Chrysler Files for C11 Tomorrow; Obama Blames Bondholders

by Robert Farago

April 29th, 2009 5:57 PM

chrysler files for c11 tomorrow obama blames bondholders

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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on Apr 30, 2009
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.

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Dolorean23 on Apr 30, 2009
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.

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Steven Lang on Apr 30, 2009

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.

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Tedj101 on Apr 30, 2009

>>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?

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