Posts Tagged ‘Citigroup’

Gunfight Looming Between Politicians, Banks and Treasury at the Chrysler Corral

Secured debt might not be so secure if the government forces bankruptcy or politics intrude.

by on Apr.23, 2009

Is Citibank being a piggy bank in its demands for worthless Chrysler bonds?

Are Citibank and others being piggy banks by demanding too much for worthless Chrysler bonds?

Chrysler LLC’s creditors will have to make a judgment soon on whether they accept an offer to exchange their debt for equity in the company for pennies on the dollar or risk a political showdown over whether to force the company into bankruptcy.

Michigan’s Democratic Governor Jennifer Granholm and the state’s Republican Attorney General in a rare agreement have in recent days characterized the battle over debt and bankruptcy as a struggle between Wall Street and Main Street. Cox has accused Steve Rattner, the head of President Obama’s Auto Task Force of favoring a Wall Street-oriented solution at the expense of small businesses, retirees and workers in Michigan.

Rattner has a New York banking and financial services background, and Rattner himself is under investigation for bribing New York politicians to secure lucrative pension fund management contracts for his firm.

Chrysler’s creditors have proposed forgiving a very small part of their stake in return for as much 40% of the equity in a reorganized Chrysler. In addition, the creditors also are asking Fiat, Chrysler’s potential Italian partner, to invest cash in Chrysler. So far, Treasury has countered with far less cash, about $1 billion, and only 5% of the equity in the re-organized company. Expect this to go back and forth right  down to the deadline. (more…)

Congressman Warns Wall Street Firms to Stop Obstructing Auto Viability Plans

Reckless banks hold key to automaker's survival.

by on Apr.02, 2009

"These banks hold the key to Chrysler's survival," Peters said.

"These banks hold the key to Chrysler's survival."

The President’s restructuring of General Motors Corporation and Chrysler LLC just got more interesting. As executives from Chrysler and the Italian carmaker Fiat have intensified their discussion on an alliance, some of the automaker’s political allies are taking aim at the big Wall Street institutions that hold Chrysler’s debt.

In a sharply worded letter to the top executives,  Representative Gary Peters (D-Michigan) is warning four of the nation’s major financial institutions, JP Morgan, Citigroup, Goldman Sachs and Morgan Stanley, not to block Chrysler’s chances for survival by trying to squeeze more money from the ailing carmaker.  Peters noted that these institutions have already received billions of dollars in taxpayer investments and that any debts they collected from Chrysler would simply be more tax dollars.

Click Here to Subscribe“These banks hold the key to Chrysler’s survival,” Peters said in his letter. “Despite taking billions in taxpayer support to keep themselves solvent, these creditors are unwilling to reach a fair deal to keep Chrysler alive and to protect hundreds of thousands of American families. The banks that hold Chrysler’s debt were provided federal support for the good of the economy, and they should negotiate in good faith with automakers for the same reason,” Peters said. (more…)