What went wrong with Chrysler?
TEXT OF STORY
Kai Ryssdal: You know the actual bankruptcy petition that Chrysler filed today was a mere three pages long. Of course, it was followed by a list of the company’s creditors that ran for another twenty or so. Until about this time yesterday there was some hope in the White House that those creditors would be able to see their way clear to taking less than they were owed, just as a way to keep Chrysler out of Chapter 11. Those negotiations broke down late last night. And so the president found himself at the podium this morning. Our Washington bureau chief John Dimsdale has more now on what the heck happened.
JOHN DIMSDALE: President Obama praised most of the stakeholders, including workers and management, for their concessions. But in the end, about 40 of Chrysler’s private debtholders refused to meet government demands. Obama called the holdouts “speculators.”
PRESIDENT BARACK OBAMA: They were hoping that everybody else would make sacrifices, and they would have to make none. Some demanded twice the return that other lenders were getting. I don’t stand with them.
But the recalcitrant investors defended themselves today. They said they haven’t accepted any bailout money, and they’re legally bound to protect to the interest of their investors. Those include unions, endowments, and retirement plans. James Ellman, who runs the Seacliff Capital hedge fund — not a Chrysler investor — says they are right to stand up to the government.
JAMES ELLMAN: The maintenance of a domestically-owned auto manufacturing capability in the United States is not their concern. And they believe that if they would achieve significantly more in bankruptcy proceedings than in negotiations, these investors are more interested in bankruptcy.
Government negotiators hope the bankruptcy goes quickly since most of the work has already been done. In the meantime, Obama became salesman-in-chief.
PRESIDENT OBAMA: If you are considering buying a car, I hope it will be an American car. I want to remind you that if you decide to buy a Chrysler, your warranty will be safe because it is backed by the United States government.
Obama then endorsed government incentives for Americans to trade in their old gas guzzlers for cash.
In Washington, I’m John Dimsdale for Marketplace.
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