Chrysler just announced that the American automaker is going to file for bankruptcy in New York . President Obama has also announced his support on the move and at the same time will dole an additional $8 billion in tax payers’ money to help the company restructure. As late as Mar 29, 2009, CNN reported that Chrysler will be getting an additional $6 billion in tax payers’ money to help the company with it deal with Fiat. But the next day, Mar 30, 2009, Fox News reported that the Obama administration denied both GM and Chrysler the bailout funds because they did not meet the restructuring requirement. I would assume that this led to Chrysler filing for bankruptcy instead.
Ok, let me get this clarified. Last month Chrysler was denied the $6 billion because the company failed to restructure. This month, April 30, 2009, Chrysler will get $8 billion to help them restructure while the company is on bankruptcy. Does that make sense?
I did some research and found out more about who really owns Chrysler. The majority stake holder in Chrysler is the private equity group Cerberus Capital Management and the minority owner is Daimler AG (a German company) which owns 19.9% stake on Chrysler.
In Obama’s speech today, he chastised the investment firms and hedge funds that were holding out for the prospect of an unjustified taxpayer bailout. And he said this:
“I don’t stand with them,” Obama said at the White House event.
So first he denied Chrysler the $6 billion then he will give Chrysler $8 billion instead. Isn’t that a better deal for whoever owns the stakes in Chrysler? Last time I checked 8 is bigger than 6.
The financial winners on this Chrysler’s move towards bankruptcy are the investors who hold the company’s bonds. That would be Cerberus Capital Management and Daimler AG – a German based company.
Again, Obama is firing unfavorable salvos towards the “greedy investors” but his ever “slight of hands” are giving the investors he vilifies tax payers’ money.
Just a side note: Contribution of Cerberus employees to Obama campaign = $7800; Chrysler employees = $21,000; Securities and Investment companies contributed a total of $14.4 million to Obama campaign. This information is available in opensecrets.org.