June 7, 2009

Politicizing the Automotive Bankruptcies

Uh oh. Chrysler's debtors are taking the bankruptcy proceedings to court on the basis that they were preferred creditors and they got less than the auto workers did, so they feel that it is an unfair bankruptcy. They feel the Executive branch of the federal government - the Obama administration - used undue influence to set the conditions of the managed bankruptcy in favor of those it favored.

It further politicizes the bankruptcy/bailout proceedings that President Obama politicized in the first place by trying to control the entire process. This is something that should not have been politicized in the first place. But now that it has been, there's no going half way.

It's a parallel to selectively releasing Guantanamo 'torture' information. The President wanted to release the bad details there but not the whole story. Withholding some of the truth is tantamount to lying. In the case of the Chrysler bankruptcy, there's no half way either. Since it's been politicized to benefit one group over another, there's no shame in the injured party trying to defend its interests in a court of law.

There are other aspects to this story now. For example, the Chrysler situation might serve as a test case for the GM situation. Obviously everyone involved has a vested interest in seeing specific outcomes. The outcome could indeed impact the eventual sale of Chrysler to Fiat.

But don't count on anything happening to derail this deal. While it's going to go to the supreme court, it's not going anywhere, despite the frequent split court. Why? The primary review will be managed by Justice Ginsberg, who doesn't need to bring it before the entire Supreme Court. She can decide on her own how to deal with this issue.

Ginsberg? This is going to go nowhere. Well, it was a nice try.

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