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Foxbusiness.com live everybody I'm column with Jenna and we have a two.
You know a lot to talk about today obviously -- pay attention to news at all.
You know the story about Chrysler we're going to be covering for the whole hour here with the president getting set to talk you could see his remarks in the Fox Business Network that we have plenty to cover that's for sure always.
We -- in the market have lost some steam over the last hour or so we've been up about well well over 1% for the at least they came to features and started -- today we've come off some of those highs.
As -- headed into this announcement with respect and you need to be something about the fate.
Of Chrysler get a president's list to speak and you and you can see that live streaming on foxbusiness.com.
Fox Business as well as Fox -- are gonna be caring I son if not all of those comments because again -- the fate of Chrysler is paid 54000 employees.
And is that they were really watching very closely.
Yes some headlines are crossing now on the wires that seemed to confirm.
Most of what we already at new except the Chrysler it says his -- -- Obama administration official on the wires this morning or this afternoon saying that the the filing of Chapter Eleven in New York what happened.
Quote almost immediately and expected to take thirty to sixty days which they've been saying already this morning.
The Fiat -- -- to start -- 20% can only be majority wants the government loans or are repaid in that and the bankruptcy.
That this again all coming from an administration official head of the presidents -- remarks which from I'm sure will confirm all of this.
In some more detailed bankruptcy to not have a quote on quote negative effect Chrysler would operate normally in the interim they -- to do this quickly whether they count or not we'll see.
Remember Brett they precede it means that you can break up contracts contracts have really any story and that's why.
That kind of conversation about -- in the different assets of Chrysler in question including some of the jobs and we're going to be talking to.
What some call ground zero this potential Chrysler bankruptcy -- confront this will bring it to you to talk about the effect that only on Chrysler the markets.
But on Americans because it comes -- -- individual lives to.
And yes and mayor Greg goodnight if Kokomo Indiana town has certainly been affected by this will be joining us in just a moment Jeff Flock had an Auburn Hills, Michigan will be -- Michael -- law professor and bankruptcy expert we got a lot of people.
Lined up on this as well Sheldon stone turn around Basra and Amherst partners who really knows his stuff -- -- -- all these things and you really have to because a lot of this complicated disabled least.
At a Shapiro's covering it now will join us from the UAW headquarters in Dearborn are or in in downtown Detroit should have a -- -- -- we start Robert -- as we always do on the top stories which have.
Are not tough difficult to pick out today although there are other things to talk.
Yeah that's right this is still Livni had busiest earnings week yep you know we've we heard from you know the biggest company in the world ExxonMobil up today missing but revenue up.
And I investors annoy the fact they're gonna save more money than they thought -- gonna -- going forward you know and in this is not to diminish the question is by any means but obviously if you're tracking the market you're still seeing us.
Extending the gains.
Did he didn't see this headline we we talked about it because again we had to -- in these headlines but one of them says that -- GM AC will be financing.
The sources for new Chrysler cars and should be interesting as we don't have faded -- at this point and they -- an epidemic they have -- -- in about a month.
Yeah and just keep in mind obviously that cerberus owns a majority of GM AC 21% majority ownership GM -- 49% that in.
And I had read that some speculation in the media because Wall Street Journal saying they thought that you could see I had -- Chrysler finance and you may see coming together so it looks like.
That is sort of the next logical step we can't when it's at the moment that the GM is the -- were talking about who's gonna buy cars.
Whether or not just -- buying a car.
So I wanted to see just open it up on the test track yesterday than in actually -- chaps who had the a challenger at the dodge dealer yesterday isn't anyway.
A different story what Percival finished for another day there's a lot of there's a lot gathering satisfy.
Many big names isn't a lot -- -- Meantime let you know ExxonMobil yet Comcast the cable operator coming in beating the -- he also had you know Viacom the media company.
Beating street boy we're seeing in the Procter & Gamble yes -- Colgate-Palmolive.
Seeing a lot of again bottom line between about the pad the profit number beating expectations not as bad as expected if you have this in a lot of cases you are in most cases.
Seeing this is a profit decline vs a year ago.
Revenue numbers had a single off missing that you've got a couple of factors at play here -- revenue is down.
Yet you're still seeing profit beating revenue lower for a lot of these multinationals really getting hit.
Particularly Procter gamble they're big and Central Europe you think about the Hungarian foreign and a lot of these you local.
Currencies that have had.
Such a -- difficult time.
And the stronger dollar they bring back some of those of profits over there.
They're getting fewer dollars back for their forwards and other -- currencies as well -- in the Euro compared particularly to a year ago so they're really done taken on the chin there.
The way they're getting to bottom line -- of course.
-- -- job cuts didn't give cutting down the unpaid furloughs and some companies cases so we're continuing to see this trend where cost cutting.
Is how companies are beating on the bottom line yet they're missing on the top -- revenue numbers so.
Something to keep your eye on Procter gamble also -- some concerns going forward say they're very comfortable with the street's forecast.
Their forecast may still be down by a couple of pennies on the upside and -- talking to traders -- and -- back actually out of Minneapolis Piper Jaffray and -- -- consumer confidence is one reason he thinks you're seeing the market still you know extending gains today says we're.
A long way from Gordon -- territory but you are seeing a little bit of that greed risk tolerance coming back to the street and in many managers who were on the sidelines you hear this a lot but.
You look at you and trillions of dollars in money market -- you're getting paid nothing for that.
Some people are -- to come back into the market and all that in the midst of a month that looks like as -- wrap it up there will be the best of the stock market since 1991 so do you sell and they -- it out of your question for tomorrow that's right how often go -- if we confronted.
Thank you Robert I appreciate it Robert grant you Smart headlines before we get from here.
It does look like we have these headlines at I think you -- a lot of these at the beginning of the show that talk about that just Fiat and Chrysler looks like this bankruptcy filing is happening as of right now we are seeing what headline saying that in this pleases her next statement that.
According to the White House the White House sees -- surgical thirty to sixty day bankruptcy was talked about this set.
The carefully plans bankruptcy if that is the case that could happen that could not happen -- it happened in fact.
