The Federal Elephant in the Chrysler Bankruptcy Courtroom
James Gattuso /
Chrysler is declaring bankruptcy. The step that was once declared “off the table” is now a reality. And that’s good news. The bankruptcy process provides the long-troubled automaker with the means necessary to reduce restructure itself into a viable enterprise.
It’s also good news that Chrysler will have private-sector help in this task, in the form of an alliance with Fiat, which is expected to not only provide technological aid for Chrysler, but take a leading operational role – up to and including selection of a new CEO. The move makes sense. Fiat, which had its own near-death experience a few years ago, knows a thing or two about reviving a moribund firm. And the combination – though less than a full merger – would create for operational purposes the fifth-largest automaker globally, providing the scale necessary to survive on the global stage.
But there is an elephant in the bankruptcy courtroom that can’t be ignored: the dominant role of the federal government in the process. Tellingly, the announcement of bankruptcy was not made from Detroit, or from a federal courthouse somewhere – it was made from the White House, by President Obama himself. That left no doubt as to who is in the driver’s seat. (more…)