The tale that wagged the dog: Cerberus' Stephen Feinberg speaks
Now that the crime is over, the verdict issued and the sentencing issued, we can look forward to a few
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]
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Reader Comments (Page 1 of 1)
Horst 9:12PM (8/14/2009)
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.
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Paul 9:18PM (8/14/2009)
And you actually believe that? LOL!
BigWill 9:13PM (8/14/2009)
Steve,
It is better to to stay silent and people think you a fool than to open your mouth and prove them right.
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Paul 9:16PM (8/14/2009)
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...
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waiownsyou 9:21PM (8/14/2009)
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.
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Joseph 11:01PM (8/14/2009)
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.
Frank 9:10AM (8/15/2009)
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.
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calebe 10:16AM (8/15/2009)
Corporate greed hiding behind patriotism or even worse, religion, is one of the most distasteful and shameful things.
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Julius 12:16AM (8/16/2009)
Why is greed suddenly so bad? Someone obviously didn't catch the Top Gear commie cars episode; that is what happens without a profit motive. Maybe there was a back of the mind objective to get Chrysler back from the people that brought us the Avenger, great. In the end either privately owned or publicly traded companies have to make money or shut the doors and Cerberus jumped in at the wrong time. They paid a great many people for a few years and ended up losing their own money. At my most cynical I would say that anyone that tells you they have some motive other than greed is greedy and a liar.
farmer0904 2:28PM (8/15/2009)
lol @ feinberg "patriotic" this was all greed driven ! also the Only thing that looks decent at chrysler was the dodge ram pickup truck and the jeep line save the little suv patriot, saying that I know first hand that their rash.. my brother brought a 2007 dodge ram pickup brand new and the transmission went out in 2008 and cost a pretty penny to replace ! though in fairness to dodge, my brother liked his ram enough to buy a new 2009 ram pickup ! His 07 was in a accident, where it was hit from a tractor trailer jack knifing , he did walk away unhurt and according to him that was a good enough reason to give the dodge ram anther chance! I would consider a ram myself if gas prices were more stable or the ram go at least 28 mpg on the highway!
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Frank 4:02PM (8/15/2009)
If a new 2007 Ram had a tranny go in 2008 I would think it wouldn't coast him anything, being it was still under warranty.
Charlie 9:32AM (8/16/2009)
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.
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66coronet 5:46AM (8/17/2009)
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?
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