And also another headline CNET.
They -- she will not have a negative impact unemployment.
Now whether that's employment all overall unemployment specific to Chrysler.
That's a question but again 54000 employees a lot of lives there.
Ball place where the auto downturn has already had quite an impact on employment is Kokomo Indiana the mayor of -- town Greg -- just kind enough to join us by telephone now.
mayor great to talk to you on what is -- -- a tough time for -- -- Area of the country -- what about this idea of a bankruptcy filing for Chrysler.
And and where do we go from here for the for the people thought that -- certainly obviously -- -- so much already.
Well obviously we're following it closely we've been following -- -- -- took taken office last year.
So well here we got some immediate concerns.
Obviously with the bankruptcy what does that do for -- Chrysler's.
And it will they have to -- local property taxes how that affects local businesses that.
May have some obligations owed to them Chrysler.
And it'll be immediate impact on employment as well.
Can you just tell us a little bit about.
Where you -- and what it's like there and but Chrysler means for the town.
Sure absolutely we're about 45 miles north of Indianapolis in the central part of the state.
Other cities right around 50000 people.
Chrysler employees just under 5000.
And of course we have an adult by plant the past 3100.
Former GM plant just 3100 employees as well also -- we have a rich automotive history of and but just you know we're very dependent on manufacturing and especially.
Automotive manufacturing but.
-- -- I try to remind people were not.
If we have a lot of people -- live and our communities that to commute to other towns including Indianapolis but obviously a Chrysler is the largest.
Business and and the city governments.
It is the largest -- -- property taxes.
President Obama has -- his remarks on the Chrysler situation now you can see that live.
On the Fox Business Network there's the president's so you can monitor that certainly on television we will monitor the headlines here and bring them to you as he makes those remarks were speaking.
-- with mayor Greg goodnight of Kokomo Indiana how many jobs have been lost so far it at this point -- nobody expect from here on out.
Well I sort of plot that was right -- -- 5000 at the end of 2008.
Baseball for some incentives for people to take a buyout packages at an early retirement.
I think it's still in the 4500.
-- and I haven't gotten really any updated numbers that I could.
You -- feel real comfortable talking about so.
-- That's that's where we're at now -- they've had some layoffs throughout to various departments of some shut down for a couple weeks that certain areas so.
Obviously the it's it's been under point that it is not that important for a lot of -- -- Chrysler.
People -- You know I I would remind people that our city is as a rich history being factually and therefore -- We've been through these tough times before.
I was you know just to junior high school when the -- during the Chrysler situation late -- But of course I remember it took from that some standpoint and a lot of -- friends of their parents to -- time so.
We're just you know try to fact I've got to know that the president -- right now but I've got to tell you they have -- I guess.
Let's let's fill in the pieces -- a lot of us are kind of watching listening try to put it all together as we we piece together this story -- -- the headlines easy crossing right now.
-- -- the president led his news conference saying.
He announcing that he's announcing -- Fiat deal with Chrysler.
You've had some discussion recently about what -- Fiat deal would mean for your town and the people that work for Chrysler there can you offer some insight on that.
-- what we've you know a lot of this started last fall when other worse but there were some of discussions about General Motors and Chrysler emerging.
Since that time we -- we've watched that the whole bridge loan process and we -- Outspoken advocates in favor of securing.
Of the bridge loans and and -- the Fiat to merger came about I actually -- letter a couple weeks ago to Fiat is -- them to Kokomo to talk about.
-- both our past -- history with the automotive industry and our future and some of the things that we've been touting.
And anyways they last week they said of a return and invited me to go to Italy to visit there -- facilities and -- -- gonna take the -- Yeah it's interesting because among the comments the president is made here as he speaks.
About the crisis situation is that Chrysler is gonna get this a president Obama's.
Words a new lease on life.
I wonder from your point of view is there any kind of -- and in this might be.
I'm a huge threat is there any kind of a sense of relief that -- -- moving closer and of course is a lot to get their.
That we hope to be moving closer to some sort of -- resolution to this and that mean there's an opportunity to move on in some way shape or form.
-- you know I think that's very important week we have you know I would say we've had everything on hold -- we've been obviously monitoring this as closely as we can't over the last few months.
Didn't feel real good about thirty days ago.
When they gave them the direction they had the end of the month to to come up with a viable plan if you read that it didn't look.
On their all their financial plan and their business plan that that they would come out of this.
Of course in the last couple weeks we started that we -- little more often those -- and even as late as yesterday felt a pretty good at that all love that -- the local unions here voted overwhelmingly to accept the of modifications to -- labor agreement I think it was about a nine to one vote.
For the police -- Kokomo.
And we felt that maybe everything was coming together of course that -- late last night so right.
So it'll work here over -- we'd like to to -- brings some finality to this at least this chapter but.
You know you.
They they change before the end of the day that's true -- take years because -- the story in Chapter Eleven as you know no pun intended there but it lecture what kind of party dress.
Actually my wife and I both have -- I ever Reagan bush has a great charity great cars.
Mary go with the if you had fifty yep that's right I mean it was what -- the questions but if I as far as it is the future of this company and we're getting a lot more details that since.
This is coming out but.
You know one of the things that's been -- happened since your public service I want to ask you about your duty to what did they had that conversations has been brought up about these debt holders is.
They had a duty.
As Americans to reach some sort of negotiation the unions did -- -- a corporation apparently had with Fiat.
And they're the ones that aren't budging what are your thoughts on the duty for some of these debt.
Walters well I do believe that I mean win you know it you know we talk about -- American manufacturing we talk about.
Are people loyal to their country especially the CEOs and the corporations that in sometimes.
You know those things come out and I think the support you have a company that wants to.
Based you know they've had a long rich history in this country I go back to it in the late seventies when they went through the turmoil in the -- Lee Iacocca came in and they made.
-- people wanted to write them off not loan them money and not give them the opportunity and have that not happen.
You know we obviously -- -- -- thirty years of productivity at thirty years of deployment for a lot of people it.
And all those things that go along with the so I think.
