Government by Thuggery - 'The Chicago Way'

A leading bankruptcy attorney representing hedge funds and money managers told ABC News Saturday that Steve Rattner, the leader of the Obama administration's Auto Industry Task Force, threatened one of the firms, an investment bank, that if it continued to oppose the administration's Chrysler bankruptcy plan, the White House would use the White House press corps to destroy its reputation.

The White House said the story was false.

"The charge is completely untrue," said White House deputy press secretary Bill Burton, "and there's obviously no evidence to suggest that this happened in any way."

Thomas Lauria, Global Practice Head of the Financial Restructuring and Insolvency Group at White & Case, told ABC News that Rattner suggested to an official of the boutique investment bank Perella Weinberg Partners that officials of the Obama White House would embarrass the firm for opposing the Obama administration plan, which President Obama announced Thursday, and which requires creditors to accept roughly 29 cents on the dollar for an estimated $6.8 billion owed by Chrysler.

Lauria first told the story, without naming Rattner, to Frank Beckmann on Detroit's WJR-AM radio.

Perella Weinberg Partners,"was directly threatened by the White House and in essence compelled to withdraw its opposition to the deal under the threat that the full force of the White House press corps would destroy its reputation if it continued to fight. That’s how hard it is to stand on this side of the fence," according to the attorney.

It turns out Perella's stake in Chrysler debt was small potatoes compared to big banks like JP Morgan, Citigroup, and Goldman. Do you think that the fact those banks got up to $100 billion in bail out money had anything to do with them embracing the administration's plan for Chrysler?

I think it also significant they sent out a deputy instead of Gibbs to deny the story. The crack about "obviously no evidence to suggest that this happened in any way," is typical "non-denial, denial for a president when they are caught doing something they shouldn't.

No doubt the White House press corps would eagerly do their master's bidding if told to destroy someone or some firm's reputation. At least most of them would. Jack Tapper of ABC just might be one of the last honest reporters in Washington which makes him extremely vulnerable. For the press, there is safety in the pack and Tapper taking on the role of Diogenes might be dealt with the same way that Mayor Daley of Chicago deals with reporters who displease him; the "Freeze-out" or "The Big Freeze." Tapper's sources in the WH, his access to high level administration officials, could disappear. Obama could conveniently forget to call on him at press conferences. Exclusive on camera interviews would be routinely denied.

In short, they might very well prevent Tapper from doing his job. But that's "The Chicago Way" and the White House is now in the hands of people who play that game with thuggish efficiency.