The Obama Adminstration Forced Chrysler to Accept Bankruptcy

[C-101]

This is a really long article, so I'll just give you a preview.

By the evening of April 29, with their historic bankruptcy filing hours away, Chrysler Chairman Bob Nardelli and other company leaders were left with no doubt that Steven Rattner was calling the shots.

Chrysler executives still hoped to avoid bankruptcy. The UAW had ratified a second round of concessions that froze wages, cut retiree health care benefits and agreed not to strike the company for more than six years. All but a handful of lenders had signed off on the U.S. Treasury's offer of $2 billion to write off $6.9 billion in Chrysler loans.

Reluctantly, however, the leaders were recognizing the harsh decision Rattner made weeks earlier: Chrysler was filing for Chapter 11, no matter what.

Rattner had met with Ron Kolka, Chrysler's chief financial officer, and told him how it would go.

"We need a deal with Fiat today. We were told to pretty much take it," Kolka wrote in an e-mail to Nardelli, Vice Chairman Tom LaSorda and Robert Manzo, a financial consultant Chrysler hired in November. Rattner and his colleague Ron Bloom "will call the union in and tell them what will happen. Then they'll tell the banks, 'Here's the deal: take it or liquidate it.' "

As details emerge in bankruptcy proceedings, it is clear Rattner has both the president's absolute trust and a go-for-the-jugular instinct. He was not interested in a mundane, outpatient treatment for suffering Chrysler. The president wants major surgery on Detroit's auto industry, and Rattner is running the operating room.

Obama's man called shots on bankruptcy | Freep.com | Detroit Free Press

Essentially, Chrysler secured concessions from the UAW and therefore they stood a chance of avoiding bankruptcy and government intervention.

However, Obama's man Rattner gave the banks an ultimatum: Accept the terms or liquidate Chrysler.

Therefore, Chrysler was forced to accept the bankruptcy terms agreed upon by the banks and the government or face extinction.

Overall, the Obama administration forced the government into this matter and made any option outside of government intervention impossible. As a result, this proves Obama wanted to control Chrysler through the government and he is now advancing his environmental agenda as a result.

Without a doubt, it is clear now that Obama lied when he said that "I don't want to run a car company."

With concessions made by the UAW, Chrysler had a chance to survive without bankruptcy and therefore government intervention.

But Obama's auto man Rattner would hear none of that. Chrysler was going into bankruptcy, the government was taking a share of the company, and that was that.

 

[AllieBaba]

I can't believe this isn't bigger news. When the national government forces companies into bankruptcy, there's a BIG problem.

 

[Oddball]

Did I hear someone say "constitutional crisis"??

 

[STAND4LIBERTY]

With concessions made by the UAW, Chrysler had a chance to survive without bankruptcy and therefore government intervention.

But Obama's auto man Rattner would hear none of that. Chrysler was going into bankruptcy, the government was taking a share of the company, and that was that.

This makes it sound as if there were only 2 choices though, Chrysler could have very well went into a (non-politicized) Bankruptcy, reorganized and come out the other side as a healthy company. Either that or had it's assets sold off to effecient producers, either of which would have been better for the long term health of the economy.

As it stands now, Chrysler (an inefficient producer) is holding productive resources hostage under the direction of the least efficient producer in the Universe (the Federal Government).

So out of all the available options in this scenario our government in it's infinite wisdom chose the dumbest one available and at the point of a gun no less.

 

[AllieBaba]

Then perhaps they shouldn't have been given stimulus money.

When the gov't is forcing companies to cave against their wishes, we're in trouble.

 

[Oddball]

Then perhaps they shouldn't have been given stimulus money.

I don't believe they were. I hear that money has been siphoned off of the TARP scheme for this boondoggle...Which itself goes against that legislation.

More ruling by executive fiat.

When the gov't is forcing companies to cave against their wishes, we're in trouble.

Big trouble.

The Chrysler shotgun marriage circumvents both established bankruptcy laws and the takings clause of the 5th Amendment.

More ruling by executive fiat.

 

[C-101]

This makes it sound as if there were only 2 choices though, Chrysler could have very well went into a (non-politicized) Bankruptcy, reorganized and come out the other side as a healthy company. Either that or had it's assets sold off to effecient producers, either of which would have been better for the long term health of the economy.

Chrysler tried to avoid the government.

They couldn't.

Rattner was unfazed by his lack of experience in the auto industry and, after a short period of research, began quickly making decisions and demanding results.

High-ranking power brokers like Chrysler Chairman Bob Nardelli and Vice Chairman Tom LaSorda seemed caught off-guard.

Chrysler executives preferred to keep Chrysler as a stand-alone enterprise -- even after Rattner declared March 30 that their turnaround plan was not viable.

But their fate was not completely in their own hands, and Rattner & Co. was already committed to a deal with Fiat.