As speaking not just for -- but I think people I've said all what we're not asking for a -- But we are asking for an opportunity to succeed.
And I think I think we -- -- not just to Chrysler but I think we owe to each other.
Well good luck mr.
mayor and all that to you and so it's all the people live in and Kokomo that they are basically very much and I appreciate you keeping an eye on the.
Thank -- we will -- we'll continue to watch says if you had the apparently we'll go through you get a lot of things can practice the one of the things that was said on the show this morning.
Matt McCall said this he said if we see Chrysler go we will see GM and Ford.
And -- right in step and maybe -- can opposite.
CNN has a lot of differences between what Chrysler is happening here with that secured.
Bob -- secured bank debt and what GM is dealing with both of which are much more unsecured.
Our whole loans they're looking at some of the headlines here -- the president saying among other things that the Fiat deal gives Chrysler chance not only to survive but to thrive.
And he says that the -- that well again moving on here to open.
Bob Nardelli to some comments on that well.
And other things he says is every as far as our taxpayer money remember aggressor has a lot of our taxpayer billions of dollars are -- our money according to the president.
I the president saying as -- the agreement every dime of the taxpayers many will be repaid.
Before Fiat will take ownership whatever the ownership is -- that is is still going to be the 20% or so.
We're 30% now we're still trying to figure out exactly -- those agreements gonna look like because remember there can be a deal announced SPI.
But Chrysler could still file for bankruptcy fact Fiat may not want to take over Chrysler unless there is -- bankruptcy and again we're working through some of the details as we get a handle all -- this.
I looks like the focus is going to be -- more fuel efficient cars we need that and -- knew the UAW was going agreed to cut benefits and wages.
Right now on the Nardelli thing he said that he put a positive role throughout the talks these risk CEO that he says he Chrysler -- -- -- -- -- Nardelli put a positive role throughout the talks now.
And now that this is the other issue and -- -- PX joins us from FT and could sequencing.
We can talk about here in terms of what -- the holdouts who are the president saying a moment ago that some hedge funds held out for what he says were on an unjustified.
Government bailout I don't stand with those who held out as a quote from president.
Obama so we have to go through some of that the issue the -- brought up that then this is an argument that's been made this whole patriotic argument of of who's going to make concessions here.
Now from what I understand this is talking to somebody who had it been involved in and -- dad fought in the General Motors dead at least and was saying that.
That the word on Wall Street right now is that the the big banks the big bank colder stated in in terms of bank -- debt on all this.
Date you know there's a very good possibility that -- -- some arm twisting going on there because they have they have other business with the government so -- they make concessions probably easier for the government to get that.
-- it was from some of these hedge funds -- they have little or no control over.
I I think you're right and Obama has been very.
Very active in the arm twisting in terms of getting government control and in several different industries and this is not new to.
This administration we've seen this in the financial industry we've seen this -- the -- -- -- He had leverage over this is destroyed his sick over JPMorgan -- -- and he he would have much more leverage over over over over big bank like that that he would over smaller hedge fund.
-- you know.
Has no reason necessarily.
-- other then you know as bias as -- asked the mayor about on the other goodness of their heart Nestle is take a deal -- they don't see is that contagious to the.
You know their masters and what they were trying to do is they were trying to maintain a majority stake of the company but instead Obama wanted to make sure that the government had.
Stake and I think that was the major.
A difference between the two different plans you know an interesting.
Comment on free markets because if the president is coming out and saying these hedge fund guys.
-- the evil guys that made this company had bankruptcy.
That's an -- having.
Part of that -- you're allowed to hold out if you want the -- and it's it's a capitalistic society you can not take the deal did you are not quite -- a duty to your people.
Just like Chrysler had a duty to take our taxpayer money.
And try to survive and -- -- so it's an interesting comment to single out hedge funds.
And saying this is.
Their fall for this upcoming whether it's an interesting stance to take when -- running a capitalist nation.
It's been a profit has become a dirty word capitalism has become a dirty word.
It making investments has become very questionable as well.
What we needed to see is that the government stay out of it what this has become -- a status.
Situation where the government is coming and taking control these companies.
And turning them essentially into another arm of the government grab what they need to do is allow these companies to either fail or restructure or.
Go into bankruptcy themselves.
Along those lines of comments just after the president getting speaking like -- -- -- our screen on the Fox Business Network you can you can watch and hear the audio of the there that he.
Just what you're talking about -- what -- up a small group of speculators this is his words not mine.
He -- he criticizes -- -- criticizes a quote small group of speculators for endangering Chrysler's features -- bully pulpit stuff in a lot of ways because there's no comment.
There's no power for the president over that group of speculative such as they do exist -- they don't exist.
The with -- pricing has been explained to me is that the but the offer for these sudden these.
These debt holders was something like thirty cents on the dollar right.
But they did debt that's in question here has been trading over the last few months anywhere from the mid teens.
To maybe fifty cents on the dollar so just for argument sake let's say -- -- trading between fifteen and and fifty cents of the dollar and you get an offer of thirty you may have bought and it.
I don't know 1819 cents -- you're saying.
-- -- -- know liquidation I could probably get forty or fifty cents so at the end of the day you know I lose a little bit but what's my motivation for getting in there where's the big bank has the arm twisting.
So the president's comments you know are what they are but they don't necessarily carry much more than the bullet -- -- -- -- long been present.
And -- is confirming that they are going to be in bankruptcy Chrysler right yeah.
We have exists so we're clarinet I mentioned before that may be yet we're just constantly on a deal but -- they are they're going to.
-- -- -- Filing new York and in court in New York -- so what do you make that of the Christopher Owens who chipped in Afghanistan just as an economist as the broader effect of all this is a but he said.
One of these guys files while what does this mean for the economy -- and that and that's -- -- -- what the ripple effect it so it's not just the automakers but the auto parts the dealerships and the periphery jobs are affected by this.
But if they do go into bankruptcy as we just -- -- either going to restructure the going to reemerge.
But the bigger question is will be industry itself.
See a return of demand because where we.
