lenders? I don't think you can get anything right.... :rolleyes:

    MICHELE NORRIS, host:
    And I'm Michele Norris. Chrysler Corporation filed for bankruptcy protection today. Bankruptcy would enable the company to clear the final hurdles of a merger with Italian automaker Fiat. President Obama announced today that those merger negotiations have concluded. The president said the move will likely save the jobs of tens of thousands of autoworkers and employees of supplier companies. NPR's Don Gonyea reports from the White House.
    DON GONYEA: This was deadline day for Chrysler, the end of the 30-day period that President Obama gave the automaker to enter into a marriage with Fiat. The company has also been involved in intense negotiations with debt holders and with the United Autoworkers Union, all overseen by administration officials. Here's the president.
    President BARACK OBAMA: And today, after consulting with my auto task force, I can report that the necessary steps have been taken to give one of America's most storied automakers, Chrysler, a new lease on life.
    GONYEA: As part of the deal, Mr. Obama also pledged $8 billion more in taxpayer money. He said Fiat will help distribute Chrysler products, including Jeeps and minivans, to a global market.
    Pres. OBAMA: Fiat has already agreed to transfer billions of dollars in cutting-edge technology to Chrysler to help them do the same. Fiat's also committed to working with Chrysler to build new, fuel-efficient cars and engines right here in America.

    [B]GONYEA: But the president also used the bully pulpit today, scolding those Chrysler debt holders who did not make the kind of concessions the United Autoworkers and some of the major banks did. The failure to reach an agreement to reduce all of Chrysler's debt is what is forcing the company to go into bankruptcy to complete the Fiat merger. [/B]
    [B]Pres. OBAMA: A group of investment firms and hedge funds decided to hold out for the prospect of an unjustified, taxpayer-funded bailout. They were hoping that everybody else would make sacrifices, and they would have to make none. Some demanded twice the return that other lenders were getting. I don't stand with them. I stand with Chrysler's employees and their families and communities. [/B]

    GONYEA: Bankruptcy is the part of this that makes a lot of people close to Chrysler nervous.
    Representative GARY PETERS (Democrat, Michigan): We've been fighting very aggressively to keep Chrysler out of bankruptcy, and that was certainly the preferred option.

    Or this?

    [B]Obama says “speculators” helped force the carmaker into Chapter 11.[/B]

    [B]By [URL="http://www.thebigmoney.com/users/matthewdebord"]Matthew DeBord[/URL][/B]

    [B]Posted Thursday, April 30, 2009 - 4:42pm[/B]

    Ever since the negotiations between the government and Chrysler's debtholders began to bog down, ultimately leading to today's bankruptcy announcement, I've been trying to figure out who the holdouts are. Big banks that took TARP funds accepted the government's offer, but a group of smaller players, including a trio of hedge funds specializing in [URL="http://www.investopedia.com/articles/bonds/08/distressed-debt-hedge-fund.asp"]distressed debt[/URL] refused to play ball.
    A previously [URL="http://dealbook.blogs.nytimes.com/2009/04/30/chrysler-lenders-fault-government-as-bankruptcy-looms/"]unknown consortium[/URL] of debtholders—calling themselves "The Committee of Chrysler Non-TARP Lenders" (yes, it sounds like the name was invented sometime between midnight and dawn this morning) and saying that they're composed of "approximately 20" small investors—released a statement prior to the president's "new lease on life" bankruptcy announcement. The group says it represents "many of the country's teachers unions, major pension and retirement plans and school endowments who have invested through us in senior secured loans to Chrysler." Their total exposure is $1 billion, out of a total of $6.9 billion in secured Chrysler debt.
    Among the CCNTL—now that they have a name, they should also have an acronym ("Com-Sin-Tel?")—is OppenheimerFunds, which is part of MassMutual, a company that last year [URL="http://www.massmutual.com/aboutmassmutual/newscenter/pressreleases/articledisplay?mmcom_articleid=a9490f691458d110VgnVCM100000c07106aaRCRD"]declined TARP funds[/URL]. [B]CCNTL may represent teachers and schools, but Oppenheimer manages 529 college savings accounts, and several states are so enraged with the [/B][URL="http://moneywatch.bnet.com/investing/blog/fund-watch/oppenheimers-bond-fund-blowup-worse-than-you-think/185/"][B]dreadful bond gambles[/B][/URL][B] that the firm has taken that [/B][URL="http://www.bloomberg.com/apps/news?pid=conewsstory&refer=conews&tkr=AB%3AUS&sid=asGB7cAom.gY"][B]they've begun investigating them.[/B][/URL][B] Oppenheimer holds Chrysler debt in its [/B][URL="https://www.oppenheimerfunds.com/commonJhtml/fund_info/profile_base.jhtml?fundcode=00291&catId=null&view=facts"][B]Senior Floating Rate B Fund[/B][/URL][B] (XOSBX), which was down almost 30 percent in 2008. The fund itself is now worth $1.2 billion, with Chrysler's debt making up 1.1 percent, or $13,200,000, reduced from a [/B][URL="http://www.fundmojo.com/mutualfund/fund_report/mutualfund/XOSBX"][B]larger holding in late 2008[/B][/URL][B]. Was Oppenheimer looking at a wipeout on its Chrysler investment? Did its fiduciary responsibility to investors include functioning as hedge fund? As part of CCNTL, it evidently offered to take 40 percent on its debt, which of course it had acquired as junk in the first place. The government said no, the Chapter 11 filing ensued, and the president wasted no time in chastising the holdouts as a "small group of speculators."[/B]

