Union wins, investors lose in bailouts

One of the problems with the on-going negotiations involving the automobile companies, government and the union that helped destroy General Motors and Chrysler is that, when it’s all over, the union ends up in the driver’s seat.

The United Auto Workers, an extension of the Democratic Party, will wind up with a controlling stake in Chrysler.  General Motors bankruptcy filing is imminent and expectations are that the UAW will wind up with as much as 20 percent of the surviving company in exchange for wiping out $10 billion of the $20 billion that GM owes the union’s health care trust.  Bond-holders, meanwhile, are being asked to swap the $27 billion they’re owed for 10 percent of the company.  The government would get 50 percent for wiping out half of the $19.4 billion GM has gotten in bail-out money.  Shareholders would be left with 1 percent.

Bond-holders understandably balk, pushing GM to bankruptcy.  In the future, investors should and will be extraordinarily leery of investing in struggling businesses in competitive industries.  Government is, in effect, confiscating investors’ money and transferring it to the union and to government.   In the case of Chrysler, it confiscated money from teachers and policemen in Indiana and transferred it to the UAW.

Lawyers for the Indiana pension funds argued in court Tuesday that their rights were being trampled by the federal government in the Chrysler bankruptcy. The pension funds paid about 43 cents on the dollar when they bought Chrysler’s senior secured debt last August.  The government offered holders of $6.9 billion in senior secured debt 29 cents on the dollar, while giving creditors with a lesser claim — the UAW — bigger payouts.  The UAW, which is at least equally responsible for the auto industry’s plight, will end up with a 55 percent ownership stake.

The federal judge in Manhattan on Tuesday rejected the pension funds’ effort to delay today’s bankruptcy court hearing on Chrysler’s proposed sale.  Pension fund lawyers had argued that the federal government doesn’t have authority to provide Chrysler money for a sale, a point that the judge said could be argued after the bankruptcy court acts. Chrysler filed for bankruptcy on April 30 and a sale is expected to close by June 15.

120 comments Add your comment


May 27th, 2009
8:24 am

Those blasted workers! They ought be grateful we don’t count them as three-fifths of a person anymore!

Things always go south when people forget that some were born to serve!


May 27th, 2009
8:27 am

Jim, I realize this runs counter to everything the supply-siders chant at their weekly worship services, but…

Maybe the workers matter MORE than the investors do, hmmm? Maybe the idiotic supply-side, laissez-faire mentality is OVER because it was a proven failure. And maybe the new administration is focusing its attention where it belongs: on the working class, not the wealthy.

Rush Leader of the GOP

May 27th, 2009
8:46 am

Conservative radio host Rush Limbaugh blasted President Barack Obama on Tuesday for picking a “reverse racist” and “hack” in Judge Sonia Sotomayor for the Supreme Court.

“Here you have a racist — you might want to soften that, and you might want to say a reverse racist,” Limbaugh said of Sotomayor on his show, alluding to the New York federal appeals court judge’s past statement that a “wise Latina woman with the richness of her experience would more often than not reach a better conclusion than a white male who hasn’t lived that life.”

Liberals, “of course, say that minorities cannot be racists because they don’t have the power to implement their racism,” Limbaugh said according to a transcript on his website. “Well, those days are gone, because reverse racists certainly do have the power. … Obama is the greatest living example of a reverse racist, and now he’s appointed one.”

Asked about Sotomayor’s remark Tuesday, White House press secretary Robert Gibbs said that “if you look at the context of the longer speech that she makes, I think what she says is very much common sense in terms of different experiences, different people.”

Limbaugh used the line to accuse Sotomayor of being a “party hack,” though the radio host conceded that she will likely be confirmed.

“The odds that she could be stopped are long,” Limbaugh said, before turning fire on moderate Republicans who he thinks will be “completely useless” in opposing Obama’s pick.

“When the rubber hits the road, such as in this nomination, where are these moderate Republican groups on the nomination? Where are the moderate senators? Where is Colin Powell? Where is Tom Ridge?” Limbaugh asked.

