5

I'm gonna make him an offer...

A spat's brewing about the government's allegedly aggressive lobbying of those holdout non-TARP lenders to Chrysler. In case you've missed it, the government's plan to get Chrysler in and out of bankruptcy at lightning speed depends on the co-operation of a number of lenders. But they're holding out for what they believe could be a better deal.

Tom Lauria of White & Case represents the Chrysler holdouts. He was interviewed on News/Talk WJR by host Frank Beckmann, and told how one of his 20 clients was strongarmed.

Lauria: One of my clients was directly threatened by the White House, and in essence compelled to withdraw its opposition to the deal under threat that the full force of the White House press corps would destroy its reputation if it continued to fight. That's how hard it is to stand on this side of the fence.

Beckmann: Was that Perella Weinberg?

Lauria: That was Perella Weinberg.

But Perella Weinberg is now denying this.

Dealbook reports that Perella released a statement saying the firm decided to back the government-proposed settlement Thursday afternoon, after Mr. Obama criticized the lenders in harsh terms.

"The charge is of course false as both parties who would know the facts have pointed out," Bill Burton, a White House spokesman, told DealBook. "It is neither substantiated by people involved in the conversations nor by what has transpired over the course of the last couple of days."

And, of course, the government would never resort to such underhand, sleazy, well, Nixonian tactics.

About the author

Paddy Hirsch is the Senior Producer, Personal Finance at Marketplace and the creator and host of the Marketplace Whiteboard. Follow Paddy on Twitter @paddyhirsch and on facebook at www.facebook.com/paddyhirsch101
Ned. D.'s picture
Ned. D. - May 5, 2009

Someone correct me if I'm wrong, but I think part of the issue was that the government knew some of these lenders had gotten the debt for 30 cents on the dollar and so they used their purchase price as a benchmark instead of the full value of the debt and played a little extra hardball with those lenders.

CK's picture
CK - May 4, 2009

Some folks need to realize, it's time to sit in the barber's chair and get a haircut. It's reassuring to know, this administration can bring out the hatchets if necessary.

Stepping back a bit, I have to wonder, will the bond market ever be the same again?

AW's picture
AW - May 4, 2009

Paddy,

It's important to note that Perella Weinberg is not denying that they were threatened; Perella Weinberg is denying that they changed their position because of government threats, at least in the statement in the link you provided.

This distinction is important because the administration is the only one party that is denying that they threatened the lenders. In other words, "I am not a crook"!

AW

Paddy Hirsch's picture
Paddy Hirsch - May 4, 2009

Fair one, AW! I'd love to have been a bug under the desk at that meeting.

JM's picture
JM - May 4, 2009

I guess, in the public eyes, water boarding isn't even close to strong arming, and Obama would never do such a thing.