Prez Played Hardball to Clip Pushy Chrysler Creditors

'You don't need bondholders to make cars,' says White House source
By Mary Papenfuss,  Newser User
Posted May 11, 2009 3:49 AM CDT
President Barack Obama discusses the auto industry with Cabinet and members of his auto task force in the Cross Hall of the White House last month.   (AP Photo/Gerald Herbert)
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(Newser) – President Obama pressed Chrysler into bankruptcy to shave the car company's debt in a move that rattled financial institutions across the nation, reports the Wall Street Journal. A vice president at JP Morgan Chase, Chrysler's biggest creditor, had told the administration that the company owed $6.9 billion and "not a penny less." Now that Chrysler's in bankruptcy court, debts are being settled by a judge, and humbled creditors have opted not to fight the move.

The White House has used its tremendous clout as final lender in the Chrysler mire to exact major concessions from banks. But rattled financial institutions claim the administration has unfairly demonized creditors. A White House source counters that while dealers, suppliers and workers are critical to Chrysler's continued survival, creditors were expendable. "You don't need banks and bondholders to make cars," said one administration official.