“I’m the one doing the heavy lifting. Colin Powell panders to moderate Republicans,” he said. “If the moderates in the Republican Party offer no way to address this danger, then they are useless.”

Ga Values

May 27th, 2009
8:57 am

I am not pro union in fact I made my living buying & putting companies into bankrupcy. Your headline should read Workers, taxpayers, bondholders and stockholders lose, lawyers win. Our current bankrupcy law is a way that much of the cost, pension guarentees & unemployment , are shifted to the taxpayer to the benefit of the vulture investor. Personally I would like to see the law changed so that secured creditors are seperated by their investment value. For example a bond hlder that bought $1,000,000.00 face value for $1,000,000.00 should be treated differently than a vulture investor who bought the same face for only $1,000.00. This won’t happen but I can tell you that there are going to be fortunes made by Lawyers in this mess. I have seen estimates that the total GM legal cost will be over $100,000,000.00 most of it coming out of the taxpayer’s pocket.


May 27th, 2009
9:13 am

Jim where do you get off with this comment………”The United Auto Workers, an extension of the Democratic Party”………

Today you showed you are a HACK……..a sad old worn Out REPUBLICAN….just like your party of thieves, that ripped off the country for WAR ! Cost Plus contracts you never said a thing about.

HA HA HA……… HA HA HA………..as your party become less relevant, you cry more and more !

Too bad Bush didn’t force the auto makers to create better cars through tougher emissions, and how about the tax credit for buying a huge SUV ?…..but hey you would say let the markets work it out, and of course the Bush family oil business was MORE important than America………. Now you are CRYING like a baby !


Is America better after 8 years of BUSH ?………answer NO……..are the American People better off with Republican’s in the White House ?……. answer NO……..

Go cry to mama Jim !!!!!!!!


May 27th, 2009
9:14 am

I get it JW….your anti-union. That’s fine…however I’m not much concerned with your average Joe getting ahead in his union job whereas you think that it is the root of the problem. But hey; if you want to try to stir up votes for the GOP by turning whats left of the middle class on each other… more power to you. The sooner we throw the last shovel of dirt on the republican party the better. Get some Libertarians in office folks.


May 27th, 2009
9:19 am

Copyleft wrote-
“And maybe the new administration is focusing its attention where it belongs: on the working class, not the wealthy.”

The working class better hold on to their wallets since the fed is focusing on them.

Redneck Convert

May 27th, 2009
9:21 am

Well, it figures Free Innerprize would get the shaft. The poor guy with only a few million bucks loaned to the co. gets next to nothing, while the UnPatriotic Unions make out like bandits. These union thugs caused all the problems and now they’re going to own a big chunk of the co. Meanwhile, the guys that loaned all the money to keep the co. above water will probly have to buy a real small yacht or cut back in other ways. It just ain’t fair.

Have a good day everybody.

Churchill's MOM

May 27th, 2009
9:25 am

Your link from the home page is screwed up AGAIN..time to retire.

Big Bucks GOP doing the Lords work

May 27th, 2009
9:27 am

Government officials in Britain and Germany indicated that they may
pony up emergency funding for Vauxhall and Opel, two General Motors
units currently on the block.

Big Bucks GOP doing the Lords work

May 27th, 2009
9:28 am

An affiliate of Harbinger Capital Partners won court permission on
Tuesday to try to reorganize the bankrupt copper miner Asarco, making
the hedge fund manager the third party trying to take control of the

Big Bucks GOP doing the Lords work

May 27th, 2009
9:29 am

Following a plan unveiled by Morgan Stanley last week, Citigroup and
Bank of America are likely to soon raise base salaries for investment
bankers to compensate for limits on annual bonuses,

Big Bucks GOP doing the Lords work

May 27th, 2009
9:30 am

JPMorgan Chase stands to gain $29 billion windfall as a result of an
accounting rule that allows it to transform the bad loans that it
purchased from Washington Mutual into income,

Big Bucks GOP doing the Lords work

May 27th, 2009
9:31 am

Banco Santander, which funneled $3 billion of its clients’ money to
Bernard L. Madoff, agreed Tuesday to pay $235 million to settle
potential legal claims by the trustee liquidating Mr. Madoff’s
now-defunct brokerage firm.

