Wouldn’t It Be Ironic If Obama Ended Up Decimating Unions In America?

At best, what Barack Obama did at Chrysler was a grotesque abuse of power and at worst, it was a criminal act that merits his being put in a cell next to Duke Cunningham. The President of the United States should not be using billions of taxpayers dollars to maneuver his political allies into the driver’s seat of a company like Chrysler.

This has not been lost on the people whom union companies are going to need to have to rely on for future funding,

Hedge fund manager George Schultze says he may avoid lending to any more unionized companies after being burned by President Barack Obama in Chrysler LLC’s bankruptcy.

Obama put Chrysler under court protection on April 30 after lenders balked at a proposal giving them about 29 cents on the dollar for their $6.9 billion in debt. The investors said the president’s plan favored a union retiree medical fund whose claims ranked behind them for repayment. It was offered a 55 percent equity stake in the automaker.

Pacific Investment Management Co., Barclays Capital and Fridson Investment Advisors have joined Schultze Asset Management LLC in saying lenders may be unwilling to back unionized companies with underfunded pension and medical obligations, such as airlines and auto-industry suppliers, because Chrysler’s creditors failed to block Obama’s move. The reluctance may put additional pressure on borrowers seeking capital in the worst financial crisis since the Great Depression.

“Lenders will have to figure out how to price this risk,” Schultze, 39, said in a telephone interview from his office in Purchase, New York. “The obvious one is: Don’t lend to a company with big legacy liabilities or demand a much higher rate of interest because you may be leapfrogged in a bankruptcy.”

…”Anything that involves a large number of jobs or affects a large number of people, you can expect to see a Chrysler redux,” Jerry del Missier, president of Barclays Capital, said in an interview from his New York office. “One of the consequences here is the so-called speculators, people who provide financing, will think twice about getting involved.”

Barclays Plc, based in London, is the third-biggest U.K. bank.

‘Rights Were Trashed’

Jack Welch, former chief executive officer of General Electric Co., criticized how the government handled Chrysler’s bankruptcy, saying unions were favored at the expense of creditors.

“I didn’t like the terms,” Welch, 73, said in an interview yesterday at the Boston Convention Center. “The creditors’ rights were trashed and the unions got 55 percent of the company.”

…General Motors Corp., which accepted $15.4 billion in U.S. taxpayer aid, is also giving unions preferential treatment over bondholders in its restructuring, even though their claims rank equally. The biggest owners of GM debt include San Mateo, California-based Franklin Resources Inc. and Capital Research & Management Co. of Los Angeles, regulatory filings show.

…”It’s terrible precedent,” said Schultze. “The sad thing is it impacts the manufacturing sector and the companies that have legacy liabilities directly. It will be nearly impossible, or much more expensive, to get secured financing for these type of companies.”

…Unions spent $52 million to help elect Obama, which includes $5 million from the United Auto Workers, according to OpenSecrets.org, a Washington-based organization that tracks campaign spending. Roger Kerson, a spokesman for the UAW in Detroit, declined to comment.

The unions may think they got their money’s worth when they bought Obama for 52 million dollars and judging by what has happened so far with Chrysler and General Motors, they may be right. However, the price over the longer term could turn out to be more than they can afford.

If any contract you make may get thrown out the window if a union is involved, is it financially prudent to loan money to a union-infested company? There are some big names who seem to be thinking very hard about that question and given the state of the economy, that could literally result in some big union employers going belly up.

Wouldn’t it be ironic if Obama, with his overzealous, quasi-criminal meddling on their behalf, ended up killing union jobs all across the country?

PS: I own a Dodge today, but I will never buy another car made by Chrysler as long as the union is a majority owner. The union rank and file may be good people, but their bosses are involved in politics and are implacably hostile to the things I hold dear. As long as that is the case, I don’t want to do anything to help them survive.

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