By on December 19, 2008

Ever since Cerberus took ownership of Chrysler, it has been lights out at what was once America’s third-largest automaker. With Daimler holding on to a 20% stake in the firm, some small news was public. And Chrysler did report its [dismal] sales each month. But that’s about it. The public relations folks were rolled into human resources. Cerberus played its cards close to its chest. And this was what we all expected from the beginning; it was at least in theory one of the major high-points of Cerberus taking over as Chrysler’s owner. They didn’t have to keep an open book, report financial data, and be subject to the short-term goals of shareholders. But it has also meant we have no idea what is going on inside this big company with tens of thousands of employees. Now that you and I are non-voting shareholders, we should have a better idea.

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18 Comments on “Bailout Means Look Into Cerberus and Chrysler...”


  • avatar
    guyincognito

    ” Now that you and I are non-voting shareholders, we should have a better idea.”

    Surely you jest.

  • avatar
    Justin Berkowitz

    Part of the terms of the bailout were open books for the government to see. You can bet plenty of info will be released to the public now.

  • avatar
    guyincognito

    @ Justin:

    You mean like all the info we’ve seen on the banks that have received TARP funds and what they’ve done with them?

  • avatar
    rkeep820

    It will be a cold day in hell before BUSH gives Detroit or UAW anything.

    Wait, maybe that explains the winter blizzard that just hit Detoit.

    There ya go. Turn the lights back on at the rencen we can cover our utility bills another 2 months now.

  • avatar
    Stu Sidoti

    Chrysler Asia Chief Phil Murtaugh just quit.

    Chrysler Marketing Chief Deborah Meyer just quit.

    Earlier this week, Purchasing Chief Joe Campi quit and Parts and Service chief Simon Boag quit on December 15th.

    Anybody see a pattern here?

  • avatar
    ithiel

    It still baffles me how the government isn’t requiring Cerberus to open their books before they get bailout. Regardless of the proven less-than-stellar decision making skills of many in government, how does lending a company money before looking into their financial status make any sense? If you or I were to go down to the bank to request even a small loan, you can bet they would do a credit check, etc. What the government has done is to effectively issue the loan and then do the credit check. ???

  • avatar

    Have Fox News sue them to disclose their Bailout info!

  • avatar
    psarhjinian

    Part of the terms of the bailout were open books for the government to see. You can bet plenty of info will be released to the public now.

    Suuuuuure they’ll see the books. Some of them. After much hemming and hawing about competitive secrecy requirements and such. After all, GM was chided for not being able to provide complete and accurate statements to it’s auditors. I highly doubt Chrysler–a private entity–will do any better.

    I’ll also wager one or more of them will pull the National Security card when the requests for information get too personal.

  • avatar
    Justin Berkowitz

    Here’s the bottom line. Right now we know nothing. I’m not saying we’ll have a perfect idea of what is going on at Chrysler. But it sure as heck is going to be better than the land of no information that we’re in right now.

  • avatar
    Tiger Commanche

    Absolutely no due diligence done prior to forking over such a massive loan. Unbelieveable.

    And did any congressional member really question GM about their “long term” viability when testifying the other week? Did anyone ask what products GM has beyond 2011 save the (1) Volt, (2) the Holden VE Ute or (3) the “alpha” platform (which is a small car based rear-wheel drive platform)? That is all the GM engineers are working on right now, and does Chrysler even have any long term products in the pipeline at all?

    GM engineering staff is at “critical” level meaning if they slash any more engineers they simply cannot engineer vehicles. My 3rd grader conducts more “due diligence” when lending lunch money to her school friends.

  • avatar
    porschespeed

    Nothing to see here. Nothing at all. Move along folks…

    As always, FOX is all about infotainment, not getting at the real story.

    Bloomberg is already suing under FOIA for access to what happened to the REAL money…

    2 TRILLION in emergency ‘loans’ already made. Done. Not maybe, not possibly. Already made.

    As the banking system continues to shake out in 2009, one will find that a good chunk of those ‘loans’ are not getting paid back either.

    While the MSM plays along with the center stage show giveaway known as TARP, the real money is swapping hands behind the curtain.

  • avatar
    windswords

    Has anybody seen this story?

    An Associated Press story cites Cerberus as saying it will invest the first $2 billion in Chrysler Financial profits into Chrysler LLC, adding to the $4 billion in funding from government loans. However, like the White House, Cerberus will demand that Chrysler labor costs be cut to the same level as foreign transplants – around $10 per hour for existing workers in combined wages and benefits according to some analysts – and creditors must “restructure” debt. (Restructuring can mean changing payment terms, cutting the amount to be repaid, or both.)

