Chrysler LLC’s dissident secured lenders, a group including OppenheimerFunds Inc. and Stairway Capital Management, gave up their fight against the automaker’s bankruptcy sale of assets to a company run by Fiat SpA.
Chrysler’s non-TARP lenders, as they dubbed themselves, don’t plan to defend their earlier objections to the deal and may withdraw them formally, said Tom Lauria, the White & Case attorney representing the group.
“After a great deal of soul-searching and, quite frankly, agony, they concluded they just don’t have critical mass to withstand the enormous pressure and machinery of the U.S. government,” Lauria said today in an interview.
This comment in the comments section at Calculated Risk does a fair job of summing up what happened:
The creditors were being stupid. If they wanted liquidation, they could have got it- and the recovery would have been about 5 cents on the dollar- after all- how big is the environmental liability tail for all of those old factory sites? Moral of the story- Wall Street invests in failing auto company, wall street gets clipped by the failure of the company, wall street want Uncle Sam to make them whole. Well, that is not the government’s job.
The minute government money went in to support the company, all of the ability to conduct a normal bk evaporated.
Too big to fail also implies a loss of control- that includes creditors. Unless you are lucky to be GS getting their payments from AIG. Even so, they will pay through increased regulation. What would main street say if the hedge funds got away with their attempt to rake more out of a democratic administration?
This guest post at Naked Capitalism is worth a read, as well, to balance out the hysterical shrieking you see in the WSG and the FT.
So much for trying the case in the court of public opinion guys. Should have taken the deal. Also, I still want follow-up on the CDS angle and the questions from Rep. Elijah Cummings.
TenguPhule
I.E. they looked like dicks, they know it and it could hurt their money machine in the future.
TenguPhule
” Kill them all and let someone else figure it out later.”
SATSQ.
John Cole
@TenguPhule: I really think, having watched Lauria trample Chuck Schumer in his race to any available microphone the past week, that some of these guys are shocked they entered a negotiating room and someone told them no. They are so used to having the biggest dick and holding all the cards, they didn’t know how to react, and instead we watched this meltdown.
mcc
PR consequences aside, will they be better or worse off now if they’d taken the original deal?
Gordon, The Big Express Engine
Slightly O/T but Wells and Morgan Stanley raised $16bn of capital today not guaranteed by the government.
Laura W
I’m going to marry Tom Lauria.
Laura Lauria
Cheers!
Edit: and now that I see John’s comment about his, um…anatomy, I’d better start dieting hard for that dress.
Xecklothxayyquou Gilchrist
@John Cole: instead we watched this meltdown.
Oppenheimer went nuclear, eh?
I’m sure that joke is brand new.
linda
they concluded they just don’t have critical mass
‘critical mass’ — that’s a new one. i prefer the good old standbyes”: intestinal fortitude, backbone, guts, balls. so much for those ‘masters of the universe’.
bwahahahahahahahaha.
PeakVT
After a great deal of soul-searching and, quite frankly, agony
Only someone completely devoid of soul could say this.
dmsilev
@John Cole:
Probably also a good explanation for the implosion of the GOP over the last few months.
-dms
TenguPhule
That could be true as well.
I just can’t tell anymore if it’s that they’re arrogant idiots or just greedy a-holes trying to play damage control.
sgwhiteinfla
Greater wingnutia is going to freak the fuck out over this one. I imagine that before the night is out memeorandum will be full of posts about Pres Obama’s abuse of power, and President Obama intimdating the hedgefunds into surrendering. Of course it is now a fascination of mine that on the one hand they will try to portray President Obama as weak and feckless then on the other hand they will portray him, in cases like this one, as some kind of blood thirsty tyrant. Either way, its good to see Wall Street get kicked in the nuts for once.
Mr. Stuck
I guess that Unicorn Head in the bed turned the tide.
TenguPhule
Controlled by the Liberal Undead Vampire Soros and his Legion of ACORN. Hence the thirst for blood from an otherwise wimpy girlyboy who doesn’t eat ketchup.
