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
3:52 pm


I am leaving but what is small to you is bigger to me because I am not as politically correct as you. When playing cards, a spade is a spade and not the Queen of hearts. I try to see things as they are.

I don’t like insults to our American troops.

I don’t like defenders of the law who believe that empathy is a better basis for law and order than executing the law as written. Empathy should come in the making of the law, not delivering it.

I don’t like skin color or upbringing as a vital issue for selecting a judge in the Supreme Court of our land. They may be an influence but they are not standards for excellency.

As to immigrants, I don’t have to think of ancestors. I can think of my family. We have a much beloved first generation immigrant who is legal and a fine character and a great addition to family and country. If I were a lawyer, should I consider my family experience or should I consider the law? I think the law should be first and foremost. Unless something has changed, illegal is still illegal.

Now, I am really gone for the day. Stay sober and sensible if possible.


May 27th, 2009
4:47 pm

The right continues to foist the notion that the ‘free market’ can provide for the healthcare needs of our society and that universal coverage is nothing more than veiled socialism. The current plight of the automakers highlights the fallacy of this ‘right’ thinking. Why should it be the responsibility of business/industry to provide for the healthcare needs of American workers; what made it their responsibility? This only places an onerous burden on the business sector which in turn continues to erode its’ ability to compete in a global market where other governments have stepped up to the plate and shouldered this cost without burdening the business sector. Thinking right has never been more wrong.


May 27th, 2009
5:26 pm

Do you ever get the sense that when Dusty is riding her high horse, she is hanging on by the tail and taking on huge draughts of processed equine food? What ponderous nonsense, what empty umbrage against the imagined slights to her cherished tropes. What an examplar of feeling over thought, of imagination over fact. What utter bullshyte.

Why, some of her best friends are immigrants!


May 27th, 2009
5:32 pm

What kind of pu$$y minded President even worries about things such as empathy, anyway?

This one:

George HW Bush, July 2, 1991:

“I have followed this man’s career for some time, and he has excelled in everything that he has attempted. He is a delightful and warm, intelligent person, who has great empathy and a wonderful sense of humor. He’s also a fiercely independent thinker with an excellent legal mind who believes passionately in equal opportunity for all Americans.”

What a hippie. And he said it while he was introducing someone who went to an Ivy League school under affirmative action codes. Stupid hippie.


May 27th, 2009
7:12 pm

Over the last 20 years I have been investing a portion of my hard earned money in a 401K. Because of rampant mismanagement and corruption in the financial sector I have lost 34% of what I invested. Who is crying a river over that, Jim?


May 27th, 2009
7:22 pm

Another d@mned hippie caterwauling about “empathy”:

Republican Senator John Danforth on Clarence Thomas on July 16, 1991: “His empathy is with the disadvantaged people of this country. He would bring a perspective to the Supreme Court which nobody else brings.”

Fu(|3ing Hippie.


May 28th, 2009
12:35 am

You know who actually won? The people at other car companies; Nissan, Honda, Toyota, etc… They decided a while back to work on the quality and fuel mileage of their vehicles. American motor companies dug the hole for themselves and refused to try and dig their way out. Instead, they relied on the American Taxpayer, who they have been ripping off for years, to bail them out. I say to hell with them, let other up-and-coming automakers take over their places in the market after learning lessons from their demise. The jobs will be transferred to other areas and other automakers…It may take a couple or so years, but it will fix itself. We are to the point that other companies cannot come up because the big companies keep them down… Let them have their chance. If the big 3 really wanted to keep their places in the industry, they would have done whatever they needed to do so… Including bankruptcy.


May 28th, 2009
7:07 am

They removed Barr’s link to his anti drug prohibition editorial and replaced it with a second link to Wooter’s whining. I guess freedom is too controversial for the AJC.


May 28th, 2009
7:35 am

Some random thoughts here (I haven’t had my coffee yet).
Clyde: It was Bugs, not Daffy. I was in a union back in the 70’s
working for Ma Bell. We went on strike for a raise in pay and other
benefits. I lost hundreds of dollars while on strike and when it was
over, I figured it would take me 30 years to get that money back, IF
we never went on strike again. Also I lost more money to the union
because my dues went up because my pay went up! Now, that being said,
the really sad part is that Unions are still necessary because “Big
Business” will not deal fairly with its workers. If honest and fair
negotiations would take place between management and the work force,
no unions would be necessary.
Hmmm, but “Big Business” and fairness…It’s a good thing I believe
in Never, Never Land.


May 28th, 2009
8:24 am

Munch, I’m loving your exposure of the right-wing’s hypocrisy on all the stuff they suddenly find “unacceptable” now that it’s coming from a liberal speaker!


May 28th, 2009
8:28 am

where will the workers work if the investors don’t invest??


