An attorney representing several Chrysler bondholders accused the Obama administration of intimidating his clients by issuing threats of public humiliation if they opposed their brokered deal to resolve the automaker’s debts. Speaking to WJR, Thomas Lauria said that the White House called the bondholders “vultures” for insisting on their rights as senior creditors and told them that the Obama administration would use the White House press corps to attack them in the media. Corky Boyd has the transcript (also via HA reader Geoff A):
Lauria: Let me tell you it’s no fun standing on this side of the fence opposing the President of the United States. In fact, let me just say, people have asked me who I represent. That’s a moving target. I can tell you for sure that I represent one less investor today than I represented yesterday. One of my clients was directly threatened by the White House and in essence compelled to withdraw its opposition to the deal under the threat that the full force of the White House Press Corps would destroy its reputation if it continued to fight. That’s how hard it is to stand on this side of the fence.
Beckman: Was that Perella Weinberg?
Lauria: That was Perella Weinberg.
Glenn Reynolds wonders how the White House press corps will feel about being used as an arm of the administration to beat its opposition into submission. My guess? Enchanted, with just a couple of exceptions. He also wonders whether they will show the slightest inclination to ask about these allegations. So far, it looks like the Sounds of Silence on the WHPC dial rather than We’re Not Gonna Take It.
Bear in mind that this is one attorney operating in his client’s interest, and attorneys do like to make media waves by fighting cases on the evening news and the front page before they fight them in court. However, the WHPC should be asking whether they’re getting played by the Obama administration — and consider the strong possibility that they’ve allowed themselves to be put in that position.
Update: Jake Tapper reports the allegations and wants an answer from the White House:
A leading bankruptcy attorney representing hedge funds and money managers told ABC News Saturday that Steve Rattner, the leader of the Obama administration’s Auto Industry Task Force, threatened one of the firms, an investment bank, that if it continued to oppose the administration’s Chrysler bankruptcy plan, the White House would use the White House press corps to destroy its reputation.
Thomas Lauria, Global Practice Head of the Financial Restructuring and Insolvency Group at White & Case, told ABC News that Rattner suggested to an official of the boutique investment bank Perella Weinberg Partners that officials of the Obama White House would embarrass the firm for opposing the Obama administration plan, which President Obama announced Thursday, and which requires creditors to accept roughly 29 cents on the dollar for an estimated $6.8 billion owed by Chrysler.
Lauria first told the story, without naming Rattner, to Frank Beckmann on Detroit’s WJR-AM radio.
The White House now denies the allegations, claiming that there’s no evidence of it (via Geoff A):
The White House said the story was false.
“The charge is completely untrue,” said White House deputy press secretary Bill Burton, “and there’s obviously no evidence to suggest that this happened in any way.”
No evidence? What about Lauria’s personal testimony?
Meanwhile, Tommy Christopher — who actually reports from the White House — dismisses the charge:
As far as the “threat” Lauria alleges, it sounds an awful lot like someone told his client that public opinion would not likely be favorable to people who would obstruct a fair deal to save Chrysler. That’s not a threat, it is a reality. It’s no more a “threat” than John McCain’s campaign promise to make earmarkers “famous.”
Apples and oranges. McCain threatened to make public officials “famous” for wasting taxpayer money. The Obama administration allegedly threatened to use the WHPC to destroy the reputations of private citizens as a punishment for not relinquishing their contractual rights for having helped float Chrysler. There’s a huge difference between the two.