When President Barack Obama announced Thursday that Chrysler was entering bankruptcy, he pointed the finger of blame at a few of Chrysler’s bondholders for not agreeing to the government’s out-of-court offer to erase some of Chrysler’s debt.
In particular, a group of investment firms and hedge funds decided to hold out for the prospect of an unjustified taxpayer-funded bailout. They were hoping that everybody else would make sacrifices, and they would have to make none.
A lawyer for the holdouts has fired back at the White House, as ABC’s Jake Tapper and Clusterstock have detailed in blog posts over the past two days. The attorney claimed that the White House misrepresented the investors’ willingness to compromise, and threatened at least one lender, a firm called Perella Weinberg. The White House and a Perella Weinberg spokesman deny this account.
An interesting twist: Perella Weinberg’s founder, Joseph Perella, made Rahm Emanuel rich. In his two-and-a-half years between the Clinton White House and Congress, Emanuel made $16.2 million working at Wasserstein and Perella. I argued in a column last November that Emanuel’s value to the firm was his political connections.
