"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.
“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.
Gary Peters
None of the banks targeted in Peter’s letter, among the worst offenders in causing the global financial meltdown and Great Recession, had any immediate comment. Some critics are calling for criminal charges to be brought against the firm’s executives.
The Chrysler-Fiat alliance was given the green light earlier this week by President Barack Obama’s Auto Task Force.
However, a prerequisite is a sharp reduction of the automaker’s outstanding debt.
“There is a commitment to the continuing viability of Chrysler,” said Vice Chairman Jim Press. “The U.S. government provided a critical vote of confidence in the company’s alliance with Fiat SpA. The administration’s announcement gave Chrysler a clear path to finalize plans for the future. Moving forward, our goal is to translate the confidence to our customers through our continued focus on quality, reliability and service,” Press said. “The fact that we exceeded 100,000 units for the first time since last fall is encouraging,” he said during a conference call on the company’s March sales results. Overall Chrysler sales dropped 39%. Press also said Chrysler’s internal warranty data is the best in the company’s history, with a 30% improvement in the last 12 months. The Auto Task Force was highly critical of Chrysler’s poor quality.