Government Motors Follies: Chrysler Fiat Edition
[Posted by Karl]
It’s not just General Motors, kids:
At a meeting with executives from four of the nation’s largest banks earlier this month, the chief of the government’s auto task force, Steven Rattner, delivered a message that shocked some in the room.
To save Chrysler, he told them, the four banks and several other financial firms would have to surrender their claims to most of the $7 billion the automaker owed them. And what would the banks get in return for this sacrifice? Nothing.
“People’s jaws just dropped,” said a person familiar with the discussions.
Rattner is looking for some kickbacks? Who’da thunkit? But why the strongarm tactics? Round up the usual suspects:
Fiat S.p.A. CEO Sergio Marchionne said he is ready to abandon plans to form a partnership with Chrysler LLC unless the U.S. carmaker’s unions accept substantial labor cost reductions by the end of the month.
In fact, this case is doubly dire, as one of the few things worse for a business than the United Auto Workers is the Canadian Auto Workers. This is a job for Super-Kabuki!
—
Update: Meanwhile, the Obama Administration’s surgical taxpayer-soaking scheme for GM seems to be running smack into reality:
The transaction could have very real implications, though, for creditors and unionized workers. If union contracts on pensions, employment and benefits remain tied to the old G.M., employees and retirees could be devastated financially.
If the contracts move to the new, good company, the surviving business would look considerably weaker. That creates a political problem that would make a rapid, clean bankruptcy unlikely.
“It’s going to be about the union and the pensions,” said Ms. Mayerson, the bankruptcy lawyer. “And I don’t see any way that this is a quickie bankruptcy. After all, it took them 30 years to get into this mess.”
Reality bites again.
Update x2: “Upon successful completion of the alliance, a board of directors for Chrysler will be appointed by the U.S. government and Fiat…”
–Karl
Interesting. Any chance that Marchionne and Fiat now have the upper hand? After all, is this not Chryler’s last, best chance to be rescued?
Does the administration allow the UAW to sabotage this merger?
belloscm (cf0c5e) — 4/17/2009 @ 1:01 pmTruth be told, I’m somewhat shocked at this – Rattner was one of the few individuals that at least had some lukewarm recommendtions, based on his past work on similar scenarios. Call me paranoid, but I feel the hidden hand of Teh One behind his back on this one.
Dmac (1ddf7e) — 4/17/2009 @ 1:18 pmParanoid
Oiram (983921) — 4/17/2009 @ 1:20 pmWe are supposed to be comforted by the complete and utter lack of experience and expertise of these people?
JD (40dc71) — 4/17/2009 @ 1:53 pmSure, JD, they are soooo much smarter than us neandertals.
SPQR (72771e) — 4/17/2009 @ 1:55 pmIf FIAT wants a manufacturing base in North America, it sure looks like it will be cheaper just to cherry-pick Chrysler properties when the BK Court starts liquidating assets.
AD (8d39bd) — 4/17/2009 @ 2:05 pmThe sheer incompetence is what is most impressive. Still, there are lots of people who seem to be either rich or smart still supporting this poseur. I guess they figure they have the combination to the national safe deposit box. I can see no other explanation.
Mike K (8df289) — 4/17/2009 @ 2:20 pmSounds like the banks need to get their legal staffs on forcing Chrysler into bankruptcy ASAP.
Legally, their fiduciary duty is now clear.
LarryD (243b3d) — 4/17/2009 @ 2:24 pmParanoid
Troll.
Dmac (1ddf7e) — 4/17/2009 @ 2:40 pmAnd where are the buyers going to come from for this fiasco’s products?
bill-tb (26027c) — 4/17/2009 @ 3:41 pmSo The Rat wants the bondholders to do the heavy lifting/losing? The shareholders are already broke. Gosh, who does that leave intact?
The union! Surprise (wink wink).
Patricia (2183bb) — 4/17/2009 @ 4:37 pm“Rattner is looking for some kickbacks? Who’da thunkit?”
Pay to play in blue state New York where everybody has their hand out? Why would this surprise anyone?
This could never happen in a state like Illinois. We have RULES!!!!
“If the contracts move to the new, good company, the surviving business would look considerably weaker. That creates a political problem that would make a rapid, clean bankruptcy unlikely.”
