Why Won't Chrysler's Owner Bail Themselves Out?
Date 2008/12/11 8:27:30 | Topic: Miscellaneous
|While the senate debates the current $14 billion bailout package for GM and Chrysler, Forbes recently published a fantastic article about Chrysler's parent company, Cerberus, and the fact that they probably have the cash to bail out Chrysler - they just don't want to. The article stems from a New York Times article about Cerberus' lobbying of U.S. Treasury Secretary Henry Paulson by former Treasury Secretary John Snow (now in the employment of Cerberus). |
Cerberus is a private equity firm - the key word there is "private" meaning that for the most part, they get to keep their books closed. Dan Gerstein, the author of the article, does a great job of outlining the demands the U.S. Government should be making to Chrysler before giving them any of the bailout money. Some snippets:
Buried on the business page of The New York Times Saturday were the details of Detroit's biggest snow job yet--literally as well as figuratively. Turns out that Cerberus CEO John Snow, who spent three-and-a-half lackluster, and some might say lap-doggish, years as President Bush's second Treasury secretary, is leading a who's who of crony capitalists in a lobbying campaign for a taxpayer bailout to "salvage Cerberus' investment in Chrysler."
To date, Cerberus has barely tapped any of its massive holdings--its investments in Chrysler are estimated to be just 7% of its assets under management--to stabilize Chrysler's precarious finances; the exception was a $2 billion loan in July. Instead, the company has shed 30,000 jobs, a specialty of cost-cutting corporate flip artists like Cerberus.
"We're not in this for the money," said Cerberus COO Mark Neporent, in what easily qualifies as the most laughable statement in American politics since Sarah Palin said seeing Russia qualified her to be commander in chief.
Enough of the snippets - go read the entire article for yourself.