Obama worse than Kissinger?

[Drake Tungsten]

This is pretty ****ed up...

New Allegations Of White House Threats Over Chrysler

Creditors to Chrysler describe negotiations with the company and the Obama administration as "a farce," saying the administration was bent on forcing their hands using hardball tactics and threats.

Conversations with administration officials left them expecting that they would be politically targeted, two participants in the negotiations said.

Although the focus has so been on allegations that the White House threatened Perella Weinberg, sources familiar with the matter say that other firms felt they were threatened as well. None of the sources would agree to speak except on the condition of anonymity, citing fear of political repercussions.

The sources, who represent creditors to Chrysler, say they were taken aback by the hardball tactics that the Obama administration employed to cajole them into acquiescing to plans to restructure Chrysler. One person described the administration as the most shocking "end justifies the means" group they have ever encountered. Another characterized Obama was "the most dangerous smooth talker on the planet- and I knew Kissinger." Both were voters for Obama in the last election.

One participant in negotiations said that the administration's tactic was to present what one described as a "madman theory of the presidency" in which the President is someone to be feared because he was willing to do anything to get his way. The person said this threat was taken very seriously by his firm.

The White House has denied the allegation that it threatened Perella Weinberg.

Last week Obama singled out the firms that continue to oppose his plan for Chrysler, saying he would not stand with them. Perella Weinberg says it was convinced to support the plan by this stark drawing of a line between firms that have the president's backing and those that did not. They didn't want to be on the wrong side of Obama. Privately, administration officials have expressed confidence that other firms will switch sides for this reason.

These allegations add to the picture of an administration willing to use intimidation to win over support for its Chrysler plans--and then categorically deny it.

http://www.businessinsider.com/new-allegations-of-white-house-threats-over-chysler-2009-5

Threatening creditholders for standing up for their rights while letting the UAW walk off with a sweet deal? **** this...

[Drake Tungsten]

Some background on the Perella Weinberg story...

White House Denies Claims of Threat to Chrysler Creditor

Recent comments by a lawyer representing Chrysler’s dissident debtholders alleging that Steven Rattner, the White House’s auto task force chief, “directly threatened” to wreck the reputation of the investment firm Perella Weinberg Partners if it continued to oppose the Obama administration’s reorganization plan have been picking up steam in the blogosphere.

After President Obama announced Thursday that Chrysler would file for bankruptcy, Perella Weinberg said it would support the government’s settlement with the carmaker’s secured lenders.

But representatives for the Obama administration and Perella Weinberg challenged the accuracy of the account by Thomas E. Lauria, the White & Case lawyer representing the handful of hedge funds calling themselves the Committee of Chrysler Non-Tarp Lenders.

“The charge is of course false as both parties who would know the facts have pointed out,” Bill Burton, a White House spokesman, told DealBook. “It is neither substantiated by people involved in the conversations nor by what has transpired over the course of the last couple of days.”

Perella Weinberg said in a statement that the firm decided to back the government-proposed settlement Thursday afternoon, after Mr. Obama criticized the lenders in harsh terms.

“In considering the President’s words and exercising our best investment judgment, we concluded that the risks of potentially severe capital loss that could arise from fighting this in bankruptcy court far outweighed any realistic potential upside,” the firm said, suggesting that its decision was based on financial calculations. (Read the full statement at the bottom of this post.)

Mr. Lauria couldn’t be reached for comment on Sunday.

Chrysler’s secured lenders argued that the $6.8 billion of the carmaker’s debt that they hold must be repaid before junior creditors. In a statement on Thursday, the group — then numbering about 20 firms — said that while they had proposed accepting 60 cents on the dollar as repayment, their offer was rebuffed. The administration’s offer to those debtholders was 29 cents on the dollar.

Mr. Lauria said that his clients’ most recent offer to the government, made Thursday, was for a settlement of about 50 cents on the dollar, a proposal that a person briefed on the matter said involved $2.5 billion of repayment, including $500 million to minority debtholders. The government, which had given the dissident investors until 6 p.m. on Wednesday to make an acceptable offer, rejected the plan.

Among the most public members of the group at that point were Perella Weinberg, Oppenheimer and Stairway Capital Management, all members of the Chrysler lenders’ steering committee, which included JPMorgan Chase, Citigroup, Morgan Stanley and Goldman Sachs. The dissident group’s statement suggested that they would contest the government’s reorganization plan in bankruptcy court.

In an interview with a Detroit radio host, Frank Beckmann, Mr. Lauria said that Perella Weinberg “was directly threatened by the White House and in essence compelled to withdraw its opposition to the deal under threat that the full force of the White House press corps would destroy its reputation if it continued to fight.”

In a follow-up interview with ABC News’s Jake Tapper, he identified Mr. Rattner, the head of the auto task force, as having told a Perella Weinberg official that the White House “would embarrass the firm.”

http://dealbook.blogs.nytimes.com/2009/05/03/white-house-perella-weinberg-deny-claims-of-threat-to-firm/?hp

[Jon Miller]

I thought you liked Kissinger?

JM

[Drake Tungsten]

I do, but it's certainly not a compliment to be described as more devious and two-faced than him.

[chequita guevara]

The UAW isn't getting a sweet deal. The shares in Chrysler would be bought by the UAW's pension plan, which is a separate company. The UAW would be fvcked if they took that deal. It certainly wouldn't give the workers control of the company, even if their pension had a majority stake. Even if the UAW controlled the shares directly, the deal was engineered to keep control out of their hands. It's a horrible deal for the union, and the bureaucrats are giant idiots for considering it.

[mrmitchell]

in this thread:

baseless FUD spread by the investor class

[Drake Tungsten]

The UAW would be fvcked if they took that deal. It certainly wouldn't give the workers control of the company, even if their pension had a majority stake. Even if the UAW controlled the shares directly, the deal was engineered to keep control out of their hands.

Yes, the best prescription for the American auto industry is to give the UAW even more control over the companies.

[Jon Miller]

Basically I think that the investors should get screwed. I have no complaints with the government not bailing out the investors when it is bailing out the company.

JM

[Jon Miller]

Basically I think that the investors should get screwed. I have no complaints with the government not bailing out the investors when it is bailing out the company.

JM

[Arrian]

I really don't know what happened, but it's pretty obvious that you've just posted the creditor's sour grapes on what went down. I should believe them because?

-Arrian

[Jon Miller]

Also, just as obviously, the management and union which are also responsible for the companies failure should similarly not be rewarded.

JM

[Drake Tungsten]

Basically I think that the investors should get screwed. I have no complaints with the government not bailing out the investors when it is bailing out the company.

I think you're confusing mere investors and senior creditors. These people have the right to get paid first in any Chrysler bankruptcy and the Obama administration is threatening them to keep them from exercising their rights in the pseudo-bankruptcy the White House is overseeing.

[Jon Miller]

When they agreed to be a creditor to Chysler they knew it could go completely up in flames.

The government stepping in means it has gone completely up in flames. The government then dictates who gets what...

JM

[OzzyKP]

I bet it is all Rahm's doing.

[chequita guevara]

In bankruptcy proceedings, creditors (which includes investors) have first dibs at the carcass. Workers are at the bottom of the pile. The White House, though, correctly sees that if the normal procedures take place, it will hurt the overall economy.