How Stupid Does Cerberus Think We Are?

Cerberus is the highly secretive private equity company that owns Chrysler, the ailing American automaker that just scored $4b from the Troubled Asset Relief Program (TARP). Cerberus also owns 51 percent of lender GMAC (soon to be less) and all of Chrysler Financial Services. And a lot of Burger Kings. Anyway, The New York Daily News reports today that “Cerberus says it will invest the first $2 billion of Chrysler Financial profits back into the financing arm’s parent automaker.” WHAT PROFITS? This horseshit comes hard on the heels of Cerberus pledge not to take any profit on Uncle Sam’s forthcoming $4b “investment” in Chrysler. WHAT PROFIT? CEO “Boot ’em Bob” Bob Nardelli and his golden parachuted pals want us to believe that Chrysler is determined to become a profitable automaker. Is there anyone who actually believes that? FYI, make the jump for Cerberus’ reason why Uncle Sam must boldy go where the equity firm fears to tread.

From The Wall Street Journal’s Deal Journal, Dec. 17:

“Cerberus has invested all it is allowed to in Chrysler: The $27 billion Cerberus manages isn’t cash on hand. Cerberus’s charter maintains that the firm can’t put more than 5% of its assets into any one investment; to buy Chrysler in the first place, Cerberus had to seek permission from its limited partners to bend the rules of the charter. To inject more money into Chrysler, Cerberus would have to again seek permission. And the chances are slim that the LPs would agree to invest–and potentially lose–another batch of money on an auto maker so close to bankruptcy precipice that it has hired bankruptcy advisers. Cerberus’s LPs know what everyone else knows: that the financial tsunami of the past few months has wiped even more of the value from auto makers than would otherwise be the case in an economic downturn. ‘The timing of the investment was unfortunate,’ this person said, and Cerberus ‘can’t recover.'”

Says who?