On Thursday, I wrote about the banana republic capitalism that we are experiencing under the Obama administration. In connection with the Chrysler bankruptcy, Obama, ignoring laws that assign priority to secured creditors, has tried to bully lenders into abandoning their legal rights in favor of the United Auto Workers Union. To my knowledge, there is no precedent for this sort of arrogant lawlessness in American history. (Germany, Italy and Argentina are familiar with it.) Now, bankruptcy lawyer Tom Lauria adds more:
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.
There is a pattern here. Financial institutions holding billions of Chrysler’s secured debt are being held hostage by the TARP loans they are not permitted to pay back. They are being forced to accept just pennies on the dollar for loans they made in good faith less than two years ago. Just like mob loan sharks, the administration wants them under its thumb so they can extort more and more concessions.
I drew the same analogy to organized crime loan sharking in my “banana republic” post. Sadly, I’m afraid it is apposite. Once again, the Obama administration has steered us into uncharted waters: we have no experience with this lack of respect for the rule of law.
By the way: does anyone doubt that Barack Obama can mobilize, as he threatened, the “full force of the White House press corps” against any political opponent? No doubt there would be an honorable exception or two, but the threat is obviously credible.
UPDATE: The Obama administration denies making the threats alleged by Lauria. The denial, however, is merely a bald assertion. Lauria is the head of the bankruptcy group at White & Case, and a Democrat who contributed $10,000 to the Democratic Senatorial Campaign Committee in 2008. In that sense, you could say that he helped to bring about the corrupt regime that is now bullying his clients. But his credibility vastly exceeds that of an administration spokesman who, having no knowledge of the facts, is sent out to issue a blanket denial.