Tuesday, May 12, 2009

The Sack of Chrysler

"It is absolutely critical to follow [established, legal] priority rules inside bankruptcy in order to allow creditors to price risk outside of bankruptcy. Upsetting this fixed hierarchy among creditors is just an illegal taking of property from one group of creditors for the benefit of another, which should be struck down on both statutory and constitutional grounds.

"In a just world, that ignominious fate would await the flawed Chrysler reorganization, which violates these well-established norms, given the nonstop political interference of the Obama administration, which put its muscle behind the beleaguered United Auto Workers. Its onerous collective bargaining agreements are off-limits to the reorganization provisions, thereby preserving the current labor rigidities in a down market."

-- University of Chicago constitutional scholar Richard Epstein, on the Obama administration's misuse of the bankruptcy process to give a 55% stake in Chrysler to the UAW

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