We have two more updates to the Chrysler bankruptcy story, neither particularly surprising but rather depressing nonetheless. First, the bankruptcy court has revealed the list of senior creditors objecting to the deal the Obama administration attempted to cram down their throats through threats of public attacks. How long before someone arranges another AIG-style rich-hunt (h/t HA reader Geoff A)?
The names of nine dissident Chrysler debt holders were disclosed Wednesday, but a number of others chose to avoid the spotlight first put on them a week ago when President Barack Obama publicly chastised them for not supporting his plan for the automaker.
The nine lenders, which include previously disclosed members Stairway Capital Management and OppenheimerFunds Inc., represent just $295 million of Chrysler’s total of $6.9 billion of secured debt.
Previously, lawyers for the group estimated its size at 20 members with about $1 billion in debt.
The shrinking numbers attest to the real power of a “madman theory of the Presidency” on investors. So far, it appears that the creditors have decided to continue in opposition to the plan, but they are now down to a small minority of the overall senior creditor interest. My guess is that the judge rolls over them fairly quickly.
Of course, that’s what has happened to the American taxpayer under this plan, too, although Barack Obama seems awfully quiet about it. The administration buried the fact that they don’t expect repayment on any of the TARP funds granted to Chrysler, and won’t even keep a position in the company for any extended period of time. The American taxpayer literally will get nothing for the billions of dollars showered on Chrysler, from which the UAW and FIAT will benefit the most. Henry Blodgett says, “Suckers!”
The White House confirmed yesterday that the $8 billion in “bridge loans” the U.S. taxpayer has given to Chrysler over the past six months, including $4 billion in bankruptcy financing, won’t be paid back. Taxpayers also won’t be getting a big slug of Chrysler stock in exchange.
Instead, the wreckage of Chrysler will be divided up among Fiat, Chrysler’s unions, and Chrysler’s debtholders. Which means that the taxpayers’ $8 billion was just a gift to these three consitituencies.
Blodgett wonders whether the Obama administration will explain its “gift” to the saps who paid for it. I’d say that the explanation is obvious. The White House wanted to pay off the UAW and used the shell of Chrysler to do it. That’s not the work of a madman, but a calculated political act.