May 28th, 2009
8:48 am

Can anyone name me a company that has been successful that used Union workers? I can not come up with one. I know union workers get higer pay for less work.

Their quality of work is really never publicized. The only union workers I know bankrupted the business that is near us.

Oh well, why pay a man $18 an hr to hang 80 lights when you can pay a union work $25 an hr to hand 40 lights. Can not work to hard because it is a safety hazard–right.

Buzz G

May 28th, 2009
9:00 am

The real loosers are the taxpayers. The tile should have been: Unions Win, Taxpayers Lose.


May 28th, 2009
9:20 am

Please do more research on this topic and how bankruptcy works in general. You don’t completely understand the topic and your article reflects it.

William H. in Lithonia

June 5th, 2009
10:28 am

Unions were the biggest part of the Golden Age of the American middle class. So was government spending with the GI bill, infrastructure investment and corporate tax rates of 90%. Since the Reagan Religious Bigot revolution, we’ve seen a growth in prisons and national debt while we’ve experienced a deterioration in wages, education and unions.

I guess republican religious bigots just yearn for the good ole days of economic feudalism and religious inquisitions from thier city on a hill, but I don’t.

William H. in Lithonia

June 5th, 2009
10:30 am

60% of bankruptcies are due to health care emergencies. I guess republican religious bigots yearn for the good ole days of leeches and witch doctors where hospitals were places for people to go and die with no hope of getting better.

William H. in Lithonia

June 5th, 2009
10:34 am

I’d say the taxpayers loose when their wages are cut more than when they pay taxes for benificial government services.

Yet republicans not only cut taxes on the rich, they’ve put us in debt when the economy was good, they’ve redirected government spending on counter-productive drug war prisons (50% of your local taxes go to jails – 90 Billion nationally to the drug war). Health care and energy costs have eaten up any raise we may have gained, yet the republican answer is more war and debt.

Republicans are simply traitors to this country, to humanity, and to the god they claim to kill in the name of.

Pubs=Pscych Talk

June 8th, 2009
7:12 pm

Wooten be all confused and Ruthie the G. one of the few Supremes with real litigation experience has done stayed the bankruptcy. That ain’t a bad thing considering how the Republicans at Cerebrus have been screwing you and not the unions.

He also ain’t been listenin’ to his honey the fired Van Sustren on his favorite TV station Faux News.

Bush and Paulson gave a sweetheart deal to Cerberus run by their Repubilcan cronies who are steaing your tax dollars.

To quote blogger Marcy Wheeler who comes armed with a Ph.D. in Poly Sci from the University of Michigan–it ain’t McRae JawJaw or even Athens, but what the hell:

“He did so in two ways. First, in Christmas week negotiations that no one followed, Bush allowed Cerberus–and not Chrysler–to negotiate the terms of the December loan to Chrysler. And then Bush gave Chrysler just $4 billion–much less than Chrysler said it needed to survive those three months (by comparison, Bush gave GM more than they asked for). And even though Cerberus (and not Chrysler) negotiated that loan, Cerberus was barely on the hook to pay any of that money back. Given that Cerberus was trying to dump Chrysler on the UAW and bondholders at the time, the arrangement seems designed to drive Chrysler into liquidation without Cerberus losing much more on the deal.

And while Bush couldn’t find time to negotiate some kind of way forward for Chrysler (which Bush seemed determined to kill) or GM (which we know he was determined to keep alive for 90 days so Obama would have to deal with it), he did find time to negotiate bank status of GMAC in the last days of December last year. Now, Cerberus had to dole out 36% of its ownership stake to its members. And the deal–along with the financing it freed up for GM–did help the company’s sales at the end of last year. But Cerberus got to start sucking the federal teat just before its buddies in the Republican party turned over control of that teat to Democrats.

So it’s not just that Bush left a crisis for Obama to deal with–that I’m not so bummed about, because Obama’s team has proven way more competent to deal with it than Bush’s was. But Bush picked and chose which crises he’d address, and just happened to choose to solve Dan Quayle’s and John Snow’s crisis rather than Main Street’s.”

Uncle Cheney–Wooten can spell Cheney but not Cerberus and neither can ole AJC–stated yesterday that Bush punted the auto crisis as well as every other Rethug screwup to Obama after they gave Cereberus a sweet deal.

CHENEY: Well, I thought that, eventually, the right outcome was going to be bankruptcy. … And the president decided that he did not want to be the one who pulled the plug just before he left office.


CHENEY: Well, I think he felt, you know, these are big issues and he wouldn’t be there through the process of managing it, but in effect, would have sort of pulled the plug on GM and that was one of the first crises the new administration would have to deal with. So he put together a package that tided GM over until the new administration had a chance to look at it, decide what they wanted to do.

