Sunday, May 3, 2009

Did White House threaten Chrysler creditors?

An attorney for one hedge fund has made that charge. He claims that Steve Rattner, the leader of the Obama administration's Auto Industry Task Force, threatened one of the firms, an investment bank, that if it continued to oppose the administration's Chrysler bankruptcy plan, the White House would use the White House press corps to destroy its reputation. Of course the White House is denying this allegation. is reporting:
Thomas Lauria, Global Practice Head of the Financial Restructuring and Insolvency Group at White & Case, told ABC News that Rattner suggested to an official of the boutique investment bank Perella Weinberg Partners that officials of the Obama White House would embarrass the firm for opposing the Obama administration plan, which President Obama announced Thursday, and which requires creditors to accept roughly 29 cents on the dollar for an estimated $6.8 billion owed by Chrysler.

Lauria first told the story, without naming Rattner, to Frank Beckmann on Detroit's WJR-AM radio.

Perella Weinberg Partners, Lauria said, "was directly threatened by the White House and in essence compelled to withdraw its opposition to the deal under the 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."


Steel Phoenix said...

I would assume they did, if in an indirect manner. It is how the modern mix of bloated government and corrupt lobbying works.

Clinton and Bush both did the same sort of thing with our banking institutions, which led to the bank crash.

Armand Vaquer said...

This story was reported last week on talk radio. Of course, the White House would deny it.

What started the bank crash was the bundling of sub-prime mortgages through Freddie Mac and Fannie Mae that was started under Carter and expanded under Clinton. Those institutions and banks were forced to extend loans to people who had no business getting them in the first place by Chris Dodd and Barney Frank. Bush first warned about potential problems back in 2001.