Chrysler’s Hidden Coffers
Dan Gerstein, 12.10.08, 12:01 AM EST
Why is Cerberus, one of the world’s richest private equity firms, begging for a bailout?
When I wrote about the bailout blunders of the auto industry two weeks ago, I thought the Big Three had most likely topped out on the political outrage meter. But that was before the shady story of Cerberus, the uber-connected private equity firm that owns Chrysler, reared its three ugly heads over the weekend.
Buried on the business page of The New York Times Saturday were the details of Detroit’s biggest snow job yet–literally as well as figuratively. Turns out that Cerberus CEO John Snow, who spent three-and-a-half lackluster, and some might say lap-doggish, years as President Bush’s second Treasury secretary, is leading a who’s who of crony capitalists in a lobbying campaign for a taxpayer bailout to “salvage Cerberus’ investment in Chrysler.”
That’s right. Not to save the jobs of Chrysler employees or America’s disappearing manufacturing base, mind you, but to prevent “one of the world’s richest and most secretive private investment companies” from having to take a relatively modest financial hit and use some of its own capital to prop up the smallest of the major automakers.
Of course, Cerberus is sparing no expense to spare their investors any exposure. Together with Chrysler, it has spent $7 million to hire such high-rent lobbyists as Dan Quayle (who runs one of Cerberus’ international units), former Sen. John Breaux (D-La.) and former Bush legislative liaison David Hobbs. Their goal: $7 billion from the auto industry bailout package Congress is working on now and another $8.5 billion in loans from the Energy Department that have already been authorized.
The more I dug into this private duplicity, the more nostalgic I got for the PR stupidity of the Big Three CEOs and their corporate jets. It smells that bad of boondoggle. And even worse, somehow this stink has largely escaped the detection and scrutiny of the bipartisan leadership of Congress. Indeed, both sides seem ready to compound their complicity in the lousy deals that Henry Paulson cut in the Wall Street bailout by handing over billions more to Chrysler without forcing the Snow men at Cerberus to show why they need it.