RUSH: Let’s go back to me on this program on Friday. I made this prediction.
RUSH ARCHIVE: So here’s the money question: Did the big banks decide, out of the goodness of their hearts, to go along with Obama and settle for pennies on the dollar, or did they do it — There’s three possible reasons. They did it out of the goodness of their hearts. They did it because TARP money was sent to them under the table to cover their losses. We’ll never know if that’s the case, but it’s a good bet. Maybe they didn’t suffer losses. Maybe the big banks didn’t really — remember, these guys all voted for Obama. Public consumption is everybody took a bath and that’s what makes the deal fair, everybody sacrificed, except the UAW, Obama’s real friends. The third possibility to explain why the big banks rolled over is they’re just scared to death because the Obama administration, Treasury department, has their future in his hands. So, of the three possibilities: goodness of their hearts, they got secret slush money under the table from TARP, or they’re scared to death because the Treasury department holds the future right in their hands. I vote option three. I vote that the big banks rolled over ’cause they’re scared to death ’cause wherever I go, I don’t care who I interact with, they’re scared to death of this administration.
RUSH: And now we know, ladies and gentlemen, I was right. Now we know beyond a shadow of a doubt I was right. Option number three, they are scared to death. My buddy Frank Beckmann at WJR in Detroit interviewed one of the bankruptcy lawyers for one of the bondholders at Chrysler, one of the clients. His name is Tom Lauria. Tom Lauria said, ‘Let me tell you, it’s no fun standing on this side of the fence, opposing the president of the United States. In fact, let me just say, people have asked me who I represent. That’s a moving target. I can tell you for sure that I represent one less investor today than I represented yesterday. One of my clients was directly threatened by the White House and, essence, compelled to withdraw its opposition to the Chrysler deal under the threat that the full force of the White House press corps would destroy its reputation if it continued to fight. That’s how hard it is to stand on this side of the fence.’ And Frank Beckmann said, ‘Was it Perella Weinberg?’ Lauria says, ‘It was Perella Weinberg.’ Now, this happened on Friday in Detroit. It’s made the news throughout the weekend. Now, the White House, by the way, is denying all of this.
But there’s a pattern here, ladies and gentlemen, that sort of gives the lie to the denial. We’ve referred to the situation that’s going on in Washington as loan sharking, Obama loan sharking people. Basically what happened was, as we mentioned last week, the bondholders, the investors at Chrysler were leaned on by Obama and called out personally by the name of hedge funds, and they were selfish and they were holding out for a better deal. These people were forced to settle for 20 to 30 cents on the dollar while the UAW was made whole in the whole thing, and the lawyer, Thomas Lauria, now says that his client was threatened with reputation ruination from the White House press corps. There’s no question that there is fear all over this country of this administration. There’s fear in American business; there’s fear in average citizens; there’s fear in every aspect that does business one way or the other with the United States government now. The fear that the average American has always had of the IRS has now been transferred to everybody having fear of whatever branch of government they deal with — in this case, Geithner and Treasury and President Obama.
Now, who is this lawyer, Thomas Lauria? Thomas Lauria is the head of a bankruptcy group at White & Case, the law firm. He is a Democrat who contributed $10,000 to the Democrat Senatorial Campaign Committee in 2008. He voted for, he contributed to the very regime that he brought to power that is now wreaking havoc on his clients and threatening them with reputation ruination. But because he’s a Democrat and gave ten grand to the Democrat Senatorial Campaign Committee he’s got some credibility here, does he not? He’s got a little bit more credibility than the White House spokesman. What did the White House spokesman say? ‘There’s no evidence.’ Well, what’s Lauria? Is he lying? ‘Well, he’s a lawyer, Rush.’ But he’s also a Democrat lawyer and gave big money. So on Friday, I predicted to you exactly what was going to happen, why’d they roll over, because they’re scared to death. And here’s a lawyer now saying (paraphrasing) ‘The Obama administration came to us and said, ‘If you don’t go along with this deal we’re going to ruin the reputation — we’re going to get the White House press corps.”
