Financial Times – Debt holders move to block Chrysler’s restructuring
The Obama administration got Chrysler’s biggest creditors to sign off on taking huge losses from selling the failed company to the U.S. and Canadian governments, the United Auto Workers and Italian carmaker Fiat because the biggest creditors all happen to be government bailout recipients themselves.
But in bankruptcy court today, 20 other non-TARP creditors will be protesting the raw deal they’re getting by Obama circumventing the traditional bankruptcy process.
“The dissident non-Tarp lenders allege that Chrysler’s proposal strips them of their rights as senior lenders and ignores procedures set out in the bankruptcy code.
‘It is a sale that was orchestrated entirely by the Treasury and foisted upon [Chrysler] without regard to corporate formalities, the fiduciary duties of [Chrysler’s] officers and directors, or the other important checks and balances typically found in good faith sales,’ they said.
‘The government exerted extreme pressure to coerce all of [Chrysler’s] constituencies into accepting a deal which is being done largely for the benefit of unsecured creditors at the expense of senior creditors.’
Court documents also shed new light on the scale of Chrysler’s financial plight. The company posted a loss of $16.8bn last year on revenues of $48.5bn. It had assets of $39.3bn on December 31, and liabilities of $55.2bn. This year’s loss is projected at $4.7bn.”
Bloomberg – Fed Stress Test Results May Show 10 U.S. Banks Need Capital
Monday was the good news day – the Obama administration said that the remains of the $700 million TARP program would be sufficient to meet the needs of the 19 big banks being stress tested. Treasury officials also indicated that the banks might not need any immediate taxpayer cash dumps to remain solvent.
Today, it’s a little more complicated. When Federal Reserve officials roll out the stress test results this afternoon, they are expected to say that 10 of the 19 need more capital and suggest a variety of ways to do it.
“Financial shares jumped the most in almost a month yesterday on optimism about the tests. The Treasury and regulators have presented different options for the banks to shore up their books without taking taxpayer money, including selling assets, seeking private capital and converting previous government investments from preferred to common shares.
‘Maybe the capital that’s required from these tests is going to be smaller than the market had been anticipating,” said Blake Howells, an analyst at Becker Capital Management, which oversees $1.7 billion in Portland, Oregon, and owns shares of U.S. Bancorp and KeyCorp, referring to the stock rally.
Still, ‘for the stress test to have any sort of legitimacy, some of the banks are going to have to raise capital,’ he said.”
Washington Post — Democrats Seek More Interrogation Documents
Rep. John Conyers, D-Mich., and other House Democrats are proceeding with their probe into Bush administration anti-terror practices.
This comes as sources inside the Justice Department tell writer Carrie Johnson that the Bush lawyers who wrote the memos detailing what kind of interrogation tactics could be used on terrorists must decide whether to respond to a secret probe underway there.
The first draft of the Justice report included the possibility of disbarment for the lawyers.
But out in the open, it’s all about a following the paper trail in Congress – especially to the memo that allegedly rebutted the Justice memos that have so inflamed liberals.
“The memo’s author, former State Department counselor Philip D. Zelikow, wrote on a Foreign Affairs blog last month that he dissented from conclusions by the Justice Department Office of Legal Counsel four years ago that the methods were legal. Additionally, he wrote that unnamed White House officials at the time ‘attempted to collect and destroy all copies of my memo.’”
New York Times — Schumer Offers Middle Ground on Health Care
Everyone on Capitol Hill seems to agree that there will be a health care plan passed this year. What has been less clear is whether the plan will include – as candidate Obama promised – a new government-run insurance program or simply be an expansion of existing programs like Medicare and Medicaid combined with new rules for who private insurers must cover.
Sen. Chuck Schumer is proposing a compromise that would have a public component but subject the new federal insurance venture to the same arduous regulation process as its private counterparts.
But as writer Robert Pear points out, with the Senate Finance Committee taking up the matter today, many would be happy with the traditional answer of more spending and more regulation – especially since the insurance industry isn’t complaining.
What Schumer and others hope to do is shift the discussion.
“Democrats in Congress hope to shift the debate from the question of whether to create a public health insurance plan to the question of how it would work.
In so doing, they look for the support of influential moderates. But in the last few days, three moderate senators — Ben Nelson, Democrat of Nebraska; Olympia J. Snowe, Republican of Maine; and Arlen Specter of Pennsylvania, who switched parties to become a Democrat — have expressed reservations about a public plan.”
Washington Post — Murtha’s Nephew Got Defense Contracts
Earmarker extraordinaire John Murtha says he has no control over defense contracts, even though his Western Pennsylvania district has been heavily favored by contractors who receive his earmarks. But now we learn from writers Carol Leonnig and Alice Crites that the coincidental success with defense work of those around Murtha extends to his nephew, who runs a chemical warehouse in suburban Washington that took in $4 million from the Pentagon last year. Robert Murtha Jr., son of the congressman’s lobbyist brother, The company, Murtech, got most of the work on a no-bid basis.
It’s just the latest chapter in the expanding ethics cloud around the Pennsylvania Democrat.
“Murtech also was awarded a large piece of military business in September, as part of a contract for detection equipment awarded to ICX Technologies, a client of the lobbying firm PMA Group. PMA founder Paul Magliocchetti is a close friend of John Murtha’s, and his firm’s clients were highly successful in securing hundreds of millions of dollars in defense earmarks from Murtha. PMA is under federal investigation for its campaign donations to Murtha and other lawmakers.”