Big Bucks GOP doing the Lords work

May 27th, 2009
9:32 am

Lawyers for Fiat argued Tuesday that in taking over a bankrupt
Chrysler, it would be an unfair burden if Fiat had to be responsible
for product-liability lawsuits filed over vehicles built by the old


May 27th, 2009
9:39 am


We all know who Jim W…. is.
Who are you with all your expertise?


May 27th, 2009
9:47 am

Hey Lefty……… What is Jim W’s Expertise ? A Right wing hack ? Like Rush ?


May 27th, 2009
9:54 am

All I can say is that I hope all you people who think this is such a great deal for America enjoy the times ahead when Obama’s decisions mean that NO ONE will give you credit. You won’t be able to get a credit card or a mortgage without paying HUGE interest rates, because no one in their right mind would lend money knowing that Obama might randomly decide someone else is more important and give your investment away.

Besides which, how can you people not give the union any culpability when their pay+benefits makes it far more expensive to build a GM car than a Honda? There are two sides to every negotiation, and the UAW is every bit as responsible as management. The only folks not responsible are the investors, and they are the ones gstting screwed over. Even the government shares the blame for the fall of Detroit, with shortsighted regulations, and overly favorable union laws.

D. Sanchez

May 27th, 2009
10:01 am

Bailout 2008 by David Jeffrey

Like a bloodied warrior,
laying broken and torn.

Like a dying soldier, hopeless and forlorn.

But the blood, it be green,
the color of money.

And the soldier is an economy,
and it is anything but funny.

Broken are it’s people and shattered are their dreams.

Thanks to the ultra rich and their full proof schemes.

It is a tragedy with more pain to come.

Finance will be Hell, and their wills will be done.


May 27th, 2009
10:15 am

Government is taking over private corporations. That’s socialism, no matter how you spin it.


May 27th, 2009
10:15 am

I love this David Jeffrey poem!!


May 27th, 2009
10:16 am


I do not read Jay Bookman or Cynthia Tucker. I do not agree with their point of view.
If Jim Wooten’s point of view bothers you so much that you get irritated, why don’t
you give it a rest and read other columnist that you agree with?


May 27th, 2009
10:20 am

Hey Lefty you have an opinion great……so do others………


May 27th, 2009
10:20 am

Would someone please break down and get Jim an adding machine. This “fingers and toes” thing just doesn’t work with him.

Let’s see:
UAW- 20%
Bondholders- 10%
Gov.- 50%
Investors- 1%

Who get’s the other 19%?


May 27th, 2009
10:25 am

Ward: General Motors is NOT a private corporation. It is a publicly held corporation that WE, as taxpayers, are funneling BILLIONS of dollars in TAXPAYER money into, to keep it afloat. Maybe YOU don’t want something back for your investment but I sure do!


May 27th, 2009
10:51 am

Jim Wooten,

This I think is the substance of the new socialism. It’s the sludge that will drag us down comfortably. It’s Italy.

Tell me about it, Jim. I’m heavily invested in G.E. and therefore am scewed. All those of us who put our faith and credit into American industrial might are screwed. These no longer are agile companies in search of the next profit; rather, they are looking sluggishly not to offend Washington, DC. It’s written.


May 27th, 2009
10:53 am

“Ward”: General Motors is NOT a “private” corporation. It is a “publicly held” corporation that the US government is pouring BILLIONS of dollars into so it will not go under, taking the ecomnomy with it. Since some of those dollars are MY tax dollars, YES, I want the government to have some stake in it so they will have some say in how it is run. And (another) YES! I think my grandmother could run that place better than the people that have been running it! The whole world is churning out hybrids and other fuel efficient cars and GM is churning out SUVs.


May 27th, 2009
10:55 am

but still, mcgeybr,

You prove yourself a true socialist at heart.



