 Why Won't Chrysler's Owner Bail Themselves Out? |
While the senate debates the current $14 billion bailout package for GM and Chrysler, Forbes recently published a fantastic article about Chrysler's parent company, Cerberus, and the fact that they probably have the cash to bail out Chrysler - they just don't want to. The article stems from a New York Times article about Cerberus' lobbying of U.S. Treasury Secretary Henry Paulson by former Treasury Secretary John Snow (now in the employment of Cerberus).
Cerberus is a private equity firm - the key word there is "private" meaning that for the most part, they get to keep their books closed. Dan Gerstein, the author of the article, does a great job of outlining the demands the U.S. Government should be making to Chrysler before giving them any of the bailout money. Some snippets:
Buried on the business page of The New York Times Saturday were the details of Detroit's biggest snow job yet--literally as well as figuratively. Turns out that Cerberus CEO John Snow, who spent three-and-a-half lackluster, and some might say lap-doggish, years as President Bush's second Treasury secretary, is leading a who's who of crony capitalists in a lobbying campaign for a taxpayer bailout to "salvage Cerberus' investment in Chrysler."
...snip...
To date, Cerberus has barely tapped any of its massive holdings--its investments in Chrysler are estimated to be just 7% of its assets under management--to stabilize Chrysler's precarious finances; the exception was a $2 billion loan in July. Instead, the company has shed 30,000 jobs, a specialty of cost-cutting corporate flip artists like Cerberus.
...snip...
"We're not in this for the money," said Cerberus COO Mark Neporent, in what easily qualifies as the most laughable statement in American politics since Sarah Palin said seeing Russia qualified her to be commander in chief.
Enough of the snippets - go read the entire article for yourself.
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| hal2814 | Posted: 2008/12/11 10:19 Updated: 2008/12/11 10:19 |
Quite a regular   Joined: 2006/5/23 From: Posts: 47 |
 Don't look so surprised...Cerebrus will do anything they can to make make a buck. Cerebrus is the same company that wiped out Mervyns by purchasing them and then spinning them off as their own company minus their property holdings. This basically resulted in Cerebrus gouging Mervyns on land leases for land Mervyns previously owned.
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| tmedlock | Posted: 2008/12/11 8:50 Updated: 2008/12/11 8:50 |
Not too shy to talk  Joined: 2007/1/11 From: New Hampshire Posts: 40 |
Re: Why Won't Chrysler's Owner Bail Themselves ... I have a question which seems to have a huge impact on this topic. However, I have no idea how to look for the answer. So, I will ask and see if anyone knows. I believe Cerberus owns Chrysler. If Chrysler files for bankrupcy, is Cerberus liable for Chryslers outstanding debt?
If they are NOT liable, then (from their point of view) it would seem like it makes real sense to go after a government loan (what have they got to loose).  If they are liable, as a taxpayer, this would make me happy. If it is true that they have tons of money, we will get our money back from them.  I'm betting they are NOT liable. If they were, I doubt they would risk going further into debt by borrowing from the government. |
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| AngryNJ | Posted: 2008/12/11 8:23 Updated: 2008/12/11 8:23 |
Quite a regular Joined: 2006/4/25 From: Posts: 51 |
Re: Why Won't Chrysler's Owner Bail Themselves ... Cerberus has a goal to make as much profit as possible. Purchasing Chrysler has been a disaster so far for them in that regard.
At this moment, they have no reason to pour cash into Chrysler. Why would they? They are going to wait for the bailout and if they dont get it, they will go into bankruptcy protection. They might go into bankruptcy protection whether they get bailout money or not. But in there eyes, they might as well get that loan/bailout first. |
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| MarkH | Posted: 2008/12/11 8:21 Updated: 2008/12/11 8:36 |
Home away from home  Joined: 2005/7/20 From: The Great White North Posts: 406 |
Re: Why Won't Chrysler's Owner Bail Themselves ......the most laughable statement in American politics since Sarah Palin said seeing Russia qualified her to be commander in chief. First of all, Gov. Palin did not state that proximity to Russia "qualified" her to be CINC --no more than Junior Senator Barack Hussein Obama's credentials as an inner-city community organizer qualifies him-- she was merely pointing out that her 2 nearest neighbors were foreign countries... and that Alaska has more dealings with Canada & Russia than do the other 49 states. There are few soldiers who wouldn't want to work under her...  But on to Cerberus... It's a good thing they're not in it for the money! Cerberus got into a rapidly declining industry they had little familiarity with, hoping to turn a quick buck. Boy, did that backfire! Now, the smart move is to wait for a "free" government bailout and recoup as much as possible from one of the worst investment decisions in history. Cerberus would be foolish to waste another dollar on Chrysler, unless it involves bribes to sway policians their way. And don't think for a second, that that isn't going on in Washington!  Prediction: whether by direct government bailout, or by merging with GM, Cerberus will likely break even on the deal... AND THEN RUN! |
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