1. The bondholders are the owners of secured debt. Period. There is no place for the Chief Executive of the Law in our system to do anything OTHER than enforce their clearly legal and written documents.

2. The bondholders ARE Americans – and they are hedge funds that hold the wealth and investment OF Americans. It’s easy to say “hedge funds” as if they were groups of unsavory people; but the hedge funds in question are the investors for our grandparents on fixed incomes, our 401ks, and all sorts of other ordinary people.

3. The important political consequences are that once a government can decide to change the rules on contracts at its whim, it can do it for anyone. First banks, then autos. Why NOT REALTORS? They don’t rank very highly on most consumer “likability” polls.

Turbulent times NEVER call for breaking the law. Obama can’t have it both ways – he can’t say he wants to have the moral high ground on other political issues – but not take the HIGHEST moral action: To defend the laws for ALL Citizens when it comes to the world of finance.

In any case, the bondholders know how to stand up for themselves and their clients. We’re talking Cerberus, Oppenheimer and other well established groups. They’re going to fight for what they are owed in court.

I’m still quite amazed, though, that you don’t see providing unsecured debt holders MORE than their share’s worth of equity – BEFORE secured shareholders – as “breaking the law”…. If that’s not Robin Hood redistribution without REGARD for clearly established contract and securities law, I don’t know what is.

In any case, glad you stopped by!