We're talking just on the supply side are these automakers going to reemerge and be able to.
It contribute this just supplied to an -- market if we don't see consumers move back in.
Didn't -- -- I mean I -- -- let's let's get -- bent down to it because you have consumer spending a consumer's income numbers you have.
-- the job market numbers -- all this step it as an economist so.
That because -- a core product right we know that Chrysler now -- and Fiat cars if we're not in the position in the year to have a good strong job market.
And taxpayers going to buy those cars.
Is it has a spot so.
Certainly not that it did and the question is will the consumer -- we saw the first quarter GDP numbers the consumer was actually stronger than we expected.
But we have to dig into that number a little -- I'm hesitant to just look at the headline my quarter on quarter.
Consumption did pick up that's true but if you look at the monthly profile.
We see that consumer spending petered out from January.
Relatively strong February it was present by march the consumer was.
Back in negative territory so is -- a return of the consumer or where they merely visiting good holiday sales exactly and that we also saw a tremendous number of taxpayers filing early.
So we got those tax refunds we got some stimulus checks but that again was January and February.
There's nothing to carry forward into the second half of the year President Obama is urging consumers to consider buying American cars.
Well the question is with what money income growth is negative it has been negative for five of the past six months.
It when you look at the peak of income growth we're talking about 10%.
That was back in -- 2006 late 2006.
That was a tremendous amount of income growth to support spending and all these outrageous spending trends right but right now.
Income growth -- fallen to just below 1%.
So we can't rely on income growth.
To spur spending we're no longer able to borrow against our homes we're talking nearly trillions of dollars pulled out.
On an annualized basis to fund vacations cars college tuition.
We can't do that anymore so we can't borrow against our homes we don't have income growth.
And there's very little access to additional credit so I'm not sure where consumers are going to again it's -- stamina.
To continue spending and to go out by -- American.
Cars right -- a lot of this is of course being propped up for lack of a better term by the government in the stimulus plan that -- really hasn't taken effect yet shall see if that works but also by the Federal Reserve with certain plans that have taken effect.
Now seems to me that we're gonna go into a new face of this economy where the government is.
At some point there's going to be an exit strategy from that the president alluded to this last night and we don't want -- macro managed.
So when the government starts to get out of all this whenever that happens then the question is what happens to the economy and does the government manage that exit strategy.
And what kind of mistakes can be made there and there's a lot that could you know that in other words.
The site of the -- -- it -- green shoots and all this kind of stuff there's so much to get through between now and then there's certainly no idea how this crisis even now this Chrysler bankruptcies and what -- we have no idea how -- this might get.
All right in the environments changing -- meant but as far as the exit strategy goes.
I don't know if I entirely believe the idea that the federal government will release the power that it's now accumulated because -- facts of the matter is that just a hunch well you know it.
When you look at -- government spending their very reluctant to stop spending.
Or may cut programs once they've -- to the momentum to fund these programs so.
Bad bad maybe for debate but as far as -- Fed's exit strategy that's where we could see.
A lot of these liquidity programs begin to -- -- and that's where the inflation concerns and that's where that inflation debate comes into play -- independent credit is that what you're saying for the -- to -- with all the different health plans and things like that to loosen -- -- -- my -- anyway -- -- -- once the economy begins to they show more than just green shoots that we are actually coming out of her.
They recession the government and -- the Fed will have to begin to -- -- all of these programs or inflation will shoot up and we we could see a scenario in the eighties -- -- and the balance of doing that not too soon but not too late it's going to be a big challenge the very tell us that the Federal Reserve thank you Lindsey always great to see -- instantly except from FT had to get the president's side comments on the auto industry -- now.
All wrapped up we know crisis filing for Chapter Eleven bankruptcy protection and -- idealist and put in place between the Italian company Fiat and Chrysler sold -- I mean there's so many issues.
-- -- moment -- version of Internet access but this is what we've been waiting months for a bankruptcy.
From one of our auto maker -- do you really up and realize it's happening -- a lot of ways.
Do you think that we knew was coming right we needed this step is coming we needed there's going to be from sort of restructuring.
But what what we're talking to our guests who want to hear from you as well I can email us you can Twitter with -- you can also weigh in on your comment boards.
I can do this didn't mean anything to you right now may be it -- -- I'm too close to it because shut me off is set this.
Big deal the shock and it's a huge deal with the shock and awe factor of all this -- what we've gone through in the economy since last fall -- Things are much less shocking to us now that's sad that something happens vs.
You know when.
What went all the things that happened last fall happened you walk -- what I now it's you know we're we've almost become immune to it and we try to just deal with it realistically -- it seems to me that -- -- -- when Lehman Brothers went bust any affinity in the control arm can help with two or three and did did the president -- -- speak how many Brothers bankruptcy day.
I don't remember -- -- either I'm just wondering because we saw still made it for financial firms changed hands -- -- is bankruptcy.
It's interesting to see the different ways that we're handling it now not not good or bad just different -- -- -- -- it's very it's interesting let's talk about the mechanics of this and how we're actually get through and what it's gonna look like this is -- all this thirty to sixty day talk and what have you Sheldon stone a turnaround advisor to Amherst partners.
It's kind of -- next year.
On foxbusiness.com live what stands out he shelled in terms of and and I guess the first place to start here is that we're being told this can be quick.
I don't think -- is is necessarily the word but that the the the the indication here is that hey we can get through this and emerge as a better company and thirty to sixty days is that in any way realistic.
The thirty to sixty day time frame with the complexity.
I feel is not realistic and we have these bond holders approximately.
They represent 30%.
-- of the deaths.
Who are acting in the best interest of their investors.
And not necessarily in -- -- with the interest of the government or the management.
For shareholders of Chrysler which is in the best interest of Chrysler and in the United States.
So the likelihood of being able to go through what is referred to as a prepackaged bankruptcy.
Union -- thirty to sixty day period is is low.
They even -- it's a reality show -- we're going to be back on talking more about than just a second but Jeff Flock was mentioning -- that.
And at 6 AM this morning Jeff you were saying that today even if we go into bankruptcy we have no idea.
