Tuesday, 23 August 2016
Last updated 42 sec ago
Dec 11 2008 | 4:42am ET
While a $15 billion bailout of the U.S. auto industry appears near, that doesn’t mean that Cerberus Capital Management has won any fans on Capitol Hill.
The private equity giant, which bought Chrysler last year, has been the target of some vitriol from lawmakers who ask why the taxpayer should bail out Chrysler when Cerberus, which manages $27 billion, won’t. And they aren’t buying the line Cerberus is selling.
“Cerberus has indeed ‘stepped up to the plate’ to support the American auto industry, and Chrysler in particular,” the automaker said in a statement recently.
“Cerberus has cash—lots of cash—that it is unwilling to put into this company,” Sen. Bob Corker (R-Tenn.) said at last week’s hearing, featuring Cerberus-appointed Chrysler CEO Robert Nardelli.
One of Corker’s colleagues, Sen. Charles Grassley (R-Iowa), is calling on Cerberus to explain why it can’t provide the $8 billion Chrysler requires.
“Congress should demand an accounting of Cerberus’ assets and why those assets cannot be used to bail out Chrysler,” Grassley wrote in a letter to congressional leaders. “If Congress does award taxpayer funds to Chrysler, it must ensure that Cerberus and its other investors are not able to access those funds.”
And the criticism is bipartisan. Rep. Steve Kagen (D-Wisc.) told The Wall Street Journal that he is “dead set against” the bailout, because a Cerberus portfolio company closed two paper mills in his state.
Cerberus, which along with co-investors including Citigroup, Third Point and Sun Capital Partners has lent the automaker $2 billion, says Chrysler is being unfairly singled out.
“Chrysler’s shareholders are no different than the shareholders of General Motors and Ford,” the p.e. firm said.