No shit, Sherlock! Just look back to when Ford spun out Rouge Steel and GM spun out Delphi Parts.
daleyrocks (5d22c0) — 4/17/2009 @ 4:41 pm“Paranoid”…
I never see or hear a cogent, patient and persuasive argument FOR any of Obama’s policies. All I hear within the sphere of public discourse are variations of opprobrium for not mindlessly going along…e.g., “paranoid,” “racist,” “you lost, get over it bitter loser,” “Republicans screwed up things worse,” etc. You’d think they’d be proud of their “change” and its exemplar and would offer passionate, provable arguments on its and his behalf, would show good-faith intent to make their case and convince people this is the right way to go for America. Aside from this being the moral obligation of those who propose dramatic change, it’s just common sense.
rrpjr (dabf69) — 4/17/2009 @ 4:43 pm“So The Rat wants the bondholders to do the heavy lifting/losing?”
Patricia – Aren’t there some banks they forced to take TARP money that Rattner can tell to bend over. Isn’t that what it was all about? You took our money, now you’ll do what we tell you – write those loans off or down (to those people we tell you to)
daleyrocks (5d22c0) — 4/17/2009 @ 4:46 pmrrpjr – The arguments are a variation on a theme – suck it, we won.
daleyrocks (5d22c0) — 4/17/2009 @ 4:47 pmI never see or hear a cogent, patient and persuasive argument FOR any of Obama’s policies. All I hear within the sphere of public discourse are variations of opprobrium for not mindlessly going along
You think that is bad, try the left wing blogs !
From yesterday, a discussion of the tea parties and the left wing use of “tea bagging” as a sly obscene joke.
Mike K, @22:55
I *do* “get it”, dahlink; I probably “get” more of “it” than you do, for all I’ve had the same — my first and only — spouse for the past 35+ yrs. And, no, I didn’t know the slang for “teabagging”, either (had to ask here, as a matter of fact), nor did my husband. Not until your — clueless as usual — cohorts started to swing it around making everyone giggle.
You’re still a sad sack… even your mustache looks sad (and limp).
Posted by: exlibra on April 17, 2009 at 12:33 AM | PERMALINK
My reply, which mentioned same sex marriage as perhaps the explanation for her/his satisfaction, has already been deleted. It’s amusing in a satiric way, to see left wing ripostes to posts of mine that have already been deleted.
That’s how it goes on the left. No debate. Only nasty ad hominem.
Mike K (2cf494) — 4/17/2009 @ 6:54 pmIf Fiat buys Chrysler pre-bankruptcy, it gets $6bn, which is not near enough to make up for all the liabilities–even post-emergence from bankruptcy. Better to let Chrysler file then scoop up the assets. Not the company, but the assets. The only risk Fiat takes is that someone else outbids them. I don’t know the car business very well, but that would seem to be a risk worth taking–either because there are no other likely bidders or because Fiat is better off with no piece of Chrysler than all of it.
Compared2What (71b345) — 4/17/2009 @ 8:55 pmCompared2What – There’s nothing to stop Fiat lobbing in a bid only for Chrysler assets now, screw the liabilities, but I don’t think that’s the way the government, er excuse me, the company wants to run any transactions.
daleyrocks (5d22c0) — 4/17/2009 @ 9:05 pmDamn, I was really wanting one of those 2009 Dodge Ram quad cabs with the boxes in the side of the bed and a hemi engine. Guess I’ll have to check out the Fords and Toyotas.
Cliff (94f702) — 4/17/2009 @ 9:14 pmCliff, if your local Dodge dealer has one of those on the lot, you ought to buy it because there’s a very good chance they won’t be making them next year.
AD (65649f) — 4/18/2009 @ 7:44 amI wouldn’t worry about the parts problem – they haven’t made Model-T’s for 80-some years now, and you can still get parts for them.
Saith AD:
“If FIAT wants a manufacturing base in North America, it sure looks like it will be cheaper just to cherry-pick Chrysler properties when the BK Court starts liquidating assets.”
I knew the Burger King can hold court and such, but I didn’t think that he had any, you know, actual powers.
Jess (0a7359) — 4/18/2009 @ 9:34 am