1) political payback determined the nature and shape of the financial rescue of the company, specifically the lopsided gains for the unions, who in a normal bankruptcy court would have been low on the totem pole, rather than up at the top;
2) the disdain of the Obama Administration for the rule of law is appalling, to put it mildly.
Read this to understand why.
The key point here is that the government has made decisions about Chrysler that are not based on law, but rather on political calculations to please their base, in this case the UAW.
Let's try to understand why this is bad: under the Articles of Confederation, the predecessor to the US Constitution, debtor laws were highly different between the states, allowing companies heading to bankruptcy the freedom to pick and choose, invariably to the detriment of their debtors. As a result, the Constitution (Article I, Section 8) clearly stipulates that bankruptcy laws are to be uniform.
Why is this enshrined in the Constitution, of all places?
Let's take a look at Article 1:
The Congress shall have power to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States; but all duties, imposts and excises shall be uniform throughout the United States;
To borrow money on the credit of the United States;
To regulate commerce with foreign nations, and among the several states, and with the Indian tribes;
To establish a uniform rule of naturalization, and uniform laws on the subject of bankruptcies throughout the United States;
To coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures;
To provide for the punishment of counterfeiting the securities and current coin of the United States;
To establish post offices and post roads;
To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries;
To constitute tribunals inferior to the Supreme Court;
To define and punish piracies and felonies committed on the high seas, and offenses against the law of nations;
To declare war, grant letters of marque and reprisal, and make rules concerning captures on land and water;
To raise and support armies, but no appropriation of money to that use shall be for a longer term than two years;
To provide and maintain a navy;
To make rules for the government and regulation of the land and naval forces;
To provide for calling forth the militia to execute the laws of the union, suppress insurrections and repel invasions;
To provide for organizing, arming, and disciplining, the militia, and for governing such part of them as may be employed in the service of the United States, reserving to the states respectively, the appointment of the officers, and the authority of training the militia according to the discipline prescribed by Congress;
To exercise exclusive legislation in all cases whatsoever, over such District (not exceeding ten miles square) as may, by cession of particular states, and the acceptance of Congress, become the seat of the government of the United States, and to exercise like authority over all places purchased by the consent of the legislature of the state in which the same shall be, for the erection of forts, magazines, arsenals, dockyards, and other needful buildings;--And
To make all laws which shall be necessary and proper for carrying into execution the foregoing powers, and all other powers vested by this Constitution in the government of the United States, or in any department or officer thereof.Bold simply underscores the point.
See where this places the central government? It clearly lays out what the central government not merely can do, but must do.
Uniform laws on the subject of bankruptcies...
What the Obama Administration has done is to subvert the rule of law here (to quote the WSJ article linked to above:
The Obama administration's behavior in the Chrysler bankruptcy is a profound challenge to the rule of law. Secured creditors -- entitled to first priority payment under the "absolute priority rule" -- have been browbeaten by an American president into accepting only 30 cents on the dollar of their claims. Meanwhile, the United Auto Workers union, holding junior creditor claims, will get about 50 cents on the dollar.
This was not done by changing the law but rather by a direct subvention of the law, i.e. ignoring the law for political reasons.
The silence of the rest of the MSM is deafening on this: this is a clear violation of the constitution that the President swore to obey:
"I do solemnly swear (or affirm) that I will faithfully execute the office of President of the United States, and will to the best of my ability, preserve, protect and defend the Constitution of the United States."
This isn't the first time that the Obama Administration in the first 100 days - only 100 days, and two Constitutional violations already! - has deemed it necessary to ignore the Constitution. The first was when pressure was put on executives under TARP to return their bonuses under threat of making them illegal retroactively.
This is part of Article 9:
No bill of attainder or ex post facto Law shall be passed.
Guess that the Constitution, for the Obama Administration, is not worth much more than the recycling value of the paper it was written on.