Food for Thought on this Critical Thinking Deficient Social Policy
Reader comment on: Nocera On The Eminent Domain Mortgage Grab
Submitted by Mario Delgado (United States), Jul 14, 2012 11:14
If this policy were to be put into place, what would stop a mortage lender from arguing that all borrowers with properties that have gone UP in value should now share their 'windfall' with the lender by having their mortgages go up?
This dilution of creditor rights may have its start with the auto bailout (see: http://www.nypost.com/p/news/opinion/opedcolumnists/model_corruption_ttyHIpNuoQRwVTkBZuhHeM):
"Bondholders -- investors ranging from large institutions to retirees just scraping by, who loaned GM a total of $27 billion -- received just 10 percent of the company. By contrast, the government's $50 billion gave it about 61 percent.
And the union -- in return for the $20 billion that GM owed its health trust -- got a remarkable 17.5 percent of the stock plus $2.5 billion in cash plus $6.5 billion in preferred stock carrying a dividend of about 9 percent.
In other words, the UAW got three to four times as much as the bondholders for a smaller claim on GM's assets. The union even boasted to its members in May 2009 that it had made no concessions on pay, health care or pensions in the restructuring.
In effect, the government divided up GM's creditors into favored and unfavored groups, then gave a fat stake in the reorganized business to the favored (a k a longtime Democratic Party donors). On top of that, Washington also ordered the shutdown of 1,650 GM dealers and another 1,000 Chrysler dealers as part of its takeover."
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