How long we could be in bankruptcy court and how long this can drag out tell us -- you know.
-- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- That's the scary thing because once it gets to bankruptcy.
Nobody knows how long it will take the president said it's going to be quick.
It's going to be surgical.
No one knows and one -- analyst earlier say that in some ways Chrysler is going to be that.
They get canary at the coal mine on this because.
How this plays out whether this will have huge impact on Chrysler sales whether they will be able to exit bankruptcy in in fact.
Cleanly and quickly.
Sort of is gonna go a long way toward determining how the GM situation plays out which of course affects a lot more people.
I think we'll know better once we see how this crisis situation plays -- -- want to get to the court as we all know.
Nobody wants to go to court because we're there to divorce -- whether it's a break -- of a partnership whatever it is nobody wants to go to court because they don't know what to expect.
You don't announce in the hands of a bankruptcy judge -- of the -- we talk all the time that government control the government in essence that is giving off.
A certain degree are all that control by handing it over to a bankruptcy court judge Jeff -- what.
Dog what type of if any reaction -- come out.
A Chrysler headquarters -- York today.
I just emailed it do it brand.
Inside the building -- And apparently this quiet.
People were gathered around televisions.
Listening to what the president said I think everyone is happy that the Fiat deal got done they were there was some concern that if a Chapter Eleven got file that may be Fiat would put that on hold that they would as some have reported earlier tentative cherry pick the assets of Chrysler.
That's not the way this is playing out this is essentially going to be Fiat bought it as a partner that's the way everybody wanted to place I think that's a positive but again.
The unknown is is -- the impacts of the bankruptcy.
You can't really could care it is what I read a statement from that -- -- he says.
He's releasing this statement he says are -- entire community -- hearts and hands and prayers go out to Chrysler.
He goes on to talk a little bit about.
Well and -- how he feels about the president saying that it or what about the bankruptcy saying it's cool.
It's a cool forced bankruptcy.
This seems like probably.
On the streets in Michigan there's a lot of different opinions.
-- -- Think it was forced about say the president certainly made out these lending institutions that hold the debt.
They have not got on board as the yet is the villains in this and I can tell you who they are -- -- -- The list of my pocket.
Report out here it's -- wet but.
For example Oppenheimer Funds 101 of these that that held out a stairway capital.
Perella Weinberg park New York based -- They held out and the president called about today the governor.
Has made these names public about -- they are clearly coming down as the villains in this as much as they try to put a positive on the back -- the feel like you have got to.
Right that's fine but there's nothing imminent need the extent that the government holds any leverage over any of those firms is little to none compared to -- -- that they just wanted banks in this country.
Which -- they had plenty of arm twisting capability which may be one of the reasons that the banks of the larger banks who made the concessions here.
All right well anyway Jeff civil level let me go ahead we'll check back his sense of developments -- from out there Chrysler headquarters good stuff let's get data.
-- right now UAW headquarters in downtown Detroit for the union reaction to all this Adam.
There has been no official reaction yet from the UAW of course you heard the president say that he stands.
With the employees of Chrysler and the communities in that they want to make this says at least to do is possibly does -- To the communities where Chrysler employs people and where manufactures its -- its products I think exact quote was.
This will not affect workers within it is -- least disruption to -- 170000.
Retirees as well.
That talking about the totality of the Fiat deal as well as the pending bankruptcy filing we're waiting.
The UAW officials is that national headquarters in Detroit Connell.
Two respond to what the president has had to say of course he did talk about.
The major concessions that the UAW was made the deals that are in place and there is -- perception that these deals will remain intact.
Even in the bankruptcy filing but when you speak to bankruptcy attorneys they see have to be very careful because what turned bankruptcy court he could become a three ring circus.
And that also the secured creditors who the president was pointing a finger of blame that that they have legal protection of bankruptcy court and that cannot be dismissed.
So we're waiting for UAW reaction there's one other little bit of breaking news because he did hear the president putting more pressure.
On the bond holders at Chrysler that was also putting pressure on bond holders -- GM and we've learned from a source for the bondholders that they're going to be needing to day.
We did the US Treasury Department as they negotiate a deal between General Motors as well as the bondholders.
-- exactly right try to put the pressure on the GM bondholders through this Chrysler situation Adam thanks a lot out of Shapiro with the union side of the story and we'll check back there.
As well as the reaction comes in this afternoon.
Back to sell the now talk a little bit about this restructuring -- -- -- the things that our viewers are weighing in on.
Is this bankruptcy and the timing of it a lot of them say they wish this happens a lot sooner.
-- that had changed things at this bankruptcy filing happen immediately checked it with without these deadlines after deadlines.
With -- changed what would happen in -- restructuring process at all.
No no it wouldn't the process still has to be followed.
In what the automotive task force in the administration has done is taken all the steps they possibly could to avoid.
-- filing and in the end it did come down to as the president said these speculators.
Who wouldn't get in alignment.
With the union that.
In the senior secured creditors here.
That really forced the company into bankruptcy.
And obviously they feel that they could get a better deal.
In the bankruptcy court then the administration was offering them which their prerogative right.
Yes yes cigarettes and died as investors in the company.
They can do that in as it turns out they may get a better deal than what the administration has offered them.
Yeah we were talking about some of those -- numbers involved in all that.
A little earlier now these two words -- and I've heard used and even in the last ten minutes.
One -- surgical -- -- -- right -- in describing how does bankruptcies actually gonna look for Chrysler.
The government hopes it's surgical and and we get out of it quickly.
What is messy look like -- what's the worst case here now that Chrysler is going to file.
Well the worst cases is -- it is a prolonged battle in the bankruptcy court between the rogue creditors and and everyone else in what happens when the bankruptcy is drawn out like that weird words very contentious.
Is -- intrinsic value.
Within the organization in this case Chrysler that's lost.
And what happens in their case for what could very well happen is that consumer confidence will further road past the point at which it is he wrote -- are ready.
And then once they emerge from bankruptcy.
The the task of of winning back the consumer confidence which will be a tough road -- hole.
