President Barack Obama is preparing to announce Chapter 11 bankruptcy tomorrow for Chrysler Automotive. Obama gets the joy of making this announcement because his federal reserve loaned Chrysler $4.0 billion in loans with a stipulation that it would negotiate deals with the unions and private investors as part of a restructuring settlement. Chrysler was unable to meet those requirements and is now forced to file bankruptcy, which will include the dissection of the organization and partial sale to Fiat.
Under the new business model Fiat would own 20 percent of Chrysler and a UAW union retiree trust fund would own 55 percent of Chrysler. The rest of the ownership would stay in the hands of the government.
Though it was the Bush administration that loaned Chrysler the $4 billion under the TARP program – it was done so because the Democrat led Congress refused to come up with an auto industry bailout bill. When Barack Obama took office he changed the rules of the TARP loan to include an organizational restructuring and the guarantee of car warranties to customers. These changes cost Chrysler billions of dollars more than previously agreed and consequently made the loans impossible to pay back, and not substantial enough to save the company.
President Obama expanded the auto bailout. As GM chief Rick Wagoner was pushed out, the administration required restructuring from both companies before getting additional federal dollars and Obama guaranteed car warranties to take away the reluctance consumers might have to buy a GM or Chrysler while both companies are trying to stay afloat.
However, several members of Congress, including committee chairmen overseeing TARP and House leaders have said they do not know where Obama gets the legal or constitutional authority to expand the program without congressional approval.
This is the new reality folks. We are led by an administration that changes the rules of government loans after the fact. The rules are rewritten in such a manner as to force a company into bankruptcy and (in this case) the unions become majority stock holders. Imagine this – the United Auto Workers union will own a controlling share of the Chrysler corporation, which was a privately owned corporation until the government loan was made and then changed. This will not be the last privately held company that will be destroyed by Obama and his henchmen. Obama wants to destroy our economy……or so it appears.
Block quote from here: http://www.cnsnews.com/public/…
Bankruptcy announcement here: http://www.bloomberg.com/apps/…