VAN SUSTEREN: But it’s cost us billions to get — I mean, you know —

CHENEY: It has. … And now the government owns a big chunk of General Motors. That bothers me. I don’t like having government own those kinds of major financial enterprises. I think it’s — it does damage to our long-term economic prospects when we get government involved in making those kinds of decisions.

The unions hardly control the auto companies at this point in time. That analysis is worthy of a Mac Rae, Georgia middle school student. and Wooten must be wistfully chanelling his youth.

One phrase that hasn’t entered Jim Wooten’s written vocabulary or those of any conservative columnists or bloggers or for that matter the AJC’s now vastly diluted paper although Wooten knows something about them is Cerberus Capital Management. Cerberus Capital Management, an equity holding firm in NYC, is the Republican controlled owner of 80% of Chrysler. Chrysler represents between 7-8% of Cerebrus’ financial holdings. Dan the Quayle is a Director of one of their international units and one of their spokespeople, with the communicative skills of a block of granite.

Like most conservative Rethug organizations, including the murders at Blackwater, they like naming themselves from monsters of mythology. Cerberus was the 3 headed dog who guarded Hades. After extensive research, it’s my information that most dogs have one head, as do most but not all people.

In 2006 Cereberus’ holdings were a little more than your valet parking at midtown or Buckhead for a night; they were $24 billion. Notable Cereberus principles/partners are John Snow, Bush’s 2nd Treasury Secretary, J. Ezra Merken, a major facilitator of Bernie Madoff’s Ponzi scheme shunting hundreds of millions to ole Bern who is now the target of multiple class action suits in the S.D.N.Y. and should have been indicted long ago with Madoff’s wife, brother, sons, and neice by the aces at DOJ.

Summarizing the wiki on ole Cerebrus–

Merkin’s Gabriel fund invested $79 million in Chrysler, $66 million in GMAC and $67 million in Cerberus partnerships, according to year-end statements.

In 2007, Cerberus and about 100 other investors purchased an 80% stake in Chrysler for $7.4 billion. Cereberus has refused to use a penny of its billions to help Chrysler, because rich Republicans have always had their hand out for bailouts while denouncing them out of one side of their mouths.

Currently Cerberus Capital Management will lose its equity stake and ownership in Chrysler as a condition of the Treasury Department’s bailout deal, but Cerberus will maintain a controlling stake in Chrysler’s financing arm, Chrysler Financial. Cerberus will utilize the first $2 billion in proceeds from its Chrysler Financial holding to backstop a $4 billion December 2008 Treasury Department loan given to Chrysler. In exchange for obtaining that loan, it promised many concessions including surrendering equity, foregoing profits, and giving up board seats. Cerberus acquired 51 percent of GMAC, General Motors’ finance arm, in 2006 for $7.4 billion However, on December 29, 2008, the U.S. Treasury gave GMAC (Cereberus owns 51%) $5 billion from its $700 billion Troubled Asset Relief Program (TARP).

Cereberus, one of the most secretive holding companies in the world, recently spent $7million to hire Quayle, John Breaux former Dem Sen from La., and former Bush legislative liaison David Hobbs to get $7.5 billion handout from your bank account from the auto bailout, and they already have gotten an $8.5 billion loan from Obama-Salazar energy.

Henry Paulson handed over billions to Chrysler–can you spell Bush-Cheney?

There are dozens of eliptical well camouflaged connections between Goldman-Sachs (Paulson’s former company) and Cerebus.

In short, you’re being ripped off by Cerebrus courtesy of the Bush administration as well as Dem lobbyist former La. Sen John Breaux, and several Republican lobbyists including the former VP and former Treas. Secretary.

Wooten doesn’t seem to be able to shed light on this connection, nor does the Julia Wallace deteriorating AJC. Ole Bookman is asleep at the switch as to Cerebrus as well, still smarting from being kicked off the editorial board and having his columns cut to 2 per week by Wallace and Cox.

One magazine reporting on Nardelli’s testimony said that Nardelli’s vaguely stupid answers to committees on the Hill where he appeared was “my three-headed dog ate my homework.”

Nardelli, he of the two multimillion dollar homes on Garmen Road in the head of the Buck, is screwing you out of your tax money and you’ll never see it. It is helping to finance his luxury life. Nice going sucker.

Cerebrus’ company Chrysler Financial refused $750 billion in TARP bailout money when they found out their would be limits on exec compensation. They hardly needed that money.

[...] is it that unions win so big, while investors lose so big, in these government [...]


June 18th, 2009
6:05 am

Hello everyone!
This evening I have found a very cool video about the office workers everyday life.
I recommend this for all to raise your mood.
I helped))
You can watch this toon <a href=http://www.youtube.com/watch?v=ZcmPOwpL9HI

Dont worry – be happy))