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Not enough people are talking about the Supreme Court's decision to briefly hold up Chrysler's sale to Fiat. Here's the one thing: When the government doesn't like how the game is going, they simply change the rules.
On Monday, the Obama administration filed paperwork with the Supreme Court, asking the justices not to take up the case for senior creditors — including the Indiana pension fund — which, luckily for them, was ignored.
The administration routinely has said they want the company to leave bankruptcy in less than two months. But doesn't that sound kind of fast considering it's the country's 6th largest bankruptcy filing ever?
It should; bankruptcies usually only happen that fast when one of the companies deals in products that could spoil — like fruits or meat. But while there are lots of things that are rotten about this deal, it's not the cars themselves.
The problem with this game is not only that they're changing the rules, but that the game itself might have been rigged from the start.
The Wall Street Journal reports that before Chrysler even filed for Chapter 11 on April 30, there were a series of e-mails showing that, despite worries from Chrysler's management that Fiat ignored document requests and that they tried to change contract terms at the last minute, the government still pushed the deal through.
Although Chrysler says that heated e-mails are routine near the end of deals, it's worth noting that in one e-mail, someone called the Treasury Department, quote: "God," which shows just how much they really control the game.
But even fixed games have winners and losers and this one is no different.
The clear winner is the UAW, which gets 50 cents on the dollar even though they are junior creditors and have 38,000 union workers who would've likely lost their jobs in liquidation.
But there are many more losers; most visibly, the Indiana pension fund, which gets 29 cents on a dollar even though they are senior creditors. That's happening even though at least two sections of the Constitution back up the right to uniform laws, which would see the senior creditors covered before any junior creditors.
The less obvious losers are all the businesses and individuals who will no longer be able to get loans if lenders are scared that the government can rewrite contracts whenever they feel like it.
Right now Indiana is the only state that will no longer invest in any companies or banks that have gotten federal bailout money, but would it be surprising if more investors follow suit? After all, look at what's happened with the bailouts.
Some of the biggest companies that reluctantly took government money are now seeing their salaries and bonuses limited; CEOs fired; and, in the case of GM, told where to build their product.
Meanwhile, state governors like South Carolina's Mark Sanford and others have tried to stop or limit the stimulus money they received for fear of the obligations they'd be under, yet they may be forced to take the money anyway because "God" doesn't take no for an answer.
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