That the technology that Chrysler -- that Fiat is making available to home.
Will still take a period of months if not years to -- -- into Chrysler's manufacturing facilities.
Bankruptcies before -- Sheldon we've seen in an airline industry we've seen it and -- and we've seen it work.
So let's put a different spin on it it could work we could actually have it it may be a quick restructuring what would be the best case scenario.
That it could be quick but the term quick is relative.
I do not believe that it will be thirty to sixty days is as the administration.
Has said and as some members of media said because it's a complex.
Large organization with many stakeholders and creditors.
They have to be addressed here.
It it it's likely that this bankruptcy could take six months or longer but that doesn't negate the fact.
That Chrysler can emerge from the bankruptcy process stronger.
In your point about the airline -- -- -- about the airline industry is a very well made point.
In that you look what happened -- united united came out of the bankruptcy practice and they are a robust.
Profit making business today right.
And that could happen and in this case in this same area as well that a perfect comparison we learn that but it's -- it -- you know it.
Maybe it works right and the larger point is at this -- we have no idea -- -- this we're really going into this kind of flying.
Line right shelves in some ways we don't know how any of this and for Chrysler or GM is gonna play out.
No we know we don't but one of the things that we can be sure of no matter where this case is tried whether it's in Delaware or New York or Detroit.
That once he gets into the courts the bankruptcy judge is going to ensure.
The -- whole -- -- principle of fairness.
And they're gonna look at all the detail they're gonna take everything into consideration.
And they are going to dude.
The best job that they possibly can to ensure that.
Once it comes out of bankruptcy in the deals actually cut before it gets out of bankruptcy that it is.
Feared all right so with that in mind let's just say try to put you in the mindset of somebody in one of these funds.
That owned this debt -- that -- and -- -- the so called speculators is the president says that are in question today.
And you bought the debt let's say just for argument sake we are having this discussion earlier.
At eighteen or nineteen cents in the dollar and the government Orlando and Chrysler is offering you thirty in this deal and you say no I can get more.
In in a bankruptcy filing would you rather -- is that it would it.
Do you do you see their argument in other words would you rather take your chances with the judge as opposed to doing an out of court settlement before the bankruptcy filing.
I would doubt want to take my chances.
I think that the administration's offer was a very fair offer.
Anyone who buys distressed debt.
You are speculating.
In in this case they'd still be making their return on and their investment in.
So why not take the thirty sense that's being offered it's it's still -- return on investment because.
When you do get in the court you are rolling the dice and it may be something less than that.
You know on money for breakfast yesterday we had a really interesting.
I have a couple of guests -- a really interesting we talk about the hedge funds being speculators.
And folks that got into this market over the last year.
And these are the ones that were holding out big bad hedge funds that.
You know there's people there's individuals who have a lot of bonding -- for example they had big debt and and Chrysler as well and they were beta one cell they've -- -- -- and I'm gonna lose nearly a 100% of my investment.
I'm gonna roll the dice and see what happens in bankruptcy court so.
It is this the biggest -- edited the debt is what's gonna happen with these debt holders in court is that going to be the biggest speed -- -- To get over it to get this bankruptcy filing.
On its way.
Well it it it will be -- it likely will be but good -- let me just go back to the point that you made.
Is that once it gets into court what is likely to happen is -- the -- creditors of the holders of the debt they will be separated into classes.
-- the the we'll be separated from the individuals.
Who who purchased bonds.
For the hope of some return and it may be relative to their retirement.
Well we have some other -- -- Chrysler as we continue to get this we have news from Chrysler saying that Bob Nardelli will leave the auto maker he's calling this bankruptcy bittersweet.
He says is gonna leave the automaker after bankruptcy so I -- presume this mean.
The densely after either the bankruptcy filing -- they emerge when there's still that the timeline he was named CEO just a couple years ago we have to remember that.
I he says he was not asked to step down by the government.
But he says is an appropriate time to announce his departure so looks like we also might have a replacement for -- Well that you really the talk has been a Sergio marching on NB CEO Fiat would take his place I don't know that that's been confirmed yet but there are comments from march -- Talking about the Chrysler deal being quote constructive and an important solution.
To Chrysler and to some of the industry.
Problem -- says that they're gonna introduce the offer Mayo into the North American market -- a lot about some of that was written this morning that that might happen so.
This idea of some of the affected the Italian -- and worked overseas for Fiat coming here to the United States and combining with some of the more effective for.
Chrysler what brands which you know would definitely include Jeep and what else does -- they said right all underneath that umbrellas an open question but he -- bring some of those cars in and you take Jeep on.
And which just you know have been in the best of the bunch I guess is the best -- -- -- for -- -- -- looks -- -- will -- of course is all very very -- Now we have 88 and Sarah Cindy check is on the phone is that right.
OK so I'm Sheldon we really appreciate you tip your final thoughts on on just -- restructuring hear what you're going to be watching over the next.
-- a couple hours we still have a deadline we apparently have something.
What I -- -- -- what's that what's your final thoughts on what you're really gonna be watching here.
And I'd also be curious before and get -- two what do you think the differences will be as we -- the GM deadline and what we should be thinking about differently vs Chrysler but -- across thoughts on Chrysler first also -- Sure.
What one of the things that we're going to be watching for.
Is the likelihood.
Or the probability I should say of whether this is going to be a prepackaged bankruptcy or a traditional Chapter Eleven filing.
In a prepackaged bankruptcy all the creditors half do agree.
-- what they're gonna get out of bankruptcy.
Before it goes into court.
That's what the president was referencing when he -- a surgical bankruptcy.
But if there's gonna be holdouts here.
And that debt that precludes the notion of having the prepackaged bankruptcy.
It will go into a traditional Chapter Eleven bankruptcy.
In in that case it will take.
Longer than six months the likelihood of that is is as strong.
Relative to GM.
My hope is is that.
GM the administration.
In the creditors here are learning from what went on at Chrysler.
And that some of the some of the speed bumps as you said can be avoided in GM can't avoid bankruptcy.
