Legal Commentary

When Debtholders Ask For Shared Sacrifice

By Big Tent Democrat

Why can there not be shared sacrifice from Wall Street regarding the financial bailout when GM bondholders are calling for it regarding the automaker bailout?

With a March 31 deadline for General Motors’s restructuring approaching, the ailing car maker’s bondholders are continuing to press their case to the public. In a letter to the Obama administration’s autos task force, the unofficial bondholders committee reiterated its argument that the pain in any restructuring of G.M. be shared by all of the company’s constituencies — or risk bankruptcy. . . . “It is unclear why it was decided that GM’s bondholders should bear the greatest risk here,” the letter reads. “Consequently, it is not surprising that others may be ready to accept a deal that severely disadvantages bondholders who had no role in crafting it.”

(Emphasis supplied.) I do not know enough about the particulars of the GM situation to say whether this is a fair complaint, but what bothers me is that the counterparties to the Big Sh*tpile are NOT complaining in the same way. You wonder why they aren't whining like this? Because Tim Geithner has their back. He should have the country's back. Therein lies the problem.

Speaking for me only

Full post as published by TalkLeft on March 22, 2009 (boomark / email).