• Aug 14, 2009
Now that the crime is over, the verdict issued and the sentencing issued, we can look forward to a few months years of the CSI treatment applied to what really happened at Chrysler. The first exhibit is a New York Times piece with Cerberus co-founder Stephen Feinberg, coming off almost as The Man Would Would Be Iacocca.

The first quote – "I don't know what we could have done differently. From the day we bought it, we worked hard to improve it" -- is the kind of statement that, no matter how true it is, would likely elicit numerous objections. Yet the issue of whether Cerberus should have bought Chrysler or whether it knew what is was doing is only the second most compelling theme of the Times piece.

The real hook is the competing justifications of why Cerberus bought Chrysler. On the one hand, many feel that it was a play to get Chrysler Financial and marry it with GMAC. The other hand, as Feinberg notes more than once, was supposedly holding an American flag – that is, the Cerberus deal was about patriotism and doing what's right for the country. That's a narrative we had never even considered – private equity and The Good of America don't often dine together in our world – but have a read and decide for yourself.

[Source: New York Times | Photo by Bill Pugliano/Getty]


I'm reporting this comment as:

Reported comments and users are reviewed by Autoblog staff 24 hours a day, seven days a week to determine whether they violate Community Guideline. Accounts are penalized for Community Guidelines violations and serious or repeated violations can lead to account termination.


    • 1 Second Ago
  • 11 Comments
      • 5 Years Ago
      Results are all that matter.

      From the crap of the 70's and 80's, Chrysler built up a solid set of products and market through the 90's and early '00s and showed block-and-tackle improvement all around every year in a messy industry. Daimler could have helped, but the marriage didn't work out and it put a hitch in management and development. This was fatal, not immediately, but Chrysler didn't improve from that point and they had aging product and nothing relevant in the pipeline.

      Then Cerberus came along thinking this was a great deal. Daimler spent $36B for Chrysler in '98 and 9 years later Cerebus paid $7.2B (the little Jeep brand alone is probably worth $6B). This was a "fix and flip" play (capital managers care only about returns and nothing about the widget) taking advantage of Daimler's panic to dump non-performing Chrysler (and it's $19B employee retirement liability) and it was hideously bad timing. They hung themselves out and got caught - brutally.

      Now bankrupt, Cerberus will try to get some money back from the government to keep it going and maybe save some value (these guys don't lose) and Fiat gets control of what's left for basically nothing.
      • 5 Years Ago
      The average bear knows nothing of the inner dealings of corporate hierarchy. This one was planted way over most of our heads. I do know something about product and I'll always believe Chrysler did not build the right stuff. Even their littlest car looked like a truck. The bigger is better mentality finally did them in.
      • 5 Years Ago
      Steve,

      It is better to to stay silent and people think you a fool than to open your mouth and prove them right.
      • 5 Years Ago
      Comments by Feinberg to upper management at the time of the Cerberus takeover back this up. He waved the red, white and blue more than once in these meetings, considering it a patriotic move that was good for America.
        • 5 Years Ago
        And you actually believe that? LOL!
      • 5 Years Ago
      I find that picture hilarious. They needed some guy with a safety helmet and some sort of electrical ladder to remove plastic off a new Chrysler sign-- and he's not even ripping it evenly.

        • 5 Years Ago
        That sign is quite high off the ground - quite apparent when you judge the size between him and the cars. Its an electric boom lift, so he can easily move it around and peel off the protective film - which is he peeling quite evenly to me. You can also tell this is the same guy who put the new signs up as well. When working on a busy highway up in the air, I'd sure as hell want a helmet and the safety harness he is in.

        Foreign ignorance FTL.
      • 5 Years Ago
      Too bad chrysler couldn't make a deal with VW to get clean diesel to the USA. They use the new VW 2.0L in Europe. Jeep compass, Jeep Patriot, Dodge caliber, Chrysler sebring, Dodge avenger, Dodge Journey. The best way to sell more vehicles is better fuel mileage plus performance. The best answer to sell more Avengers and sebrings is install the phoenix V-6 3.3L so half the time it's a 1.15L. But they will not do this. They will wait for a all new body and car. I love my PT cruiser 2003. I just wish I could have gotten the 2.2L crd 150hp PT cruiser. Dodge sprinter and Jeep Grand cherokee uses the same MB3.0Lcrd. Why couldn't they also sell the 300C crd and charger crd? How many police/state patrol departments wouldn't mind a Chrarger 3.0L crd and there are performance chips for the motor. Why couldn't they also offer a Dodge dakota & Jeep wrangler MB3.0Lcrd? Sure over seas market uses the VM 2.8Lcrd but that's not as clean. I see the only thing that may save Chrysler is the Phoenix MDS motors. Allowing the motor to run on half a motor for fuel savings. Two mode hybrid should have been installed in the minivan first. Not the Dodge Durango & Chrysler Aspen. Chrysler needs a small V-8 (4.0L-4.8L) with MDS to be a good combo to the 2 mode hybrid trans. Dump the V-6 3.7L in trucks and SUV's in favor of a V-8 4.0L MDS. When power isn't needed it's a 2.0L and when power is needed the 4.0L will have more torque than the 3.7L. Why didn't they do this right after making the 5.7L MDS?
      • 5 Years Ago
      Having met these guys back then, I can assure anyone who asks, with total 100% certainty, that patriotism was the FURTHEST thing from their minds! I don't know weather to vom in my mouth or belly laugh at that notion.

      Buy if you believe that patriotism spin, I've got some sweet vacation property on the Moon that you might be interested in...