John Cole
@sgwhiteinfla: That is just it- outside the shriekers and the hysterics, everything I have read at the calmer business sites aren’t acting like these guys got kicked in the nuts at all. They just took a risk and lost.
linda
having watched Lauria trample Chuck Schumer
do you have a link to that? i gotta know what that’s about. ;-)
gwangung
From what I could tell, every single thing that got screaming was something that had a precedent in bankruptcy law. Not that those things would HAVE to go that way, but that there was a strong legal position for the Obama administration to take.
Basically, then, the shriekers and hysterics are just part of the WIngnut Fog Machine.
Laura W
@Mr. Stuck:
You know how many posters and lurkers read that and thought: “Damn! I wish I’d said that!”
Bazillions.
jamie
“WSG” of course stands for “Wall Street Galactica,” the final defender of the Colonies.
Paul L.
I am sure that this negotiating tactic did not hurt.
But they are hedge funds so if this is true it can forgiven in progressive eyes.
Heck, Greater moonbatia would keep GITMO open if hedge fund managers could be sent there
Laura W
oh oh oh oh…
OT for the 4th time in a row:
Larry O’Donnell sitting in for Ed now on MSNBC.
PRAISE SHIVA!
Please let him take over the 7pm Hardball repeat slot. Please!
gwangung
@Paul L.:
Excellent idea!
We should do that ANYWAY.
Thanks.
evie
Just another group that underestimated the steely resolve and skill of Obama. It’s interesting that one group does not learn from another — each thinks they can get the better of him, regardless of the obvious wreckage left in Obama’s wake by others.
Still, we’ll be reading more stories in the not-so-distant future about how Obama is “not tough enough” with so-and-so Republican or random head of state. Those pieces always make me laugh.
disappointedGOPer
@Paul L.:
If you’re legit, you got nothing to fear, amirite?
sgwhiteinfla
Off Topic
Lawrence O’Donnell is kicking Frank Gaffney in the nuts on MSNBC right now.
Gordon, The Big Express Engine
Can we get Paul L. and BOB into a blog commenting cage match?
What regular reader of this blog would not want to see this?
The opening line: BOB in the 7th by verbal TKO.
evie
@Laura W:
Why is Ed already taking time off? I like O’Donnell, but I hope Ed’s show is not in trouble.
John Cole
Yeah, Paul L. I’m going to rely on unsourced rumors from the guy who runs Bizzy Blog, a guy so silly he claims that what is happening in the economy is not a recession, but people going galt, and who spent an entire night confusing me with Juan Cole.
Next wingnut?
Zifnab
@Paul L.: Remind me again why we haven’t done that with every “too big to fail” firm since Bear Sterns went belly up in March of ’08?
sgwhiteinfla
@Paul L.:
But they are hedge funds so if this is true it can forgiven in progressive eyes.
Thats a big ass if don’t you think? Oh I forgot
mcc
who spent an entire night confusing me with Juan Cole
Huh. I’d actually been wondering if that had ever happened.
sgwhiteinfla
Got damn I am fucking out of my chair cheering on Lawrence O’Donnell right now. He just DESTROYED Frank Gaffney AND David Rivkin over torture.
John Cole
What Lawrence O’Donnell just did to David Rivkin on MSNBC was a thing of beauty.
arguingwithsignposts
@TenguPhule:
*OR*? Need one make a choice?
r€nato
@Paul L.:
That is what is called, ‘zealously looking out for the interests of your client’. The taxpayer. You and me.
It’s really amusing reading the comments at Qando. Apparently it’s OK for hedge fund managers to shake down the taxpayers, Obama was just supposed to roll over for them like Bush/Cheney would have. Anything less would be communism, right? I wonder how these douches would feel if we were talking about illegals and welfare queens demanding government money…
Paul L.
Progressives have a long history of abusing regulatory power.
The Clinton Administration did it to groups they disagreed with such as the NRA).
However, the moonbats screamed racism when the Bush Administration considered auditing Jesse Jackson.
Shygetz
@Paul L.: This has been proven? Or is this just an unproven allegation that Rattner said this, much like the Duke Lacrosse case was an unproven allegation? And, if the latter, doesn’t that make you just as bad as Mike Nifong?
Laura W
@evie: Dunno but Ed is just not suited for that full hour slot at 6pm, IMO. O’Donnell has been cranked up and ready to go for a month or two now, as many of us here have noted. He’s been quite forceful and outspoken. (Of course, I have always loved him, as the archives will prove.)