Now, I imagine in the old days, if the old days, if something like this were reported, let’s say President Nixon or President Reagan had promised the White House press corps was going to destroy an American bank or financial institution, the press corps, when they heard about that, whether it was true or not, would be outraged, they would be screaming to high heaven about this. You tell me, but I haven’t heard any quips. I haven’t heard the Drive-Bys be upset about this. I frankly think that they could probably be used without them even knowing it. But I also believe that they could be enlisted for a cause like this with their knowledge at the same time. So they’re probably flattered. ‘Oh, Bam wants us! Our president wants us to help advance his agenda by destroying that hedge fund? Oh, we’d be happy to. Why, we’ll be happy to do our patriotic duty.’
RUSH: Let’s stick with the theme here. Let’s listen to what’s being said about President Obama targeting hedge funds last week when he announced the Chrysler bankruptcy, and he blamed other people for being selfish and some people being selfish and some people not willing to sacrifice. This whole theme of ‘sacrifice’ just infuriates me, because sacrifice is not what builds greatness. Sacrifice did not build America. Shared sacrifice is nothing more than liberals and class envy and the redistribution of wealth. That’s all it is. But it’s one of those magic words. Fairness is another magic word. ‘Sacrifice! Yes, we all must sacrifice.’
Why? What’s the self-interest in sacrifice? What does sacrifice advance? What does it advance? It doesn’t advance anything. You may be thinking of something else than sacrifice. If you give up something that you don’t need to somebody else who needs it, maybe you can call it sacrifice. If you give up something you need to somebody who needs it, that’s not sacrifice. You’re only setting yourself back. Anyway, that’s a sidetrack I don’t mean to get into now. It’s for sometime later. George Stephanopoulos, the roundtable on his show on ABC yesterday morning, they were talking about the White House threatening the hedge funds. Here’s Gerald Seib of the Wall Street Journal discussing the Chrysler deal.
SEIB: In the White House, people are sort of liking the president’s willingness to use the bankruptcy threat and follow through on it here to Ronald Reagan’s firing of the air traffic controllers; to say that you show toughness, it has an effect on the immediate situation, and it has a ripple effect down the line; that it makes people realize you’re willing to do tough things.
STEPHANOPOULOS: The hedge funds may be even less popular than the air traffic controllers were! (cackling)
SEIB: (cackling) That’s almost certainly true.
RUSH: They laugh about it. Okay, so Obama can get away with this. Again, who do they compare him to? Reagan! It’s amazing how much the left and the Democrats compare themselves to Reagan, and a lot of people on our side want to forget Reagan. Jeb Bush is not one of them, by the way. There’s a headline associated with what Jeb Bush said that’s misleading. It’s not really accurate. Jeb Bush didn’t say, forget Reagan. The headline gives an erroneous flavor to that. That’s coming up here. But in the meantime, more unpopular than the air traffic controllers? There’s a big difference. The air traffic controllers broke the law. The air traffic controllers were illegally, against the law, on strike. And Reagan gave them a deadline: ‘If you don’t go back to work, you’re all canned.’
They called his bluff and they got canned. Now, the people that Thomas Lauria, the lawyer, represents, these hedge funds, have not done anything illegal in soliciting investors to bankroll Chrysler debt. But you see the point? Here’s Gerald Seib of the Wall Street Journal and the rest of the Drive-Bys, oh, it’s cool! Obama’s smart. He hopped on these hedge funds because he knows they’re not popular. That’s why he used the term ‘hedge funds.’ Anybody on Wall Street today is not popular. All you gotta do is dump on them, act like you’re getting even with them and you can get away with doing anything in the minds and hearts of the American people. Let’s go back. Last Thursday, here’s Obama making his direct threat to private companies when announcing the Chrysler bankruptcy.
OBAMA: A group of investment firms and hedge funds decided to hold out for the prospect of an unjustified taxpayer -funded bailout. They were hoping that everybody else would make sacrifices and they would have to make none. Some demanded twice the return that other lenders were getting. I don’t stand with them. I don’t stand with those who held out when everybody else is making sacrifices.
