Over in our How the World Works blog, Salon’s Andrew Leonard has the low-down on President Obama’s remarks on Thursday about the decision to have Chrysler file for Chapter 11 bankruptcy.
As Andrew points out, “certain to dominate the cable news talk shows for at the least the next 24 hours and probably a lot longer, was his direct attack on the hedge funds whose refusal to agree to the government’s offer on Chrysler’s debt sunk a deal that could have avoided bankruptcy.”
Specifically, what Obama said was this:
Now, while many stakeholders made sacrifices and worked constructively, I have to tell you, some did not. In particular, a group of investment firms and hedge funds decided to hold out for the prospect of an unjustified taxpayer-funded bailout.
They were hoping that everybody else would make sacrifices and they would have to make none. Some demanded twice the return that other lenders were getting.
I don’t stand with them. I stand with Chrysler’s employees and their families and communities. I stand with Chrysler’s management, its dealers, and its suppliers. I stand with the millions of Americans who own and want to buy Chrysler cars.
I don’t stand with those who held out when everybody else is making sacrifices.
Andrew says he thinks the public will probably side with the president over the hedge funds on this. I think that’s right; certainly, the polling on the issue bears that theory out, and suggests that this stance will help Obama, at least in the short term. It may help him in the long term as well, even if the economy doesn’t recover as quickly as people would like. Given Americans’ attitudes about Wall Street and the automakers, it’s likely that they’ll be more forgiving of Obama if his decision to allow Chrysler to go bankrupt causes more economic turmoil than they would have been if he’d decided to offer more financial help to the company and that had negative consequences for the economy as a whole.
As of mid-March, according to a CBS News poll, a large majority of the country — 76 percent — said that no more bailout money should be offered to the automakers. Only 18 percent disagreed. Moreover, in a Washington Post-ABC News poll conducted at the end of March, 68 percent of respondents said they were “angry” at “banks and other financial institutions” for the role they’ve played in the crisis, while just 21 percent said the same thing about the Obama administration.
The president himself hasn’t hesitated to remind some people in the financial industry about this hole card he has to play against them. During a meeting with bank CEOs, he reportedly said, “Be careful how you make those statements, gentlemen. The public isn’t buying that.
“My administration is the only thing between you and the pitchforks.”
That’s still true. And it doesn’t only mean that the administration can protect the companies against public outrage; it means that they can win a battle for hearts and minds against those companies if need be.