Why Obummer stepped in and tossed Bankruptcy laws aside with GM.

Under a Chapter 11 bankruptcy the business can elect to void contracts which it deems to be injurious to the business or which the owners or managers believe would prevent a successful reorganization.  One of the principal reasons the auto industry was in trouble was …unions.  Over the years the unions had created an overwhelming array of benefits and wages that were killing the auto industry.  Some of these auto workers were making the equivalent of $75 per hour or more in wages and benefits.

As a result of the recession, and the burden of it’s current union contracts, General Motors was hinting at a Chapter 11 bankruptcy to reorganize.  The United Auto Workers Union was concerned that GM might use this bankruptcy to re-negotiate their contract, which would mean reduced pay scales and benefits.  The UAW went to Obama, reminded him of their support in the past election, and hinted that he might want to do something to save them.  BO acted quickly.  Not being a rule-of-law guy, Obummer tossed the Bankruptcy Code aside and told GM’s secured creditors that they were going to have to take a back seat to the auto worker’s union in a restructuring of General Motors. What’s more, instead of going through traditional bankruptcy reorganization procedures, the government was going to step in with a massive multi-billion dollar bailout in exchange for GM stock.  The bond holders, the SECURED bond holders, were told that they were going to have to sit back and lose money on the deal … and that’s just the way it was going to be. (Is this the new America?)

So .. just what did Obama accomplish?  At best, he saved the UAW.  If Obama had allowed the laws of this country to take their course, GM might or might not have sought court protection while reorganizing.  If GM had filed for Chapter 11 it almost certainly would have emerged, just as American and Delta Airlines did, a stronger and more financially secure company.  Obama did NOT save the auto industry.  The laws were in place that the auto industry – GM – could have used to save itself.  Obama intervened and saved his union buddies.  Anything else he tells us is plain old BULLSHIT......just like most everything else that comes out of his mouth.
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