RUSH: Who was making sacrifices? The government wasn’t making any sacrifices. The union didn’t make any sacrifices. The union gets 55% of the company. Who made sacrifices here? Maybe some Chrysler management made sacrifices, but the people that got the shaft were private sector investors. You can never say the government sacrificed. How can you say any element that has the power to print $10 trillion when it needs it, is sacrificing anything? We all know one thing: the government never sacrifices, period, zilch, zero, nada. Now, individual government employees may get canned, reassigned or whatever. But government as an institution never, ever sacrifices. The private sector did here. These people, they were just holding out for a better deal, and that’s what bankruptcy is for. So Obama just loooooves taking these shots at the private sector, and this is the comment that caused the lawyer, Thomas Lauria, to come out and say in WJR Friday in Detroit that the president was threatening his client with reputation ruination if they didn’t go along. On Squawk Box, CNBC this morning, Becky Quick talking to Warren Buffett, and she asked Warren Buffett, ‘There’s some talk out there that the bondholders, Chrysler bondholders, should accept this deal that’s been pushed down their throats. Are you sympathetic to that?’
BUFFETT: The bondholders bought a secure bond. If I have a first mortgage on my house here, and, eh, the first mortgage is for half of what the house is worth and somebody says, ‘I want you to take a big haircut because I’ve got some credit card debt someplace else,’ it has problems in terms of future lending. I mean, if priorities don’t mean anything, that’s going to disrupt lending practices in the future. Give up the priorities in lending, abandoning that principle, would have a whole lot of consequences.
QUICK: A whole lot of bad consequences down the road.
BUFFETT: I think it would. If we want to encourage lending in this country, we don’t want to say to somebody who lends and gets a secured position that that secured position doesn’t mean anything.
RUSH: Ha-ha! Right! We just did. The bondholders at Chrysler — and up next, General Motors. They’re going to get the shaft the same way the bondholders at Chrysler did. So here’s the second major issue on which Obama supporter and voter, Warren Buffett, now distances himself from Obama, Warren Buffett there is not thrilled with what Obama’s doing to Chrysler’s bondholders, not thrilled with anything Obama is doing, but he loves Obama! He loves Obama. Not thrilled with his policies, not thrilled with his economics, but, man, what a great guy! He really loves Obama. He’s so smart. He’s so eloquent. He’s so elegant. This is right: ‘If we want to encourage lending in this country…’ I’ll tell you what’s going to happen. The government’s become the major lender anyway, if this is not stopped.
I mean, if Obama can push a button — and he said the other day, that he wants to be able to push a button and push all these problems. Well, essentially last week he’s pushed a button. He pushed a button and told these private bondholders, ‘Screw you! You’re going to have to settle on ten to 20 cents on the dollar.’ Well, who’s going to…? With this kind of power, the government with this kind of power and intimidating presence… Who’s going to continue standard debt procedures down the road, major debt such as this, if the government can come in at any time and tell you, ‘That deal you had? Screw it,’ and of course here’s another thing to remember about sacrifice. And this is the key. Ask yourself a question, by the way — and be honest about this when you ask yourself. When you hear that somebody’s making a sacrifice, aren’t you heart warmed by that?
Doesn’t your heart get warm? Don’t you think we’re talking about real compassion when somebody sacrifices? ‘Oh, that is so wonderful! What a sacrifice! I can’t believe the sacrifice that person made. That is so, so touching.’ Okay. The reason I want you to answer the question honestly is because we know how it works. I mean, it’s part of the language game, and it’s an indication of just how easy the liberals have it in promoting redistribution, class envy, and so forth. But when Obama, talking about different parties at a table who have to come to an agreement to make a deal happen like the Chrysler bankruptcy — when Obama says some were willing to sacrifice and some weren’t — what Obama is saying is: ‘Some refuse to go along with my plan that hurts ’em. They refuse to sacrifice.’ That makes them look like the bad guys. But in truth, sacrifice, in order to be ‘sacrifice,’ must be voluntary. If sacrifice is forced, it ain’t sacrifice. It’s authoritarianism, totalitarianism, or what have you, in this case. But one thing forced sacrifice is, is not sacrifice.
