White House Gives the Go Ahead to Waterboard Bondholders

by David Cribbin, President of the Tailwind Capital Group, NetRight Nation: If water-boarding of terrorists is torture and as a result criminal, why is it that the financial equivalent of water-boarding is now routinely practiced not by the CIA on terrorists, but by the White House, Treasury and The Fed on bondholders, investors and CEO's. Water-boarding was part of the enhanced interrogation techniques the CIA used to extract information from enemies of the United States. Enhanced interrogation techniques are performed outside of the normal interrogation process that is used on enemy combatants. When the government chose to restructure the failing automakers outside of the normal process (a bankruptcy proceeding is the normal process when you are insolvent) they did so for a reason, and last week that reason became crystal clear.

Keeping the automakers out of bankruptcy, and thereby removing the necessity that the restructuring move forward based on "The Rule of Law", was paramount if the Unions were to have any hope of securing the payment of their unsecured VEBA health care trust claim. A big win for the politically savvy and well connected UAW, but a terrible loss for the bondholders and taxpayers who will foot the bill. Only in the political arena could two unsecured creditors receive vastly different treatment, as have the Bondholders and the Unions. The UAW, whose unsecured VEBA is owed $10 Billion by GM, will receive 39 percent of the GM stock; the Bondholders, who are owed $28 Billion, will receive 10 percent of GM stock . Do the math: the Union has received 10 times what the government expects the bondholders to take in this restructuring.

In the Chrysler deal, the Union fared even better, as they were unsecured creditors and the Chrysler bondholders were secured creditors. The bondholders received 28 percent of the value of their $6.9 billion in bonds in cash; the Union will receive stock worth approximately $4.2 billion, and a note for an additional $4.58 billion, which represents 82 percent of the value of their claim. Either the government negotiators have dyslexia and have made a terrible mistake in their paperwork, or this is political payoff WRIT LARGE. Is this not the equivalent of financial water-boarding?

And thus we enter a brazen new era of government, when the White House is openly complicit in the theft of - as a matter of fact is directing the looting of - private property from investors. Welcome to the Rule of Man, or as the President calls it, change we can believe in! Where campaign contributions mean everything and the rule of law, not so much. Exactly what did he mean when the President of the United States said, "Let me be clear. The United States government has no interest in running GM. We have no intention of running GM." Apparently he meant it's not an interesting job, but we are going to do it anyway!

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Tags: bankruptcy, Barack Obama, bond holders, Chrysler, CIA, General Motors, GM, grand theft, labor unions, looting, NetRight Nation, Obama administration, UAW, waterboarding To share or post to your site, click on "Post Link". Please mention / link to the ARRA News Service. Thanks!