Grand Theft Auto: How Stevie the Rat bankrupted GM

[Hannah Bell]

by Greg Palast

..When a company goes bankrupt, everyone takes a hit: fair or not, workers lose some contract wages, stockholders get wiped out and creditors get fragments of what’s left. That’s the law. What workers don’t lose are their pensions (including old-age health funds) already taken from their wages and held in their name.

But not this time. Stevie the Rat (Steven Rattner, Barack Obama's 'Car Czar' - the man who essentially ordered GM into bankruptcy this morning) has a different plan for GM: grab the pension funds to pay off Morgan and Citi. Here’s the scheme: Rattner is demanding the bankruptcy court simply wipe away the money GM owes workers for their retirement health insurance. Cash in the insurance fund would be replace by GM stock. The percentage may be 17% of GM’s stock – or 25%. Whatever, 17% or 25% is worth, well … just try paying for your dialysis with 50 shares of bankrupt auto stock.

Yet Citibank and Morgan, says Rattner, should get their whole enchilada – $6 billion right now and in cash – from a company that can’t pay for auto parts or worker eye exams. So what’s wrong with seizing workers’ pension fund money in a bankruptcy? The answer, Mr. Obama, Mr. Law Professor, is that it’s illegal. In 1974, after a series of scandalous take-downs of pension and retirement funds during the Nixon era, Congress passed the Employee Retirement Income Security Act. ERISA says you can’t seize workers’ pension funds (whether monthly payments or health insurance) any more than you can seize their private bank accounts. And that’s because they are the same thing: workers give up wages in return for retirement benefits...

http://www.gregpalast.com/grand-theft-auto-how-stevie-the-rat-bankrupted-gm/

[MannyGoldstein]

1. How Quaint

Palast's defense of the Middle Class is so very cute. But if they're so worthy of compassion, then why didn't God make them bankers?

Sorry Mr. Palast, your claptrap is not welcome in these parts. We know that bankers are God's chosen people, which is why our government has loaned them 200 times more money than it's loaned the auto makers.

[Octafish]

2. Consider it a prototype.

Where GM goes, the rest of the economy will follow.

Practice with me:

"Would you like to try a Value Meal today?"