    Or this:

    The bankruptcy also has significant repercussions on the corporate bond market. Chrysler's bankruptcy filing was preceded by tough negotiations among creditors and the government to conclude an out-of-court restructuring in which lenders would receive 29 cents on the dollar in cash in exchange for wiping out about $6.9 billion of Chrysler's debt.

    [B]A group of about 20 secured creditors refused to sign off on the deal, arguing that their stakes were worth more and demanding that their seniority rights be observed. [/B][B]However, recent empirical evidence shows that as default rates increase, recovery rates are falling fast in this cycle. [URL="http://finapps.forbes.com/finapps/jsp/finance/compinfo/CIAtAGlance.jsp?tkr=MCO"][COLOR=#003399]Moody[/COLOR][/URL]'s ( [/B][URL="http://finapps.forbes.com/finapps/jsp/finance/compinfo/CIAtAGlance.jsp?tkr=MCO"][COLOR=#003399][B]MCO[/B][/COLOR][/URL][B] - [/B][URL="http://search.forbes.com/search/CompanyNewsSearch?ticker=MCO"][COLOR=#003399][B]news [/B][/COLOR][/URL][B]- [/B][URL="http://people.forbes.com/search?ticker=MCO"][COLOR=#003399][B]people [/B][/COLOR][/URL][B]) reported that in the past seven months, completed CDS auctions resulted in a recovery rate of 30 cents on the dollar for loans and about 15 cents on the dollar for bonds, compared with 85 cents and 70 cents on the dollar, respectively, for all of 2008. [/B]

    The latest research by Edward Altman yields similar results, stressing that distressed exchanges to avoid bankruptcy have surged since 2008, and that they usually yield significantly higher recovery rates to participating bondholders. In fact, S&P warns that, due to loose covenants and missing early-warning triggers, the losses even for secured creditors in this cycle might turn out to be substantial if a company cannot reorganize and liquidate.

    Henry Hu of Texas University points to the "empty creditor" phenomenon to explain why some lenders prefer to hold out and force a bankruptcy seemingly against the company's--and thus their own--best interests. In short, creditors with enough credit default swaps may simultaneously have control rights and incentives to cause the debtor firm's value to fall. And if bankruptcy occurs, the empty creditor may undermine proper reorganization, especially if his interests (or non-interests) are not fully disclosed to the bankruptcy court.[/QUOTE]




    problem is, default rates arent rising...theyre at alltime lows...& they were secured creditors...their investment was worth a heckuva lot more than .28, & Obama used thug-style politics to get his union buddies paid...that's just the facts

  14. #34
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    [QUOTE=Tucker134;4027503]problem is, default rates arent rising...theyre at alltime lows...& they were secured creditors...their investment was worth a heckuva lot more than .28, & Obama used thug-style politics to get his union buddies paid...that's just the facts[/QUOTE]

    No, regrettably, that just the spin. Give Obama credit (I know that's impossible for you to do), he got the restructuring done and preserved thousands of jobs (which in your spin is paying off union buddies). Meanwhile you seem to have no problem with companies like Oppenheimer speculating with teacher pensions, which the states don't seem to find particularly nice.

  15. #35
    [QUOTE=long island leprechaun;4027523]No, regrettably, that just the spin. Give Obama credit (I know that's impossible for you to do), he got the restructuring done and preserved thousands of jobs (which in your spin is paying off union buddies). Meanwhile you seem to have no problem with companies like Oppenheimer speculating with teacher pensions, which the states don't seem to find particularly nice.[/QUOTE]


    wrong again...the Oppenheimer fund that invested in Chrysler bank debt for teacher's pensions was most certainly one that was "speculative"...& invested in levered oppty's. On a side note, investing in the 1st lien, senior SECURED portion of the capital structure is not a huge risk bet anyway....at least it's not supposed to be.

    GM shouldve gone bankrupt, & restructured their debt in court...like everyone else.

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