The group of secured lenders who were holding out for fair treatment in the Chrysler bankruptcy has disbanded, after two more defections in the face of pressure from the Arm-Twister in Chief.

“After a great deal of soul-searching and quite frankly agony, Chrysler’s non-TARP lenders concluded they just don’t have the critical mass to withstand the enormous pressure and machinery of the US government,” [said] Thomas E. Lauria, … the lead lawyer for the group. “As a result, they have collectively withdrawn their participation in the court case.”

Welcome to our new, nationalized banking industry.  Think twice before relying on contractual guarantees or the rule of law, especially if you’re doing business with a Democratic constituency like the UAW.