May 27th, 2009
10:59 am

HA HA HA ……… Glen……..” This I think is the substance of the new socialism.”……. sure it is……but more likely the results of the last 8 years of terrible money management and made up WARS by Republican’s in the White House !

Who was the last Republican President to balanced a Budget ?


May 27th, 2009
11:05 am

Ward. That’s actually fascism, no matter how you spin it. Give Rush Beck a call and he can help you with your ism’s.

Road Scholar

May 27th, 2009
11:12 am

Limbaugh is in the same class as Colin Powell. Limbaugh resides under a rock.

Ward:”Government is taking over private corporations. That’s socialism, no matter how you spin it.” No, it’s crappy management by the Corp’s. Let GM fail; maybe Rush with his $100 million contract will support the workers?

Jim: Don’t like unions? No more OT, paid vacation days, health benefits, paid holidays… Oh you are retiring…You’ll only get health care if you pay for the ever increasing premiums! Do you think business gave those benefits because they are nice guys?


May 27th, 2009
11:22 am

It is a true shame that history is neither taught to/for nor understood by those who so gleefully, proudly and angrily advocate the demise of the capitalist investors. This is a pure and simple repeat of what happened during the last century. For the exact script, check Russia in the early 1900’s thru 1940’s, then Eastern Europe from the 40’s through the 70’s, from there creeping into Western Europe, and as our final prelude South America from the 70’s to the present.

All of you who favor the union’s getting favoritism, ask one question “just how many opportunities that lead to real jobs will the unions create?” The unions do not create real opportunity or real work that requires real labor – the core ingredients necessary for real jobs and the ability to sustain a respectable livelihood. Rather, the unions purely suck parasitically from those who create the jobs by investing capital and taking risk. Those who are such strong proponents of ‘workers rights’ eventually have one of two positions – well back in the bread line or trembling in the corrupt political ‘old comrade’ system of ‘toe the party line to get yourself taken care of, or be tossed out for the slightest misstatement.’

These are sad days and foretelling days. If the investors are not treated fairly by the rule of law – the law that says secured creditors come before unsecured creditors – then look out, your home is next. Make no mistake about this, comrade Obama will do to you whatever is necessary for the good of his state – the state that will create poor service, poor products, mediocrity and shortages.

After you get your way today, I suggest you start studying Chinese (multiple dialects). You will want to converse well with your supervisor and “boss” so you understand how he/she likes the toilets cleaned.

Slavery is a repugnant and distasteful term, heavily laden with historical and political significance in this country. Warm up to it. You are on the track to absolute subservience to the State.



May 27th, 2009
11:40 am

Some of those “evil, greedy” investors are members of state employees, teachers, and police retirement systems. Many made much less than the “poor” union employee. In many states state retirees do not get any medical benefits ect….only a small pension. Secured debt means when you invest money you should be paid first. That is why you invest it. This is called capitalism and it does work well if the government whould just back off.


May 27th, 2009
11:41 am

Would GM and Chrysler be in this mess if they made quality reliable cars that got great gas mileage? Nooooo blame the unions, the government, and Obama. Face it domestic cars suck.

Atlanta Native

May 27th, 2009
11:46 am

Regardless of your political leaning, the SECURED investors have a right to first dibs, because they are secured investors. That is the law. period.

Without the expectation of getting their rights as secured investors, lending will slow. When lending slows, workers get laid off.

Ignoring the rule of law may seem like a good idea at the time, but the law of unintended consequences will hurt across the board. Feel good regulation and legislation never turns out like one thinks.


May 27th, 2009
11:53 am

Socialist Workers of America STAND UP and count the blessings handed you by your
power-hungry prophet. Selective abortion rules.



This piece reminds me…..there’s an interesting series being run at Stratfor. All about Putin and “His” oligarchs.

Phil Dolan

May 27th, 2009
11:53 am

Wooten’s not retiring.


May 27th, 2009
11:58 am

Thanks for the great post Joe. I haven’t laughed so hard in months. I’ve just caught my breath.

