Congressman Opposes Chrysler’s Bid for Loans
By: Alex P. Kellogg
Wall Street Journal
December 9, 2008
Chrysler LLC’s bid to get emergency loans from the federal government ran into opposition last week when congressmen asked why the private-equity group that controls the auto maker doesn’t put up some money itself.
Now at least one congressman is raising objections because of another deal by Cerberus Capital Management LP that led to the loss of American jobs.
Wisconsin Rep. Steve Kagen on Monday complained the Cerberus, which acquired 80.1% of Chrysler last year, took over paper company NewPage Corp., which then closed two factories in Northeast Wisconsin, eliminating 750 jobs.
In a statement, Mr. Kagen, a Democrat, said he would oppose providing aid to Chrysler because of the paper mill closures.
"I’m dead set against any proposal that would attempt to ask the hardworking taxpayers of Kimberly and Niagara who’ve just lost their jobs to pay the hangmen," Mr. Kagen said, referring to the two towns that were home to the factories.
Mr. Kagen said he holds Cerberus responsible for the closures.
The congressman’s stand reflects increasing concerns about providing tax payer dollars to Chrysler when the company is owned by a powerful investment company that has the potential to raise billions of dollars from investors.
In congressional hearings last week, Chrysler Chief Executive Robert Nardelli was pressed on why he doesn’t seek help from Cerberus. He said he has, but was turned down.
Mr. Kagen turned the spotlight on Cerberus again, saying it should put some of its "billions of dollars in assets" on the table before Congress offers Chrysler any kind of bailout.
By contrast, he said he believes that General Motors Corp. and Ford Motor Co., which are publicly traded and generally more accountable to a wider audience, need the money. He did say Congress has to make sure Cerberus is held accountable.
"They have assets and we need to push for them to get those assets on the table," he said.
If Cerberus thinks Chrysler is a good investment, the company could sell the mills it closed in Wisconsin and use that money to prop up Chrysler, he insisted.
In November Chrysler’s U.S. sales fell 47%. Mr. Nardelli told Congress Chrysler needs $7 billion by the end of the year or it may not be able to stay in business.
"If Cerberus truly believes Chrysler is a good investment, then Cerberus should put up some of their own money," Mr. Kagen said. "The question is… why are you coming to taxpayers if it’s not such a good deal?"