RUSH: Susan in Toledo, Ohio. Welcome to the EIB Network. Hello.
CALLER: Hi, Rush. I just wanted to make a comment on the Chrysler bond debacle, and also I have an idea for your teaching tour. The first thing I wanted to say was, the SEC is going after Ken Lewis at Bank of America for not the telling his shareholders that Paulson brought pressure to bear on him to buy Merrill, and I wanted to know if the SEC is going to go after Vikram Pandit of Citi and the gentleman of Chase — who escapes my mind now — for not telling their shareholders that the Obama administration put pressure on them to take the lower price?
RUSH: Wait a minute. I’ve lost track here. Are you talking about the Chrysler deal?
RUSH: The SEC had nothing to do with this.
CALLER: They’re going after Ken Lewis and saying to him that he should have told them that there was pressure brought to bear on him by Paulson to buy Merrill.
RUSH: Who’s saying that Ken Lewis should do what? When you say ‘they,’ who is ‘they’?
CALLER: No. I’m wanting to know if the SEC is going to go question Vikram Pandit from Citi and the gentleman that’s the head of Chase because those banks that got TARP money — I think there was three or four that I read, got like a hundred billion dollars in TARP money and — the administration is trying to say that they did not use that influence in making them take down their bond price on Chrysler.
RUSH: Oh, okay. What you’re confusing me with here is Ken Lewis and Citibank and Pandit because I don’t know what that’s gotta do with Chrysler.
CALLER: Because Citi and Chase had bonds with Chrysler, and they brought their price down to what the Obama administration wanted, and the Obama administration is trying to say that they did not use their influence because those banks have TARP money.
RUSH: (sigh) There is one hedge fund, and I’m having a mental block of the name of it, that held out.
RUSH: And the Obama administration, according to the lawyer for this hedge fund, said, ‘We’re going to unleash the power of the White House press corps to ruin your reputation,’ on that one hedge fund. So the hedge fund buckled.
RUSH: That hedge fund held about $6.9 billion in debt that was debt for Chrysler that was the result of individuals investing in that hedge fund who were taking a risk on buying Chrysler debt. Now, the other bondholders did not put up a fight. Are you saying they didn’t put up a fight because they got TARP money?
CALLER: Yes, they got… Citi, Chase, and there was one or two other banks. Together, they got a total of a hundred billion dollars and in the Bloomberg article that I read the Obama administration came out and said that they did not use pressure, because those banks got TARP money, for those banks to bring down the price that they were asking.
RUSH: Okay. All right. I addressed this on Friday, and I said there were three possible ways that this could have happened. One is that there was some TARP money under the table that was able to be used by some of these bondholders that they really weren’t out anything because they were being bailed out under the table. Nobody knew about it. The other reason was they did it out of the goodness of their heart to save Chrysler and all, and the third reason was that they’re scared to death of the government. I think the answer in the case of all three — be it Citi or whoever — is they’re afraid of the government, whether they got TARP money or not. Not everybody did. The hedge fund did not.
CALLER: But you have to remember that last year, when Bank of America bought Merrill, Ken Lewis said that Paulson and Bernanke brought pressure to bear on him to buy that, that he had to buy it. And the SEC is now investigating him and saying, ‘Why didn’t you come to us and tell us that pressure was being brought to bear? Why didn’t you tell your shareholders?’ So at the same time, my question is, is the SEC going to go to those other banks and say —
CALLER: — ‘Was pressure brought to bear?’
RUSH: No. The SEC is the Obama administration. It’s not going to… A lot of these banks wish they never took the TARP money. A lot of these banks want to give it back. The Obama administration is refusing to take it. Many of the banks — with Paulson, in the original TARP conference — were not let out of the room until five o’clock in the afternoon unless they had signed. Wells Fargo was one of them. They did not need TARP money. They were all made to take it. Anyway, look, I appreciate the call, Susan.