The Obama Administration continues to go after those evil corporate speculators:
Individual investors holding General Motors Corp. bonds won’t get a vote on the revised debt-swap offer unveiled by the Obama administration today, and would have to wait for bankruptcy to pursue any objections.
About one-fifth of the $27.2 billion in unsecured GM bonds that the government wants to cancel were sold to thousands of individual investors. A group representing some of those investors rejected today’s offer and vowed to fight it in court, saying it still gave the UAW a far better deal than other creditors.
Well, if by “speculators” you mean small, individual investors. But it’s not like the President has a choice:
“Once you get past the top 25 or so bondholders, the size of the holding drops off dramatically,” said a senior administration official speaking on condition of anonymity. “There are many, many, many small bondholders here, and they have to simply rely on contacting steering committee members or other sources for their information. It’s not practical for us to deal with them individually.
Indeed. Best then to screw them collectively.
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7 Comments
1. Beth Donovan:Sigh.
There has to be something that can be done to stop this madness. And the damned Republicans bicker with each other like middle-school-aged girls.
If it would not hand the next Congress to the Dems, I’d say – time for a third party.
But that will guarantee us more Obamanomics and Rev. Wright’s wish of G*d-Damn America, because that is exactly what Obama is doing – damning us to a third world existence.
May 28, 2009 - 4:45 pm 2. frank martin:any idea what the political affiliation is of the 25?
May 28, 2009 - 8:02 pm 3. jon:Someone is going to get screwed, but I have a hard time coming up with a whole lot of sympathy for those bondholders. All those years of hearing about how they shouldn’t be taxed for capital gains at the same rate as people who work for a living has made me realize that it’s about fucking time that that “risk” they used to justify that difference probably should bite them on the ass in this instance. GM was a bad investment, and the government is being told that millions of jobs are less important than bond portfolios?
I’m empathetic to their plight, but I’m not sympathetic. Yeah, yeah, I’ll hear about confidence in the markets. But I think saving literally millions of jobs is a bigger confidence-builder than bailing out billionaires. It would be nice if we could do both, but it was the billionaires that got themselves into this mess. Bad investments have consequences.
May 29, 2009 - 5:40 am 4. Stephen Green:Jon –
Under the law, bondholders get theirs back first during bankruptcy. Stockholders get equity (and decision-making power) in a corporation; bondholders don’t. What they get instead is, security. If a company goes tango-uniform, bondholders get paid first, for the reasons just described.
Their security has been taken away, by fiat, for no reason other than other people — who did have a say in the performance of the company — are more politically connected.
Sorry, but your bitterness is misdirected and sadly ignorant.
May 29, 2009 - 6:41 am 5. rbj:Um, Jon, capital gains refers to stocks, specifically increase in value of stocks. It does not refer to bonds. A bond is essentially a loan of money.
Oh, and a lot of bond holders are small investors, not millionaires or billionaires.
May 29, 2009 - 8:27 am 6. McGehee:And you wouldn’t be wrong — but as Stephen and rbj have already pointed out…
May 29, 2009 - 8:49 am 7. Vodkapundit » Money Money Money:[...] bring him up because one of my regular readers – and a smart guy, too – had this to say about GM’s bondholders getting screwed by the President: Someone is going to get screwed, but [...]
May 29, 2009 - 9:55 amSorry, comments for this entry are closed at this time.