It must be a sign of the times.
Chrysler LLC's private equity owners can't seem to get any traction with the GOP on Detroit's effort to use the U.S. Treasury as a one-stop financing source of first resort. This lack of GOP support is most remarkable and ominous.
Since July 2007, when Daimler AG divested itself of all but a 20 percent stake, Chrysler has been 80 percent owned by private equity giant Cerberus Capital Management and a group of well-heeled Cerberus co-investors. Cerberus pumped $7.4 billion into the Chrysler purchase, hand-picked Chrysler's new CEO, Robert Nardelli, and established an advisory board that directs Chrysler's turn-around plans. Cerberus is by no means a "passive" investor; to the contrary, it is a very active one.
Cerberus, named for the mythical three-headed dog that guards the gates of Hell, also has pristine GOP credentials. First, there's the money. According to Federal Election Commission records, Cerberus founder and CEO Stephen Feinberg and his wife Gisela have given about $240,000 to GOP candidates and committees over the last eight years. Recipients include House Minority Whip David Bonior, Senator Richard Shelby (ranking member on the powerful Senate Banking Committee) and GOP Senators Jon Kyl and Orin Hatch. Then there are the contacts. John W. Snow, Hank Paulson's immediate predecessor as Secretary of Treasury (2003-06), is Chairman of Cerberus; Snow's GOP credentials date back to the Ford Administration. Former Vice President Dan Quayle also works for Cerberus. Former Secretary of Defense Donald Rumsfeld is a Cerberus client.
With GOP credentials like this, you would think that Cerberus would have an easy time enlisting GOP support for the proposed $25 billion Detroit bailout legislation vetted on Capitol Hill this week. After all, in Washington it's all about who you know and how you spend your money. Instead, Cerberus has been unable to rally any significant GOP support.
There are only two explanations for Cerberus's present lack of GOP clout on this issue: (i) either the $25 billion Detroit bailout package must really be a bad idea, or (ii) the GOP must really be gunning to drive Detroit under. In either case, this is not a good omen for Chrysler LLC or for Detroit as a whole.
Cerberus may be guarding the gates of Detroit, but it has no bark, bite or GOP clout.
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