Obama's man called shots on bankruptcy | Freep.com | Detroit Free Press

Rattner declared their turnaround plan unacceptable and moved forward with the government's version.

Beyond that point Chrysler had two options: Play ball or die.

 

[WillowTree]

Chrysler should have called their bluff, filed chapter 11 and dumped those unions off their azz!

 

[STAND4LIBERTY]

Chrysler tried to avoid the government.

They couldn't.

Understood, which is why I pointed out that the government decided to take the dumbest option possible. I wasn't blaming Chrysler Management for the results .... they only get the blame for running the company into the ground into the first place.

 

[RodISHI]

Since Canada has come into the mix on bitching about the buy America... How many perks does Chrysler get for their factories in Canada? Simple issues like medical cost for employees etc..

 

[C-101]

I can't believe this isn't bigger news. When the national government forces companies into bankruptcy, there's a BIG problem.

This is should be on the front page of every newspaper, the headline of every talk show, and the hot button issue in Washington.

But it's not.

Further evidence the media is in Obama's pocket.

 

[WillowTree]

GINSBERG JUST PUT A KEBOSH ON THE CHRYSLER SALE EVERYTHING ON HOLD.

 

[Navy1960]

WASHINGTON — President Obama forced Chrysler into federal bankruptcy protection on Thursday so it could pursue a lifesaving alliance with the Italian automaker Fiat, in yet another extraordinary intervention into private industry by the federal government.
http://www.nytimes.com/2009/05/01/business/01auto.html

That from the NYT, since when I want to know does the White House have the power under the constitution do order a private company into bankruptcy?

The Indiana State Police Pension Fund, the Indiana Teacher's Retirement Fund and the state's Major Moves Construction Fund filed a last-ditch appeal with the U.S. Supreme Court today in a bid to block Chrysler from selling its good assets out of bankruptcy court to a group headed by Italy's Fiat SpA claiming the deal unfairly favors the interests of the company's unsecured stakeholders ahead of those of secured debt holders such as themselves.
Why Indiana Funds Can't Yet Accept Chrysler Bankruptcy - John Bury

The new Chrysler board will include three members from the US Treasury, one each from the Canadian government and the UAW's VEBA..
The North American Auto Industry in Crisis - Monthly Review

So given that fact the UAW backed Obama to the hilt in the last election, and the fact the UAW was one of the mitigating factors in the Chrysler demise as well as GM's we now reward them and screw the people who invested in Chrysler. This needs to go to bankruptcy court and this company needs to be liquidated and sold WITHOUT White House intervention. Then hopefully it can emerge ready to compete.

 

[Toro]

Chrysler was going bankrupt anyways. It should have gone bankrupt several months ago when the Bush administration gave them short-term loans.

 

[Navy1960]

Once the second-largest long-distance telecom in the U.S. after AT&T, WorldCom filed for bankruptcy protection following the discovery of an $11 billion accounting scandal. In 2003 the company re-dubbed itself MCI, (the name of one of its previous acquisitions), and then emerged from bankruptcy a year later. In 2005 MCI was acquired by Verizon Communications for $7.6 billion and former CEO Bernie Ebbers was sentenced to 25 years in prison after being convicted of securities fraud, conspiracy, and filing false documents. He is serving his term at Oakdale federal prison in Louisiana.
The 10 largest U.S. bankruptcies - WorldCom (3) - FORTUNE

I ask you if we can survive WorldCom, Enron, Texaco, and others, without the Govt. comming in and owning them. There is no reason why we could not survive Chrysler or GM for that matter. Has anyone given consideration here to the fact if these companies were to go down someone would have to fill the void in the Market, creating more new jobs and more new opportunities. This is not a bad thing, the bad thing here is to prop these companies up at tax payers expense then have them compete with other companies while you regulate the other companies.

 

[Ame®icano]

Once the second-largest long-distance telecom in the U.S. after AT&T, WorldCom filed for bankruptcy protection following the discovery of an $11 billion accounting scandal. In 2003 the company re-dubbed itself MCI, (the name of one of its previous acquisitions), and then emerged from bankruptcy a year later. In 2005 MCI was acquired by Verizon Communications for $7.6 billion and former CEO Bernie Ebbers was sentenced to 25 years in prison after being convicted of securities fraud, conspiracy, and filing false documents. He is serving his term at Oakdale federal prison in Louisiana.
The 10 largest U.S. bankruptcies - WorldCom (3) - FORTUNE

I ask you if we can survive WorldCom, Enron, Texaco, and others, without the Govt. comming in and owning them. There is no reason why we could not survive Chrysler or GM for that matter. Has anyone given consideration here to the fact if these companies were to go down someone would have to fill the void in the Market, creating more new jobs and more new opportunities. This is not a bad thing, the bad thing here is to prop these companies up at tax payers expense then have them compete with other companies while you regulate the other companies.

In addition, all those major airline companies that were working thru the bankrupcy, merging with other companies and doing pretty much OK so far...