It really is a great satire of the extremist wingnutter view, and excellent parody. Are you really Captain Freedom under a new name?

Welcome back Glenn. Guess you couldn’t stay away.

Road Scholar

May 27th, 2009
11:59 am

Phil, Why? You don’t suppose Bush’s deficit spending and tax cuts took too large a toll on Wooten’s retirement investments, do you?


May 27th, 2009
12:00 pm

The unions lost a contractual obligation and assumed the health care administration for its members to help both companies remain viable.

They agreed to lower pay scale and few worker protections.

I wish the media would have the courage to ask the Southern Senators in states where the automakers have moved en mass, what financial enumeration and investment strategies they have employed personally. Ask those same Senators what the average wage of the workers in those auto assembly operations what benefits the workers?

Road Scholar

May 27th, 2009
12:03 pm

Jackie, while you are asking, let’s ask what financial bribes, oh… I mean enticements did they make to attract those businesses? Or is it that southerners can be herded into jobs regardless of their benefits?

Algonquin J. Calhoun

May 27th, 2009
12:07 pm

Jim, the unions are here to stay! The automotive companies will become profitable again but no thanks to you. I bet you drive a Japanese car and hate American workers for having the intelligence to unionize. If you aren’t driving an American made automobile you are a traitor to the nation!


May 27th, 2009
12:18 pm

Economically ignorant sluts like CopyLeft and ncygaybeard are just scary. GayBeard thinks “publicly held” implies it’s held by the government. Well it is now but it aint supposed to be. It sure would be nice if their IRA’s were 100% in GM. Put their (lack of) money where their mouth is. Heil Obama! Right, you pathetic POS’s.


May 27th, 2009
12:23 pm

There is something so basicly unfair here that it stands out like a sore thumb.

Workers who got paid for their work in a company now claim to own part of it?

If you buy material and pay someone to build a house for you, does the man who did the building now own part of it? I don’t think so.

Labor unions were good when they worked to improve the circumstances of the workers. Now it seems, they want to run the company, not work for improvement.

You cannot have two managerial groups running a company. GM has proved that point. Foreign companies know that the owners run the company, not the workers. They are not going bankrupt.

I do not know how a judge came to the decision of giving away parts of a company to those that do not own it. I guess he had EMPATHY, a word we hear frequently these days. It is begining to sound strangely like”Take from the rich and give to the poor.” Maybe we should call that the CHANGE of America from a republic to a regime of empathic socialism.


May 27th, 2009
12:25 pm

Algonquin J. Calhoun said: “If you aren’t driving an American made automobile you are a traitor to the nation!”

Does this only apply to automobiles? Am I not given traitor status for my Japanese tv? my Swiss watch? my Cuban cigars (shh)?


May 27th, 2009
12:29 pm

Okay, help me get the language straight now. It’s “socialism” when unregulated CEOs run large corporations into the ground with bad decisions and personal greed, and beg the government to bail them out — in the interest of the working people — so the government does, with stipulations, in the interest of the working people.

So, what do we call it when CEOs whose best buddies ARE the government, get open-ended, un-audited, cost-plus big gub’mint contracts for years on end, emptying our national treasury into private pockets and offshore accounts, and then those CEOs move their HQs overseas to avoid taxes, and if you so much as say, “Wait just a darn minute, now…” you are called a TRAITOR and a lover of terr’ists? What’s the correct word for that?


May 27th, 2009
12:32 pm

When one group of individuals is given preference over another group, when the law states otherwise, it is obvious that anarchy and total collapse of modern life could follow.


May 27th, 2009
12:36 pm


May 27th, 2009
12:37 pm

Copyleft – I know this NEVER would occur to you, but maybe those investors are middle class folks, who actually thought about setting up a retirement plan and saved their money instead of counting on the government to take care them… silly people.


May 27th, 2009
12:44 pm

I happen to like this spunky column. In fact, I defy anyone to name a sentence in it that’s not true and to-the-point.