On Cramdown Tactics
Tom Blumer, in the WSJ, says, “Non-TARP Lenders Aren’t Making Up the Stories of White House Pressure,” citing conversations with anonymous Non-TARPies. According to these former holdouts, still masked and anonymous due to fear of reprisal, government officials went to the mats to pressure bondholders into compliance. Seeing as the group has dwindled from twenty to five since Obama called the group “hedge fund holdouts,” these tactics seem to have been highly effective. GM bondholders, pay attention ( if you aren’t already).
According to Blumer,
One person described the administration as the most shocking ‘end justifies the means’ group they have ever encountered. Another characterized Obama was ‘the most dangerous smooth talker on the planet—and I knew Kissinger.’ Both were voters for Obama in the last election.
One participant in negotiations said that the administration’s tactic was to present what one described as a “madman theory of the presidency” in which the President is someone to be feared because he was willing to do anything to get his way. The person said this threat was taken very seriously by his firm.
In less depressing Chrysler bankruptcy news, the government has provided Chrysler with $3.034 billion in DIP financing instead of $3.34 as had earlier been anticipated. Why? According to the WSJ, “Chrysler had some remaining cash, which enabled the government to slightly scale back the aid to $3.034 billion.”
More by Edward Niedermeyer
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