Washington -- Greedy. Sickening. From the White House to Capitol Hill to Lansing on Thursday, politicians declared verbal warfare on a handful of investment funds they say forced Chrysler LLC into bankruptcy.
The lenders' response: We have the law on our side. Late in the day, one fund company, Perella Weinberg, reversed course and said it would accept an offer it had declined, but it was unclear whether it was too late to change its mind.
Talks between the U.S. Treasury and Chrysler's lenders broke down late Wednesday, leading to Thursday's Chapter 11 filing. The insurmountable hurdle was a group of investment funds that rejected the administration's offer of more than $2 billion in cash in return for $7 billion in debt.
Hours later, the holdouts got a scolding from the White House.
"They were hoping that everybody else would make sacrifices, and they would have to make none. Some demanded twice the return that other lenders were getting. I don't stand with them," said President Barack Obama, adding that the holdouts threatened to "endanger Chrysler's future."
Michigan lawmakers piled on.
Sen. Debbie Stabenow, D-Lansing, named names, telling reporters that Stairway Capital Management, Oppenheimer Funds and Perella led the holdouts. In Lansing, House Democrats called for the state's investment manager to pull investments from those companies, but the treasurer's office said none is invested with the firms.
Oppenheimer released a statement saying it was protecting "the interests of the thousands of small investors and their retirement plans." Separately, a committee of Chrysler lenders issued a statement saying the administration "risked overturning the rule of law and practices that have governed our world-leading bankruptcy code for decades." Lenders complained that as secured lenders, their claims had priority over unsecured lenders -- including the United Auto Workers' retiree health fund.
Late in the day, Perella issued a statement saying it would reverse course, and encouraged other holdouts to follow suit. Given that Chrysler had filed its bankruptcy petition, it was unclear whether the change would have any effect.
"Bankruptcy is only required today because of the greed of a few hedge funds that held a fraction of Chrysler's debt," said Rep. Candice Miller, R-Harrison Township. Rep. Fred Upton, R-St. Joseph, labeled the holdouts "a sickening group on Wall Street."
Democrats Sen. Carl Levin and Rep. Gary Peters accused the lenders of speculation -- buying Chrysler loans at a discount and hoping they would profit from a government bailout.
"The president is sending a message, I think, to whoever it is who thought they could make money on this kind of deal, this kind of pain," Levin said.