Bailouts & stakeholders; the OAS & Cuba


I am not a member of the United Auto Workers, or a holder of GM stocks or bonds, or a hedge-fund manager in Greenwich, Connecticut. So I approached Nick Baumann's article (“Rules of the Road,” July 17) without any obvious bias. Baumann begins by agreeing with critics of the Chrysler reorganization plan that bondholders are not being treated fairly. He goes on to argue that this is because the point of the bailout is to save jobs, not “preserve the value of the investors' bonds.” If he had left it at that, the article might have had more appeal, but Baumann seems unable to resist turning the situation into a David-and-Goliath scenario: “tens of thousands of middle-class people in the upper Midwest” versus “the fortunes of hedge-fund managers in Greenwich.” In doing so he misrepresents the situation.

Baumann says he finds it “hard to have much sympathy for” the state pension fund of Indiana, a stakeholder trying to ensure that its bonds would be “worth something.” He suggests that groups like the pension fund stuck with Chrysler because they would be able to “bully” President Barack Obama into “giving them a good deal” on their bonds. But clearly the group most able to “bully” the Obama government was and is the UAW that supported his candidacy during the campaign with volunteers and financial contributions. In this political arena, the UAW carries...

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