The WSJ discusses and links emails from during the Chrysler/Fiat/government talks that reveal the very heavy and questionable hand of government in the negotiations.
Some highlights:
- A March 17 email suggesting that Treasury didn’t understand Chapter 11: “what’s possible/not possible, what the impact will be beyond the actual company.”
- An email late in the negotiations (April 14) indicating that Chrysler still thought a deal with GM was the best available. Evidently this is not what the government thought.
Of course the government is providing financing, so it gets to drive a hard bargain. But unlike other lenders, the government is the government. As I've discussed, firms have to consider the risks they take when they try to treat the government as they do a private party.
So should the government be throwing its weight around to the extent revealed in these emails? Should it be participating at all, or just letting bankruptcy play its course? (The unnamed government negotiator's ignorance of bankruptcy is scary on this point).
The Second Circuit has approved the Fiat deal, but stayed the order until Monday, giving Chrysler creditors until then to appeal to the Supreme Court.
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