This is the first time he’s filled in for an hour, I believe. I hope all this is a pathway to him getting his own show, a la Rachel. Maybe they told Ed to take the night off so Larry could stand in and we can all flood the MSNBC site with praise for him, as many of us used to do for Rachel when she’d fill in for Keith. They seriously need a 7pm fresh show. He’d been a great lead in for KO.
Paul L.
@r€nato:
The client in this case was UAW union not the taxpapers.
gwangung
Clinton? A progressive? Don’t try that here…go to the stupid part of the internet.
And that was the SMARTEST part of your post.
Come ON. Do better.
Zifnab
@Paul L.: LOLS! So you don’t actually disagree with the idea of auditing the hedge funds. You just object to the audit being conducted by progressives.
Which moonbats? Linkz please!
Gordon, The Big Express Engine
@Paul L.: Moonbats?
Really? That is so lame. Revised prediction: BOB in the 3rd.
r€nato
Actually this is my favorite comment at CR:
Zifnab
@Paul L.:
Chrysler is being sold to Fiat, PaulL. But nice try.
r€nato
@Paul L.:
as usual, you folks simply see the government as a purse to be looted on your behalf. That’s what happened for the last 8 years. That’s why Bush/Cheney and the GOP Congress doubled the national debt in 8 years. That’s why they were pushing for Social Security piratization. That’s why they passed that atrocious Medicare prescription drug bill which specifically forbade the government from negotiating with drug companies over drug prices. That’s why KBR/Halliburton got paid $100 to do a bag of laundry for a soldier… poorly. That’s why they also got paid to build a police HQ in Iraq which was so poorly built it literally had shit leaking from the walls. That’s why pallets of hundred dollar bills worth $9 billion was transported directly from the US Treasury to Baghdad and disappeared, completely unaccounted for.
When Republicans are voted out of power, they shriek and moan and gnash their teeth not out of any principled dedication to fiscal conservatism; it’s because their gravy train came to an end.
Downpuppy
When you control the Fed & Treasury, luck is the residue of design.
Dennis-SGMM
That “moonbat” thing has been overused so much that it’s started to sound antique. “Varlets, scurrilous knaves and sans-culottes!”
sgwhiteinfla
Again off topic but can somebody read this and tell me if you find it funny at all. Because I’m pissed off right now but I am trying to make sure I am not just over reacting to snark.
http://mediamatters.org/blog/200905080016
JenJen
OK, Lawrence O’Donnell needs his own hour on MSNBC. NOW.
OMG I am LOVING him!! He’s shredding this d-bag GOPer over Supreme Court nominees right now… the GOPer is going on and on about how “Democrats savaged Clarence Thomas because you guys are afraid of a powerful African-American man!”
Ummm…?
r€nato
@sgwhiteinfla:
sg, good of you to check yourself. I think he thinks he’s being cute. I don’t think he’s joking. I am a very good judge of humor (and not in the Richard Cohen way). That guy’s not joking and even if he is, he’s not very funny and should leave humor to the professionals in the future.
Besides, he covers golf. Which means he spends lots of time around rich white Republicans. I would not at all be surprised that he thinks this way.
For what it’s worth, I know at least three active-duty Army officers who would sooner put a couple bullets in Rumsfeld than Reid or Pelosi.
(I got a hundred bucks that says within a week he claims he was ‘just joking’ and humorless liberals should get a grip)
Dennis-SGMM
@sgwhiteinfla:
Feherty just seems to be a gasbag with delusions that he’s a humorist.
r€nato
@Dennis-SGMM: believe it or not, “Red Eye” is still on FNC. Still as unfunny as ever. Don’t ask me how I know this.
Feherty sounds like he’s got the comedy chops to write for them.
John Cole
Lawrence O’Donnell is just cutting through wingnuts like a hot knife through butter. Every Democrat going on these shows needs to watch this as a how-to video.
Dennis-SGMM
@r€nato:
In view of that, I’d appreciate your recommendations for the most effective brain bleach.
John Cole
@sgwhiteinfla: Good old Fairway Feherty. He actually has made me laugh a number of times- I remember one time he was talking about how closely he had been paying attention to Tiger Woods during a tournament, and stated “Ive been up Tiger’s kilt…”
Made me lol.
