By on April 29, 2009

Bloomberg reports that not-entirely-unexpected news that President Obama will announce Chrysler’s bankruptcy tomorrow. The president will outline the automaker’s restructuring, along not-entirely-unexpected lines (known in these parts as “good” Chrysler / “bad” Chrysler). In other words, Uncle Sam is reconstituting ChryCo as a partnership between the United Auto Workers (55 percent), Fiat (20 percent) and you, the people (25 percent). And guess who gets to put in the $6b plus to make this happen? That’s right: you! But then you’ve already put in over $4b, so what the heck. Anyway, Chrysler buyers (both of them) shouldn’t worry that C11 will stop Auburn Hills in its tracks; you’re very generous. Automotive News [sub] reports that Chrysler will extend current consumer incentives (a.k.a. employee pricing plus) until Monday. Meanwhile, The Wall Street Journal reports that President Obama is laying the blame for Chrysler’s collapse right where it doesn’t belong: Chrysler bondholders.

At a town hall meeting in Missouri on Wednesday, Mr. Obama said he still didn’t know “whether the deal is going to get done.” He told the audience that Chrysler’s unionized workers “have made enormous sacrifices,” but that a key question now was: “Are the bondholders–the lenders, the money people–are they willing to make sacrifices as well?  We don’t know yet.”

One word: Sebring.

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53 Comments on “Chrysler Files for C11 Tomorrow; Obama Blames Bondholders...”


  • avatar
    FloorIt

    If they crush the remaining Jeep Compass’, they can use my paid taxes part of the $6B for the C11.

  • avatar
    Rastus

    Obama, Obama…HE my MAN!!!

    http://www.2flashgames.com/2fgkjn134kjlh1cfn81vc34/flash/f-McDonalds-Car-2715.jpg

  • avatar
    Stein X Leikanger

    Goodbye Chrysler. Welcome Chrisisler.

  • avatar
    Ryan

    The only way this news could get better is if (or when) they file for Chapter 7. I am keeping my fingers crossed. Twice in thirty years this shithole company has needed American taxpayer money to stay afloat. Chrysler – Good riddance you junk producing American embarrassment. I only hope we can get our money back.

  • avatar
    Jeff Puthuff

    In a somewhat related revelation (but we know this already) re: the “money people” . . . From HuffPo:

    Sen. Dick Durbin (D-Ill.) has been battling the banks the last few weeks in an effort to get 60 votes lined up for bankruptcy reform. He’s losing.

    On Monday night in an interview with a radio host back home, he came to a stark conclusion: the banks own the Senate.

    “And the banks — hard to believe in a time when we’re facing a banking crisis that many of the banks created — are still the most powerful lobby on Capitol Hill. And they frankly own the place,” he said on WJJG 1530 AM’s “Mornings with Ray Hanania.”

  • avatar
    quasimondo

    The only way this news could get better is if (or when) they file for Chapter 7. I am keeping my fingers crossed. Twice in thirty years this shithole company has needed American taxpayer money to stay afloat. Chrysler – Good riddance you junk producing American embarrassment. I only hope we can get our money back.

    Then you probably shouldn’t hope for Ch 7 if you want a return on your bailout investment.

  • avatar
    gslippy

    I say the cup is 55% full. It will be fun watching the UAW try to run a company, meet a payroll, and compete in the marketplace.

    More interestingly, they have effectively eliminated themselves in this deal. To whom can they complain about their rights? Can they go on strike against themselves?

    And then Chrysler will die. Again.

  • avatar
    Rastus

    Ryan, you and I are kindred spirits…we think along the very same lines.

    American Disgrace!!!

    …maybe if THEY make a McDonald’s mobile(!!!)…

  • avatar
    kowsnofskia

    So Chrysler is going Chapter 11…but it still will get $6b in cash to “make the deal happen”. Is this the money that was supposedly being used to “sweeten the pot” for Fiat?

    At least now when the whole mess fails the UAW really will have nobody to blame but itself.

  • avatar
    Ryan

    “Then you probably shouldn’t hope for Ch 7 if you want a return on your bailout investment”.

    Chapter 7 or 11 the American Taxpayer is getting stuck either way. At least Chapter 7 would get rid of the problem.

