President Obama and the "New Villains"

When President Barack Obama framed Chrysler's decision to file for bankruptcy as the most rational, painless route for the automaker yesterday, he also made it clear that it was the only option left. He went on to blame those who held out for "an unjustified taxpayer-funded bailout": the group of hedge funds and investment firms that refused a deal offered by the Treasury Department.

I suppose it escaped the president's attention that these villains were holders of collateralized debt obligations and Chrysler bonds and their investors would doubtless fare better in a bankruptcy proceeding than they would by accepting the administration's offer of approximately 33 cents on the dollar. That offer was accepted by Goldman Sachs, Citigroup, JPMorgan, and Morgan Stanley, all beneficiaries of the Troubled Asset Relief Program. Moreover, a bankruptcy will enable Chrysler/Fiat to shed most of its dealer network, its union contracts and dump their unfunded pension liabilities on the PBGC. But, what the hey! The unions now own fifty-five percent of the new venture!