Okay double -- That's the next daughter business -- -- Sheldon stone Amherst partners Shelvin thank you very much we'll have you back for that child and -- hasn't had -- her hip -- actually want that perspective absolutely that the two are different -- and -- ended the secured vs the unsecured nature of the debt is one of the key differences here between General Motors and Chrysler.
And done so they might not play out in the exact same way the bulls will have -- time to talk about.
And that is slightly in his hanging back airlines when one airline went bankrupt now dead right.
That they -- and that is the conversation he's been hearing for investors at that is their concern now when domino falls here.
And because of the supply chain because of everything else.
That it leads to.
Another bankruptcy and that -- will return next step.
That's the worst -- -- worry you if you will check Eddy joins us.
Chrysler dealer it's -- talk about that side of the story and what he's dealing with today chuck good to talk to you thanks for coming -- we appreciated what's your take on the developments we've seen here over the last.
Ought to know twelve hours or so but culminating in the president's remarks in the Chrysler bankruptcy filing.
Well we've been.
We've been preparing for either decision.
I've worked closely with.
My counterpart -- General -- -- -- out of Virginia and also our task force today CA.
And we've -- you know we've made three trips to the White House starting back at.
Under the bush administration and then two with the Obama administration with their task force the treasury.
And -- very good meeting and were encouraged.
The fact that they were willing to work with Chrysler and gave us the targets we need to hit.
Very concerned about dealer network very concerned about the prospect of bankruptcy and what that could do to disrupt.
The dealer body again and consumers.
And and to manufacture.
And in that process.
We we just kept working working working and -- our confidence level has been very high.
That are dealership this -- look at the past our first quarter was a record first quarter -- consumer confidence sales.
That product everything was very positive April -- get another.
Record month and even right up until last night we were here late selling cars.
And we had customers that chuck what do you think what's the prospects if and I and I continue to tell everybody if that's the road that I have to take.
That I don't want to take.
It could be the right -- we come out on the other side stronger and leaner and healthier.
And the Chapter Eleven.
What would work because I was very encouraged by the president today.
It is the very encouraged that he said hey we're gonna be there Chrysler met the targets that they needed the we have a couple holed out that we're not gonna let them hold us hostage -- did what we -- -- -- -- they got the alliance with Fiat.
The UAW a lot of very Prada came to the party and it would the American auto worker did what they needed it candidate didn't think he'd -- The major.
Lenders did what they needed to deal art dealer body 3200 dealers major -- course.
Did made major sacrifices did what they had to do and so as I look at today.
Now see these speeches behind.
That -- speech is -- this this this kind of purgatory that we've been in for thirty days now behind -- now we -- the cards we're dealt and I feel very good about moving forward that.
Our pressure such that they were going to be there with Chrysler we're gonna go through this they're gonna come out stronger your award -- are gonna be solid and quite frankly in my opinion.
There's never been a better time to buy Chrysler product because the federal government just certain we're going to be there with -- -- take -- -- -- you're going to be stronger -- viable.
Our president called us a pillar in the industry you know -- China like eight K always you're you've got -- -- -- that for church where he hit it real but here's my question -- -- How are you feeling.
They didn't surprise me feeling angry and feeling optimistic they feeling sad this hasn't -- this is to -- this is a little sad you say they seem optimistic but feature but.
-- -- Did -- emotional for me.
Because it's might guess it was Chrysler.
And I've been with Chrysler my whole life I've grown up and I feel very proud of a Chrysler dealer -- so very proud for my customers and the people that they do business with but I feel very very proud.
-- the leadership that we have a Chrysler.
-- the eighteenth as far as I'm concerned.
I had dead ticket company by the -- leadership to run a company.
I would take -- -- -- problem sort of Bob Nardelli no question that.
And I would go to battle for them -- but I'm gonna tell you that.
Our family has been around this industry -- time -- get started this dealership but 69.
And so when you.
Straight -- me.
-- how to like feel it's emotional because.
I take it personal life where -- we should -- I -- better start some might but you know just the way I am and I've always felt good that at the end of this day we would be okay we would be during -- Obama.
With the loan that we -- -- we requested or we -- urgent Chapter Eleven that we would country stronger.
I mean emotional because.
It's my product gets my customers -- -- employees.
And they need to know they need to have confidence in our company meaning Chrysler they need to have confidence in their dealerships across this country.
3200 dealers right now I'm not sure who's going to be left -- -- we do not want.
This to deal would be used as an opportunity to botnet to not network out to just can't allow that.
Happened I check I I appreciate that I appreciate the honesty I can't help to get a little choked up with you and -- hear how emotional.
It is because it is it we talk about his big numbers and we talk about the money.
But we forget all the individuals and it's really important to have that perspective so I really.
A lot of gratitude for you for us for sharing that that.
Is I've got we've got 63 people that are particular dealership.
I am the third in port generations of family who have been in this store my son is now work at this dealership I've got.
I've got family members I've got employees that have been generations and are -- that that's like many across this country.
And so you take ownership of that that you care about your people first and other dealers in this country care about their -- and that's been the back.
Of every community in this country when you look at community should you look at dealerships and that you look at Chrysler he's been around.
Eighty to a hundred years usually meant there in the appropriately named Walter.
There's a building and -- it is not being dark named after all the secret for me this guy was an icon in America and this company's been an icon.
What we do our business in America we build our cars in America we we are supply chain is in America were not overseas -- not speak everywhere else may be.
To our fault you know that they get -- -- like that but it but it's been very good for America Chrysler has been very good for America.
And I'm so thankful that the president -- with the tragedy that we're gonna move forward.
Any sort of be there with us because he believes that -- -- -- -- its leadership -- -- -- I was so proud of Bob Nardelli the way he handled himself during all the hearings.
And the president acknowledged that today.
I think does Jenna said a moment ago chuck we appreciate.
Your honesty because it brings the other side of the story to it that's not just.
Dollars and cents it's real life Jack Denny thanks a lot again for coming on we always lobby back anytime thanks buddy NORAD.
Have you to as check -- he had been on wall near Youngstown and in Ohio on the Chrysler dealership that we -- said earlier and we made the point that the the holdouts such as they are in this deal have the prerogative to do that.