JenJen
@r€nato: Just had to say, r€nato, this post of yours is peerless. Well done! Lawrence O’Donnell had me all fired up, and then you delivered quite the smack-down yourself. Thanks for that!
Funny that I had to run over here and post about O’Donnell, and after doing so noticed everybody is already watching. I’m with Laura… time to flood MSNBC with O’Donnell-Love so we get this guy all the time.
@John Cole: I wish he’d use that hot knife on Joe Scarborough sometime. O’Donnell must not be a morning guy, because he’s never as good as I expect him to be on Morning Joe.
Mr. Stuck
@John Cole:
That weenie wingnut wanker on the Sotamayor nomination was “clubbing baby seal” grade destruction.
sgwhiteinfla
JenJen
O’Donnell doesn’t push back on Scar in the mornings but he has for damn sure kicked some Congressional wingnut ass as of late on Morning Joe. Or didn’t you see him PWN Eric Cantor a couple of weeks back? (I can link it if you missed it) It got so bad that Scar had to step in and save Cantor. Like I said a week ago I don’t know what bee got in his bonnet but Larry has been on fire here lately
ThatLeftTurnInABQ
I imagine the striking air traffic controllers from 1981 will chip in to send them flowers and a sympathy card.
Mr. Stuck
@Dennis-SGMM:
I always thought it kinda cool, and even complimentary. We have better insults than wingnuts, by a snide margin.
JenJen
@sgwhiteinfla: Linky, please! Now that I gotta see!
Edit: I found this one, and he’s kicking Cantor’s ass. Oh, my.
http://www.youtube.com/watch?v=YGRQ39-d5Yg
Mnemosyne
@Paul L.:
Paul, what does the word “unsubstantiated” mean? Here’s the sentence that the writer of that post used it in:
Would you mind taking a quick trip to Dictionary.com to refresh your memory on what “unsubstantiated” means so you understand what a fool you look like for insisting that an admittedly “unsubstantiated” post is PROOF of dictatorship?
TenguPhule
Not when it originally meant Right Wing Kooks of Sun Moon, Cult Leader.
Mr. Stuck
@TenguPhule:
We just called em Moonies, at least in Kentucky.
Mnemosyne
@r€nato:
I wish someone would explain to me when investments became completely risk-free and anyone who lost money investing would immediately have it repaid to them by the ones they invested with or by the government. I seem to have missed out on this utopia of risk-free investing that we supposedly live in today, given the way my IRA is looking. Do I get to call Fidelity and demand my money back?
Tonal Crow
Somewhat OT: Hey, anyone know whether the GOPers are still blaming Obama for the falling Dow?
Dennis-SGMM
@Mnemosyne:
January 20th, 2001.
Rick Taylor
And so the Republicans are going to make political hay by sticking up for the little guy, the small hedge funds that would rather let Chrysler go under rather than not get the best deal they could? Good luck with that.
TenguPhule
First, you need to be rich.
Second, you need to know the right people.
Third, you must be a complete and utter sacknutter.
ChrisB
Meanwhile, Lauria was just on CNBC whining to the choir on The Kudlow Report. Hey, you gave your clients bad advice. Loser.
asiangrrlMN
My heart really bleeds for them. Really. I feel awful, and I’m in agony. Bastards.
Legalize
I just watched video of Lawrence smacking around Eric Cantor. Even with Scar and the other dip-shit doing everything they could to massage his balls, Cantor still fumbled around like a dumb ass. Dear Dems: this really isn’t difficult. Your adversaries are liars and morans. Not. Difficult.
SLS
The point that most of you are missing is that there is a legal process that was circumvented here, to some extent. Chrysler’s bond holders (what you would call the evil hedgefunds – even though the hedge funds clients include pension funds) were senior creditors. that means they should be first in line, legally. The administartion forced a cram down on these creditors while elevating the union to senior creditor and effectively making them controlling shareholders – a position they do not want to be in, btw.
Fiat gets “Chrysler” for $0.00 – they will supply “technology” for small crappy cars that none of you will likely be buying.
I agree that the creditors were foolish for fighting the govt – not because they were wrong or ‘evil’ but because they are unlikely to win.
BTW, these were not the people who brought down the banking system, so why is everybody so intent on disparaging them?