PrintJune 6, 2009
Cramdown: Administration pushed Fiat deal on Chrysler
Douglas McIntyre, an editor at 24/7 Wall St . and writing in the blog Daily Finance comments on this story in the Wall Street Journal (subscription only) that reveals enormous pressure placed on Chrysler to do the Fiat deal despite the company's misgivings about the Italian carmaker's financial health:
It should not be a surprise to anyone that the Obama administration forced Chrysler into a marriage with Fiat. The government has forced changes in bank boards and pushed the head of GM out of his job. Former Treasury chief Paulson even forced the Merrill Lynch deal on Bank of America (BAC). Chrysler had few options as it ran out of money, and the Fiat arrangement may have been the only practical one left to the No.3 US car company. According to The Wall Street Journal, in its review of communications filled in bankruptcy court, it found one reference an official at the Treasury Department referred to as "God."
One Chrysler advisor said "the deal risked looking as if the U.S. auto maker and the Treasury Department, which helped broker the pact, were "in bed with a shady partner."
Many analysts believe both Fiat and Chrysler don't have a chance - even together. Just more taxpayer money tossed down the black hole of a failed company who should have been allowed to die.
