Who do you believe? The “evil” investment firm lawyers or the White House. Normally, I am skeptical of lawyers. But it is difficult not to believe that the White House strong armed them. Why?
First, when did you ever hear of investors saying “okay” to getting $0.29 for every $1.00 invested in a company if it wasn’t a ruling by a bankruptcy court?
Second, this is the President who told all his opposition “I won.”
My bet is that Perella Weinberg Partners (the investment firm) wanted to fight for the $6.8 billion it had invested on behalf of its client (in this case, the fund that held Chrysler is mainly comprised by fiduciaries for: pension plans, college endowments, retirement plans and credit unions).
What reputation would they have indeed if they just rolled over and said no problem, we’re happy with losing $4,828,000,000.00
It is interesting to note that the larger investors in Chrysler (JP Morgan, Citigroup, Morgan Stanley, Goldman Sachs) didn’t make an argument. They have received $100 billion from the federal bailouts. But according to the Obama administration that has nothing to do with this situation.
The lawyer for Perella had said that they were willing to accept $0.50 for every $1.00 invested. But they were rebuffed and told that the full weight of the White House would be used to destroy their reputation. The firm backed down. Then President Obama came out and all but named the firm in a press conference. Now these folks are getting death threats.
Obama liked to say that these investors don’t want to sacrifice, yet they were willing to sacrifice half of their money. Obama was supposed to be defending the workers at Chrysler.
The fact is: if the union would have sacrificed a little then perhaps Chrysler wouldn’t be in bankruptcy.