vultures.thumbnail.jpgGeoffrey Gwin runs a vulture capital fund: he finds companies in trouble, and buys up their debt on the cheap. The goal is to make a profit when the issuer fails. Or as he puts it on his web site:

Group G Capital Partners, LLC is an investment management firm founded in September of 2002. We employ rigorous fundamental research in our US credit focused strategies. Our strategies include: market neutral credit, opportunistic credit and small cap distressed.

He is one of a group of 20 people who forced Chrysler into bankruptcy, by refusing to accept the deal brokered by the Treasury. He wrote a letter to the Wall Street Journal explaining his thinking. Geoffrey’s decision to send Chrysler into Chapter 11 was a matter of principle. When Delta failed, his dad lost a big part of his pension, so it’s right for him to do the same thing to tens of thousands of Chrysler employees and retirees. After all, it’s the fault of the terrible unions who drove too good a deal, much better than other American workers.

The administration and others argue that the "right thing to do" is to save Chrysler and thereby ensure the livelihoods of all its workers, retirees, and the workers at Chrysler suppliers. This at the expense of the right’s [sic] of creditors, such as my company. But the administration should concern itself with the nobler cause of preserving the fundamental system of laws governing creditor rights.

And here’s the principle we’re talking about:

“Junior creditors are ordinarily not entitled to anything until senior secured creditors like our investors are repaid in full,” the dissidents said in the statement.

Well, not really. What secured creditors get is a claim equal to the value of their collateral. It’s called cramdown. The Washington Post says the collateral might be $.30 to $.50 on the dollar. That sounds pretty strong to me. What would you give for an empty Chrysler factory? When Studebaker failed in the ’50s, the buildings sat vacant for years. And the equipment? Who needs that stuff? For the balance of their debt, they are unsecured creditors. The offer they turned down was about $.32.

Yes, Gwin believes his property rights are more important than the lives of tens of thousands of his fellow citizens. Geoffrey is just another self-righteous bankster: John Galt would love this guy. The President has an opinion about Geoffrey and his "principles":

In a rare flash of anger, the president scolded the group Thursday as Chrysler, its options exhausted, filed for bankruptcy protection. “I don’t stand with those who held out when everyone else is making sacrifices,” Mr. Obama said.

And yet, the banksters run Congress. Can’t anyone in the Senate see that these guys are ruining the country?