by Roger Koppl
“Like many others I made the mistake of buying what I believed was ‘value,'” Mr. Gwin says, adding that investors who bought at the time believed the loans were worth more than their market price. “We did not contemplate having our first liens invalidated by a sitting president,” he adds.
Mankiw is worried that Obama may be “trying to achieve a ‘fair’ outcome as he judges it, regardless of preexisting rules and agreements . . . . in which case politics may start to trump the rule of law.”
The ever-interesting Josh Hendrickson found the same WSJ quote and draws out the Big Player dimension. “Initially,” Josh says, “I thought that the problem was confined to the Treasury department in the final months of the Bush administration, but clearly this mentality has carried over and has perhaps even become worse.”
Josh might have been less surprised at Obama’s use of discretion if he had remembered that Timothy Geithner was Paulson henchman when Bush’s Treasury Secretary pressured the nine largest banks into selling the government equity shares. Big Players corrupt the rule of law. Collapse of the rule of law is an important part of the disgraceful legacy of the Bush administration.