Chrysler’s Hidden Coffers
Chrysler’s Hidden Coffers
Dan Gerstein, 12.10.08, 12:01 AM EST
Why is Cerberus, one of the world’s richest private equity firms, begging for a bailout?
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When I wrote about the bailout blunders of the auto industry two weeks ago, I thought the Big Three had most likely topped out on the political outrage meter. But that was before the shady story of Cerberus, the uber-connected private equity firm that owns Chrysler, reared its three ugly heads over the weekend.
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.”
That’s right. Not to save the jobs of Chrysler employees or America’s disappearing manufacturing base, mind you, but to prevent “one of the world’s richest and most secretive private investment companies” from having to take a relatively modest financial hit and use some of its own capital to prop up the smallest of the major automakers.
Of course, Cerberus is sparing no expense to spare their investors any exposure. Together with Chrysler, it has spent $7 million to hire such high-rent lobbyists as Dan Quayle (who runs one of Cerberus’ international units), former Sen. John Breaux (D-La.) and former Bush legislative liaison David Hobbs. Their goal: $7 billion from the auto industry bailout package Congress is working on now and another $8.5 billion in loans from the Energy Department that have already been authorized.
The more I dug into this private duplicity, the more nostalgic I got for the PR stupidity of the Big Three CEOs and their corporate jets. It smells that bad of boondoggle. And even worse, somehow this stink has largely escaped the detection and scrutiny of the bipartisan leadership of Congress. Indeed, both sides seem ready to compound their complicity in the lousy deals that Henry Paulson cut in the Wall Street bailout by handing over billions more to Chrysler without forcing the Snow men at Cerberus to show why they need it.
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December 10th, 2008 at 4:02 pm
You are connected.
Why don’t you pass the word to your Congressman, Senator, or ??
December 10th, 2008 at 4:16 pm
Buried in today’s WSJ is an article that features congresscritters from both sides of the aisle slapping Cerberus around a bit. What is really irritating is that Cerberus will still get the cash and Chrysler will still go bankrupt.
December 10th, 2008 at 4:30 pm
great quote from Thomas Friedman I found today: “our bailout of Detroit [...] will be remembered as pouring billions of dollars into improving typewriters on the eve of the birth of the PC and the Internet.”
Sounds about right to me.
And Mark W. makes a good point, I think. Maybe you are just in it to bait us angry hater-types though BR. I understand if you are.
December 10th, 2008 at 6:08 pm
If they give a loan to Chrysler I sure hope it, in case of bankruptcy, will be senior to any and all loans that have already been given to that company.
December 10th, 2008 at 9:34 pm
The piece ends with the following:
“I am not a finance expert, but what makes this episode so outrageous is that even a casual observer can see what a taxpayer ripoff Cerberus appears to be getting away with–but Congress and the Bush administration somehow cannot or will not.”
Maybe he’s just being nice, doing his public duty to not call out lying from high office, and mis-use of government funds. It should be pretty obvious ‘why’ the bush administration is doing what it’s doing. How many examples do you need to see?
But there is a deeper point hidden in what he’s saying, that relates to one of the first comments. And that is the disconnect between the truth (powerful wall st. players bagging big time gains through federal largesse after having bank rolled a ‘free market’ presidency — and no I am not surprised by that collection of ideas) and the behavior of congress, which indeed is to whine on the back pages of newspapers, and in front of cameras to berate captive witnesses, and then to go down and vote to ensure that the handouts continue. The question isn’t ‘why is the bush admin doing what it’s doing’ that one is easy and obvious. The question, the real question, is why is there no opposition.
Whatever the answer, the fact is there isn’t. And what that spells is a new era in american politics one of un-restrained control of government by select individual economic actors of unparalleled wealth and power.
Get used to it, ‘cuz you will live with it for the rest of your lives. Your chance to do something about it has passed.
December 10th, 2008 at 9:48 pm
Dan Quayle (who runs one of Cerberus’ international units)
Shouldn’t the word “runs” be in quotes?
December 10th, 2008 at 10:22 pm
Barry, who is the “lapdog?”
It’s looking more like Bush rather than Snow….
December 11th, 2008 at 12:06 am
Why I am I not surprised?
December 11th, 2008 at 8:27 pm
But, really, why do Chris Dodd and Barney Frank still have jobs?