  • avatar
    NoSubstitute

    “And guess who gets to put in the $6b plus to make this happen? That’s right: you!”

    Well, sorta kinda. Given the size of the deficit, the money for all these new initiatives is effectively coming from buyers of U.S. bonds. Since tax receipts for the foreseeable future won’t be sufficient to pay down any of this debt, or even interest on the debt, it’s more or less a free ride for the American taxpayer. And if all of this borrowing and spending eventually leads to hyperinflation, we’ll be able to pay back the lenders with valueless dollars, while retaining our ownership of Government Fiat Inc.

    Sounds like a deal to me.

  • avatar

    Well, now that Chryco is my company, I say, put Peter Schutz, the American Jewish engineer who ran Porsche in the ’80s, in charge.

  • avatar
    autoemployeefornow

    The real question is Why are we saving Chrysler at all? Chapter 7-11 who cares? What the hell will be left? Do they/Fiat really have anything people will buy? Not much I say.

  • avatar

    Where do I send my condolences?

  • avatar
    carguy

    The only way the taxpayers will ever see that money again is if we invent a time machine, travel back to 2008 and not give them any. They should have been allowed to go C11/7 last year.

  • avatar
    Geotpf

    carguy :
    April 29th, 2009 at 5:18 pm

    The only way the taxpayers will ever see that money again is if we invent a time machine, travel back to 2008 and not give them any. They should have been allowed to go C11/7 last year.

    And, before everybody blames Obama for this, remember who was president in 2008.

  • avatar
    PeteMoran

    @ RF

    What happens with Nardelli, Press etc??

  • avatar
    paris-dakar

    Obama isn’t the only one blaming the Bondholders, I’m sure we’ll hear the same Talking Points repeated here shortly.

    And talk of the “enormous sacrifices” of the UAW is vomit-worthy.

  • avatar

    known in these parts as “good” Chrysler / “bad” Chrysler

    So “Good” Chrysler consists of the Wrangler and….. ?

  • avatar
    matt

    One word: Sebring.

    Doesn’t this really say it all?

  • avatar
    paris-dakar

    Then you probably shouldn’t hope for Ch 7 if you want a return on your bailout investment.

    Since I was never stupid enough to fall for that ‘Bail Out investment’ nonsense, I was nver susceptible to this Bait and Switch.

    If this is a Bait and Switch, there may be a particular variety of Confidence Game that fits better.

  • avatar
    rkeep820

    What happens to the pensions for those already in retirement and those say 10-15 years into the Chrysler pension plan? Isn’t is underfunded by 9.3B? PBGC?

  • avatar
    Luther

    What an Obamanation this is.

  • avatar
    Mr. Sparky

    The shotgun wedding of Chrysler and Fiat will be taking place tomorrow on the (bankruptcy) courthouse steps.

    Treasury Secretary Timothy Geithner will wed the happy couple and present them with a six billion dollar dowry.

    Taxpayers are encouraged to throw tax dollars instead of rice at the newlyweds.

    I guess they decided to elope after all!

  • avatar
    Neb

    At least Cerberus got the shaft.

    (It did get the shaft, right?)

  • avatar
    lw

    Cerberus never gets the shaft. You can bet they already covered their investment.

  • avatar
    jkross22

    Messiah Motors, part deux.

  • avatar
    jkross22

    @Geotpf:
    And, before everybody blames Obama for this, remember who was president in 2008.

    Uh, who is president NOW, overseeing and encouraging this debacle?

    Bush sucked, but he’s not the one pulling the trigger on this. If anything, Obama is magnifying what was Bush’s boneheaded move.

    Change!

  • avatar
    troonbop

    “Messiah Motors, part deux.”

    I like it a lot. Let’s get started on the logo.

  • avatar
    golden2husky

    Maybe we could take the “good Chrysler” – Jeeps and minivans and maybe a Challenger or two and meld them with the “good GM” and end up with a selection of good vehicles from a medium sized company. LOL

  • avatar
    bunkie

    What? No blame for Daimler? I’d have to say that the “anschluss of equals” and the subsequent looting of Chrysler’s cash had an awful lot to do with the current situation.

    But that’s okay. it’s so much easier to blame Obama.

