Tags: auto | creditors | obama

Lawyer: Obama Car Czar Threatened Chrysler Creditors

Monday, 04 May 2009 03:12 PM

By Dan Weil

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An attorney representing some of Chrysler’s creditors says the Obama administration’s car czar Steven Rattner threatened strong retribution against one of the creditors if it didn’t comply with the White House’s plan to rescue Chrysler.

Thomas Lauria, a heavy hitter at White & Case, one of the country’s most prestigious law firms, told ABC News that Rattner suggested to an official of distinguished investment bank Perella Weinberg Partners that the administration would destroy its reputation through the press.

Lauria used to represent Perella, but not anymore.

The firm "was directly threatened by the White House and in essence compelled to withdraw its opposition to the deal under the threat that the full force of the White House press corps would destroy its reputation if it continued to fight,” he says.

However, the White House and Perella Weinberg itself deny Lauria’s accusations.

"The charge is completely untrue," says White House deputy press secretary Bill Burton, "and there's obviously no evidence to suggest that this happened in any way."

A Perella Weinberg Partners spokesperson says “The firm denies Mr. Lauria’s account of events.”

The White House pushed Chrysler into bankruptcy last week when some of its 46 creditors declined to sign on to a debt reduction package that the Treasury Department had negotiated.

Perella Weinberg initially didn’t sign on, but then changed its mind after the deadline passed.

A knowledgeable source tells ABC News that the final decision to get on board the package "was based on an assessment of investment risk and reward and nothing else."

Whether Perella Weinberg’s reputation will suffer, it’s unclear that it helped its bottom line by initially holding out against the agreement.

“Administration officials said they believed that it was highly unlikely that a bankruptcy court judge would side with the minority when those holding 70 percent of the debt had signed off on the arrangement,” The New York Times reports.

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