First, I surely hope we're not relying on the likes of John Boehner to re-establish the two-party system in Congress. Other than having a great tailor, haberdasher and barber, what leadership has he exhibited lately? Presenting an alternative federal budget, but with no numbers?

But on to the issue at hand...

I have less of a problem with the administration getting involved with the creditors of both GM and Chrysler prior to the filing of bankruptcy than I do with the unfairness with which they pressured some creditors to settle. I say that because after more than two months, the creditors of both companies were no closer to agreeing on a Plan of Reorganization for presentation to the bankruptcy judge as a "pre-packaged" agreement than they were the first day they met. Had someone not gotten involved (who else was there but the government?), both companies would eventually have filed for bankruptcy with no agreement in sight among the creditors. There could only have been one of two results from that scenario: the government (us) would continue to fund both companies because of the fear of the economic impact of their failure...or, the companies would shut down and then liquidate, resulting in somewhere in the range of 2 million people hitting the unemployment lines simultaneously.

Personally, I think the involvement of the government was the only action that could have saved either or both of these companies.

But I agree with Boehner's assessment on the stripping creditors of their rights, having made the same assessment myself (leading me to call the first strike on this administration). The Plan of Reorganization was not fairly constructed and gave greater rewards to the UAW and even the government itself than to all other classes of secured and senior creditors. The country will pay for that action as the capital markets adjust to the fact that they cannot rely on their contracts and legal agreements to preserve their rights, particularly in situations where there's a possibility that the government might show an interest in the outcome of a situation.

The future disinterest of lenders in exposing themselves to this type of situation will be very difficult for the public to discern. As much as anything it will show up as a slowing in economic growth because of the tightness of corporate credit needed to provide the leverage on which our economy has become accustomed. There may be some legal cases in the future that are adjudicated based on the precedents set in these two bankruptcies. But even then, it would take a very perceptive and astute public to interpret the damage to our rule of law that has resulted by the unfair and unequitable trampling of creditor's rights in these cases. The precedents resulting from these cases won't get a lot of discussion on forums such as this one. But I can assure you that the issues and precedents created are garnering lots of discussion, study and planning among law firms representing creditors.