  • avatar
    amadorgmowner

    Cut the Messiah Motors crap. Ha ha. Really funny (not).It should be Bush/Paulson Motors. That’s who started this bailout baloney. I am sure Cereberus did not get the shaft. The US taxpayers have got and will continue to get the shaft. Great. Now that GM has devalued my two Pontiacs, Chrysler has devalued my Dakota. Murphy’s law. I should have started buying Toyotas years ago. I sure as hell will not buy a Marchionne Motors Chrysler. Will it come with a coupon for a genuine Italian pizza direct from Italy?

  • avatar
    Daniel J. Stern

    @Ryan & Rastus: I hate to use facts to shoot such an ugly hole in the beautiful rant you two are in the middle of, but Chrysler has never before now needed or taken taxpayer money. In 1979-80, the company received Federal loan guarantees, not Federal loans or handouts or anything of the like. All the loans were repaid in full before they came due; the whole deal didn’t cost American taxpayers anything. Furthermore, while Chrysler have certainly produced bad vehicles and made bad decisions, but they’ve also made wise choices and produced good vehicles. Their minivans, for one example, owned the North American market segment for many years and were very popular abroad, as well.

  • avatar
    Daniel J. Stern

    @Bunkie: Genau, er, I mean, exactly. Chrysler were doing very well in most respects before Eaton decided to get rich(er) by flushing the company down the toilet with the 3-pointed star.

  • avatar
    Rastus

    Can I say something? This “blame Bush, blame Obama” nonsense is just that- a load of crap.

    Obama campaigns on ending the war, and instead, some 3 months later (after election) he votes to INCREASE our presence in Afghanistan, and EXTEND the “withdrawal” of troops from Iraq…

    What do you guy expect? We do NOT have a 2-party system. You need to wake up, smell the coffee, and come to the true conclusion that we have a 2-headed, 1-party system!!

    Hell, these so-called “antagonists” meet (against federal law) OUTSIDE of Congress, in the same forums(!!, look up “Bilderberg” on wikipedia), and make policy behind closed doors.

    There’s no F’n “Change”. You need to grow up and realize that your “Dem vs. Rep” bullshit is just an illusion to keep you from seeing the truth.

    Change my ASS!!!

  • avatar
    lw

    @Rastus

    Well said. Change would be the removal of lobbyists and ways to funnel money, jobs, & perks to the elected officials. Also the removal of all earmarks. So far none of that has happened, I wouldn’t expect it to.

    I would love to see the Federal Government go back to the basics, (defend us from external and internal hazards, make things fair for commerce and deliver interstate projects like massive highways).

    Then the federal government lowers taxes while the states raise taxes to match the drop in federal taxes.

    If Vermont wants a statewide service and Texas doesn’t, let them decide for themselves. Keeping the money, power and decisions local is the only way to have any accountability.

  • avatar
    akear

    You thought Chryslers were unreliable, you haven’t experienced Fiats yet. My friend in England still calls Fiats shit boxes. They are really at the bottom.

  • avatar
    bunkie

    I think it must be said. Lots of Chrysler products really suck. But some of them have more character and attractiveness than any single Toyota or Honda (with the exception of the S2000, soon to be discontinued) that I can think of. The same is true of a number of GM products.

    If we lose these companies, the auto landscape will be a poorer place. Many will disagree with me. That’s fine, there’s room for all tastes. But as a lover of American cars, I fear for the future populated exclusively by wheeled appliances.

  • avatar
    bunkie

    “Keeping the money, power and decisions local is the only way to have any accountability.”

    I once lived in a town in Hew Hampshire which had little state oversight. The money certainly did sat local. In this case it all went to the entrenched local political family that was in the paving business. The town had fabulous roads. The library (to use just one example), however, could fit in a single-car garage.

  • avatar
    windswords

    Geotpf:

    “And, before everybody blames Obama for this, remember who was president in 2008.”

    And remember who was in control of Congress in 2008.

    Luther:

    “What an Obamanation this is.”

    No, that’s Obama-nation. It’s his now. It belongs to the Soft Drink.

  • avatar
    Lokkii

    Sic transit Mopar Mundi

  • avatar
    zerofoo

    I just hope I can continue to get parts for my jeep.

