Friday, May 01, 2009

Obama's "Unjustified" Returns

What's the difference between Chrysler and AIG? Financial institutions hold debt and other innovative instruments put out by the two firms. President Obama said in regard to Chrysler:

"Several major financial institutions led by JP Morgan agreed to reduce their debt to less than one third of face value to help free Chrysler from its crushing obligations."

"A group of investment firms and hedge funds decided to hold out for the prospect of an unjustified taxpayer funded bailout... Some demanded twice the return that other lenders were getting."

Ironically, as President Obama reaches out for direct talks with Iran, Chrysler debt holders weren't at the negotiating table. The Obama team used Goldman Sachs, JP Morgan, Citigroup, and Morgan Stanley to lever Chrysler investors. Bloomberg reported bondholders asked for $2.5 billion for their $6.9 billion in loans.

While under crushing obligations, AIG paid Goldman Sachs 100 cents on the dollar for certain investments. That was justified?

Chrysler debt holders asked for 36 cents on the dollar, which is "totally unjustified."

Unfortunately, the Obama administration spins as well as George W. "Now Change Means, No Change from W." Another thing is consistent, Goldman Sachs wins!

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