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Monday, June 8, 2009

Why is Obama rushin into a unpromising Fiat Chrysler deal?

Fiat is not a healthy candidate as they survived a bankruptcy themselves a few years ago and they do not have the strongest car franchise in Europe anyway with a thin balance sheet they are far away from being an candidate. Still Obama pushes the deal and it is on behalf of taxpayers risk again that this rookie politician/president ( not that any of the other guys in DC would be any better) makes such big and wrong calls is apparently very troubling. The biggest shareholders in Fiat is the Agnelli family which is part of the 'club' Obama seems to have joined since his administration gives plenty of perks and favors to the members from Goldman over JP Morgan. If a Daimler could not make Chrysler work how can a Fiat do the trick - Toyota no doubt they have all the qualities to do it but do not show any interest. On a daily basis I find the economic path of the Obama admin more and more troubling, besides experience they also seem to lack common sense or decency with their actions. Instead they make the people believe the Emperor is wearing clothes.

Excerpt
http://online.wsj.com/article/SB124424451815990495.html

U.S. Pushed Fiat Deal on Chrysler

Internal Emails Reveal Resentment; Court Upholds Pact

WASHINGTON -- The Obama administration rushed an alliance between Chrysler LLC and Fiat SpA despite Chrysler's worries about Fiat's financial health and its willingness to share technology, according to internal company emails.

The emails show Fiat ignoring requests for documents and trying to change contract terms late in the talks. A Chrysler adviser at one point 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." In another note, an official referred to the Treasury Department as "God."

The Emails

Emails about the Chrysler-Fiat deal reveal tense debate and last-minute attempts at negotiation just hours before Chrysler filed for bankruptcy. In one email, above, a top Chrysler financial adviser tried for new contract terms with a head lawyer for Treasury, who swiftly declined.

The documents, filed in the Southern District of New York as part of Chrysler's bankruptcy proceedings, provide a glimpse at the tense debates that shaped Chrysler's final days as it raced to find a suitor.

On Friday, a federal appeals court upheld Chrysler's Fiat deal, dismissing a challenge by dissident Chrysler debt holders. But the court also issued a stay until 4 p.m. Monday -- leaving a small window for Thomas Lauria, the lawyer pursuing the case, to appeal to the Supreme Court. One judge on the three-judge panel suggested the Supreme Court should have "a swing at this ball."

Mr. Lauria's persistence led one government lawyer in the Chrysler case to dub him a "terrorist" in an email to a Chrysler adviser.

In a written statement, Chrysler said "comments extracted from emails exchanged in the heat of negotiations reflect the normal hyperbole that occurs in the final stages of negotiating any complex transaction." Chrysler said its concerns about the deal were answered.

Fiat said it "provided full access to all information relevant to the due-diligence exercise performed by Chrysler and the prospective lenders."

The revelations come as the Obama administration is rushing to get a bankruptcy court to sign off on the Chrysler-Fiat merger as early as next week. Fiat has the right to walk away from the deal if it isn't consummated by June 15.

Related Documents

March 10: Chrysler Chairman and Chief Executive Officer Robert Nardelli writes a letter to the U.S. Treasury laying out his thoughts and concerns about a potential Fiat merger.

March 17: Chrysler advisor Robert Manzo passes along an email noting how the Treasury team seems to know little about Chapter 11.

March 25: Chrysler top brass discuss how the company will definitely go into Chapter 11.

March 27: Chrysler's advisers report that they have too little financial information to determine Fiat's viability.

April 4: Treasury's Ron Bloom chastises Chrysler's Nardelli for negotiating with Daimler.

April 14: Manzo urges all sides to reconsider a Chrysler alliance with General Motors.

April 22: Chrysler top officials are told that Fiat is still refusing to turn over key financial information, demanding they make a "written request."

April 23: Treasury's bankruptcy lawyer, Matthew Feldman, acknowledges that Fiat is holding out on a promised technology deal.

April 30: Manzo tells Chrysler President Tom LaSorda that for Treasury, "We are the gueni pigs unfortunately."

The same day, as Chrysler files for bankruptcy, Treasury's Feldman calls a lawyer opposing the bankruptcy a "terrorist"

Chrysler filed for bankruptcy protection April 30 armed with $12 billion from the government. Earlier this week, the government ushered General Motors Corp. into what it hopes also will be a speedy bankruptcy.

In an interview, an administration official said any concerns about Fiat were resolved in the final week. The Italian company gave Chrysler and the U.S. "total access to technology" and revealed enough about its financial status to persuade the U.S. the company was not just stable, but strong, the official said.

The official called the negotiations "a high-wire act" in which a small team of government advisers had to quickly pull together a complicated deal. In such situations, "people speak in elevated tones," the official said. "People get threatening."

The emails, which run from mid-March until early May, were put into the court record following a request by Mr. Lauria, the lawyer fighting the bankruptcy on behalf of various Indiana pension and investment funds that hold Chrysler bank debt. They argue that the case has trampled on established bankruptcy law.

In early March, both Chrysler and the government seemed unsure about Fiat. In a March 10 letter to the Treasury auto team, Chrysler Chief Executive Robert Nardelli said he shared some of the government's worries about a Fiat alliance, including that the introduction of Fiat in the U.S. "may have a negative impact" on General Motors and Ford.

Mr. Nardelli also noted how Treasury officials had complained Fiat was "not bringing enough to the table" and had to be forced to put up cash for an equity stake.

A Chrysler spokeswoman said Mr. Nardelli wouldn't comment beyond his affidavit. In the affidavit, he said that by April's end, "Chrysler's management became comfortable with entrusting our precious assets to Fiat."

Chrysler's advisers told the company their Italian counterparts were refusing to provide sufficient financial information to evaluate the deal. A team sent to Fiat headquarters in Turin, Italy, reported back on March 14 that "no financial due diligence ... has or can be performed."

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