    -ted

  • avatar
    guyincognito

    According to the CH11 Wiki:

    “The court is ultimately responsible for determining whether the proposed plan of reorganization complies with the bankruptcy law.”

    So, is it really a CH11 when Obama announces the terms in advance?

    I do have to admit, though, that I am interested to see results of a FIAT UAW merger. It will be quite an interesting social experiment.

  • avatar
    jpcavanaugh

    Ryan:
    Twice in thirty years this shithole company has needed American taxpayer money to stay afloat.

    You need to check your facts. The last go around, the Government guaranteed $2 billion of private loans. The feds would only fork over cash if Chrysler defaulted on the loans.

    Chrysler did not default, but paid them back. The feds did not spend a dime, and actually made a bundle for taking on the risk.

  • avatar
    carlos.negros

    Obama didn’t force bondholders to forgive most of the debt they own.

    It is not clear whom the court will consider to be the first in line at a bankruptcy hearing. Pensioners have contracts too. Workers have contracts, whether you like them or not. They were legal. It appears Bondholders decided to take what they could get rather than leave it up to a court.

    As far as taxpayer bailout for restructuring, let’s not forget it was the Bush Administration that started this off. In the end, is it really clear that the taxpayers would have saved any money by paying unemployment benefits to all the discharged workers, not collected taxes, have even more homes go into foreclosure, and still have the shareholders and bondholders screwed?

    If anyone is to blame, it is the companies that rated the bonds and who didn’t do their job and tell investors the real shape of the company. If they did tell the truth, then I have no sympathy for the bondholders because they took the risk.

  • avatar
    jkross22

    Ratsus: +1

    Now, how many of those who agree with you STILL voted for McCain or Obama? Too many, I suspect.

    That’s the problem.

  • avatar

    Dear little lord infant baby Jesus, please help us dodge dealers have a better quarter than last, and pretty please keep the contract valid btw cummins diesel and Chrysler

  • avatar

    Change would be the removal of lobbyists

    lw

    That’s unconstitutional. As odious as K Street lobbying is in this day and age, lobbying is what the First Amendment calls petitioning the government for redress of grievances.

  • avatar
    HEATHROI

    That’s unconstitutional. As odious as K Street lobbying is in this day and age, lobbying is what the First Amendment calls petitioning the government for redress of grievances.

    You do know that the last boss, (the unlamented Dubya) called the constitution just a scrap of paper.

  • avatar
    Lumbergh21

    And, before everybody blames Obama for this, remember who was president in 2008.

    And remember who told him that he wanted this bailout to go through. I think that brings us back to Obama with Bush as a spineless assistant in this mess.

  • avatar
    dolorean23

    In 1979-80, the company received Federal loan guarantees, not Federal loans or handouts or anything of the like. All the loans were repaid in full before they came due; the whole deal didn’t cost American taxpayers anything.

    This is fundamentally false as yes, Chrysler did receive loan guarantees but they also received tax creditation and cuts amounting to almost as much. Who paid for that?

    Also, Chrysler had actual vehicles that people wanted to buy. The K-Cars, Caravans, and the new Jeep Cherokee were the perfect combination of cars for the time and in many ways revolutionary. None of Chrysler’s current or future lineup remotely apes the 80’s, which makes the merger with Fiat a very good thing indeed.

  • avatar
    Steven Lang

    dolorean23, that wasn’t the case back then.

    If memory serves me correctly, the following vehicles were launched well after the loan guarantees were put into place…

    K-Car : 1981

    Minivan : 1984

    Jeep : Acquired in 1987 from AMC/Renault

    The 1980 Lineup was actually far worse than what Chrysler has right now. Unfortunately the woeful state of today’s car market is more than making up for the one then.

    Chrysler would be far better off as a manufaucturer of trucks, minivans, and SUV’s. But that’s a topic for another day.

  • avatar
    tedj101

    >>is it really clear that the taxpayers would have saved any money by paying unemployment benefits to all the discharged workers, not collected taxes, have even more homes go into foreclosure, and still have the shareholders and bondholders screwed?<<

    Is it really clear now that the taxpayers will not have to pay unemployment benefits to those same discharged workers and have those same homes go into foreclosure now that we have put 4b into it?

    It sure isn’t clear to me. It just looks like we spend 10b and then have the same result a year or so later…

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