    In return for these concessions from workers and creditors, Cerberus said it would provide equity in Chrysler to unions and creditors.

  • avatar
    autonut

    It is nice to be young and idealistic!
    Chrysler is a private company. Why anyone would imagine that because it got business loan it will open books? And who said that there is only one set of books? And who knows how those books are kept?

    GM is public company and books are open and no one had idea 12-15 months ago that they would be bankrupt today. And GM has auditing accounting firm and tax advisory accounting firm and neither one saw anything coming. Add to that 3 credit agencies.

  • avatar
    porschespeed

    GM is public company and books are open and no one had idea 12-15 months ago that they would be bankrupt today. And GM has auditing accounting firm and tax advisory accounting firm and neither one saw anything coming. Add to that 3 credit agencies.

    Autonut,

    I don’t know a soul (outside of those with ‘true believer’ status) who didn’t see this coming.

    There was a Forbes interview with Red Ink Rick in Feb of 2007. Conclusion at end of article? GM will be bankrupt by Oct 2008. Forbes was late to the party.

    All the information was right there. All GM’s own numbers have been adding up to a bankrupt GM for years. Years.

    You know who pays the credit rating agencies? The same person who pays the accountants. The clients. Inherent conflict of interest? You betcha. Why do you think all that “AAA” rated paper is only good for wiping your ass?

  • avatar
    Landcrusher

    It’s always a bad sign when PR gets cut back or eliminated. Unless some firm has too much PR for their size, they are usually doing it because they prefer less transparency, and/or they don’t give a rat’s arse what anyone thinks.

    PR doesn’t just spin for the press, they also advise management to prevent boneheaded moves that may play poorly in spite of being reasonable business decisions (jetgate). They also usually control the charitable giving, which can prevent it from being abused by upper management. When you consider all the PR functions, and then you see a company dump them, you can usually predict bad news will eventually catch up with them. You should dump shares and business ties quickly when this occurs.

  • avatar
    Justin Berkowitz

    autonut :

    It is nice to be young and idealistic!
    For me, idealism ended a long time ago. I think it was when I started writing on TTAC and discovered that there were adults outside of universities that claim to be libertarians.

    Chrysler is a private company. Why anyone would imagine that because it got business loan it will open books?
    Because that’s how loans usually work. You have to get a credit check before getting a car loan. Businesses look at each other’s books before doing a business deal (due diligence). The creditor gets to look at the debtor’s books. It’s just that in this case the creditor is the US government.

    As I said in the original post, I am not claiming that overnight Chrysler goes from opaque to transparent. All I am saying is that we will have “a look” into Chrysler. As in, more than we have now.

    And who said that there is only one set of books? And who knows how those books are kept?

    The days of mob bookkeeping are long gone. They were done even when I studied this crap back in law school. We live in the era of Arthur Anderson bookkeeping now.

    GM is public company and books are open and no one had idea 12-15 months ago that they would be bankrupt today. And GM has auditing accounting firm and tax advisory accounting firm and neither one saw anything coming. Add to that 3 credit agencies.
    Now who’s being overly idealistic? A minute ago you were talking about Chrysler cooking the books. What makes you say GM didn’t do the same thing with theirs?

    The credit agencies have no credibility since they botched dozens of ratings over the last decade in an attempt to see the economy grow. Where were they on Lehman?

    As for nobody seeing it coming, LOTS of us did. Farago published GM Deathwatch 1 in April 2005.

  • avatar
    jkross22

    @Justin,

    There is no evidence available that indicates scrutiny is being applied to ANY of the TARP money. If there is, I would be excited to learn of it.

    The same appears to be the case here with the money grab by GM and Chrysler. Bush mumbled something about no more private jets or job banks and a vague reference to limiting executive pay, but from what I understand, it’s just talk. Those are not legal conditions that are part of the $17B “loan”. By the way, what are the repayment terms on this “loan”? What interest rate is being paid?

    The game of smoke and mirrors continues on the taxpayer dime.

  • avatar
    KalapanaBlack

    Tiger Commanche :
    December 19th, 2008 at 1:48 pm

    …does Chrysler even have any long term products in the pipeline at all?

    They have a V6 engine of more than three liters in development. Due out just in time for 87 octane to reach $3/gal. again, doubtless.

    They also have… well… No, I guess that’s just about it.

    Oh, the enigmating, theoretical, pipe-dream replacement for the utterly failed Avenger/Sebring midsize program, the existence of which seems only to be bi-monthly press releases mentioning the supposed program’s continued progress in laughably abstract terms.


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