There's no -- you know they they -- they're responsible to the the investors in their respective funds but that's that this is the other side of -- so there you have that's fair and balanced as we can do it David Lee Miller said the bankruptcy court.
In New York in joins us now with you know back to the the reality of all this which is across a bankruptcy filing right David -- -- New York City today.
If filing to take place any moment in the building behind me is the building over my.
Right shoulder off in the distance that is the US bankruptcy court here for the southern district of New York.
Then again we believe is going to be filed here in Manhattan this is opposed to save Michigan where they.
Might have decided to file but the conventional wisdom here is perhaps they'll be a friendly Arab bankruptcy court here in New York City -- there might be in Michigan.
Where the court might be.
More willing to listen to the concerns of say the UAW United Auto Workers and labor we expect the filing to take place a very shortly it has been in the works now for.
For some time.
And -- it is very possible that after the -- -- C filing takes place we could see some of those lenders.
Try and influence the court but we are told that Doug this is going to be under section 363.
And those of us who are not bankruptcy lawyers that means is going to be a surgical bankruptcy for lack of a better description.
The administration now says it's going to be a quit I quit -- bankruptcy could be yet.
Just a matter of weeks but again it will be interesting to see to what extent if any some of the creditors here.
Decide to muck things up slow things down possibly even -- in the -- date Chrysler.
All this beginning to unfold once that filing takes place possibly now and just the next few minutes they -- you did.
Judge David Lee Miller allied -- the bankruptcy court in fact I'm just -- a headline and you're outside the building I'm getting ahead on in the news -- literally as you're speaking.
Chrysler files for Chapter Eleven bankruptcy.
Protection in New York so it looks like it's come down but justices who have a certain.
Are speaking which obviously we expected so -- and the next step from here as you understand it is what.
The next step now I was going to be.
The the matter is going to be decided by bankruptcy court judge and again as I say this is going to be under a part of the bankruptcy law.
That is going to.
Hopefully at least the perspective of the Obama administration result in some type of a quick fix the judge is going to have a greater amount of discretion here.
That he might otherwise have any conventional.
-- bankruptcy proceeding perhaps two overrule some of the creditors who are going to challenge this process.
As we know they didn't they were not happy with the negotiations the government offered two billion dollars.
To forget some six point nine billion dollars in debt they've been upped it to 2.2 five billion dollars that wasn't enough.
They may think they're going to get a great deal more in bankruptcy court that remains to be seen.
But right this goes the way the Obama administration wants it to things could be over in a matter of weeks I think that's probably optimistic -- -- it's not going to be a long drawn out of there.
That's -- have been -- David Lee Miller live from the bankruptcy court.
In New York City where the US auto giant Chrysler has just filed for Chapter Eleven protection thanks David now let's move on.
To the other side of the story which comes to us off from Italy where the Italian company Fiat -- entered into a partnership of course is part of this.
With Chrysler Greg Burke -- Fox News joins us now from Rome where of course there's a lot of focus on all of this is well.
Greg tell us the Italian side of this ever developing story.
We'll be Italian side is essentially a lot of pride you're sensing today and you -- one month ago when President Obama spoke so highly about Fiat and and what they could do bringing.
Technology small -- technology clean.
Technology to the table and certainly.
You sense that back then he sensed it again now that at -- very proud about that they don't tend to be very nationalistic maybe only once every four years when the World Cup comes up and have a soccer team and they can all get behind something.
And Fiat have been for -- while sort of a laughing stock in Europe but it has made.
A turnaround definitely what they get out of the deal basically they're gonna pick up 20% of Chrysler for free.
Because of what they bring to the table and that could go up to 35% later about what they get out in the deal is access the American markets not only for the small cars like the one -- Sitting on right now Fiat 500 which is great for European cities unclear whether -- make it in the United States but also they have -- huge range of products including up.
A very sporty.
Answered -- Klein called the Alfaro male and and for a long time it wanted to get access the American markets and this will allow them to do that.
It will indeed you bring up the key point in all this from -- point of -- Greg and we heard from.
Sergio Marchionne was the CEO at Fiat just moments ago saying that they will bring that -- for a -- brand among others over here to the United States.
Very interesting to see how that'll play in the in the US car market.
Yeah the I suspect -- -- it remain it will be -- popular car if you can I you -- have the service enough.
Up for it you know if you can have a range long enough that that it in the heat than -- point nine -- up until now I've rent to them often and in Italy they've been great cars but at least for Americans who no cars.
That you know hey they were great but then when it came to -- -- in trouble if this can help them do that that will be the good news the only negative.
I've seen here it seems like a win win all the way around in Italy the the negative we have heard obviously her from the unions here.
Once Fiat said they had agreed to build cars in the United States as well of course that's very good for them.
Not only opening the market -- building right there but the unions here obviously not happy about that and that that will be a problem here.
A problem -- -- think that's something we haven't talked about here as much the the the union situation at the Fiat -- -- to deal with in their own country.
Is it isn't that you say -- be a problem than anywhere does that affect the the partnership for or the Bolivia that the validity of its moving forward are now.
No I don't believe I don't believe legally that that that the that they can challenge that but you know they can't take that to the streets the unions are pretty strong here they can't take the streets and it's been it's been a problem it's not like it's interesting that Fiat is the savior in this because they have a lot of debt themselves.
It's not like they're in super great shape but compared to the Americans.
American auto makers they certainly are in good shape and they do have very good.
Our recent model so no it's not a deal stopper.
By any means it will.
Make some sort of problem on the street here for Fiat but other than that not really it it will go ahead.
Although the larger point -- that you also just brought up is that here's a company that is in and of itself is also dealing with the economic downturn in and all the things that go along with that.
And probably has the memories of what happened to a German company -- its -- -- mean when Donald combined with Chrysler's thinking -- -- -- -- great synergies here.
That didn't exactly work out -- point either.
Yeah that's true today you know and only ten years ago it seems like a lot of people seem to have forgot about that but this this is Sergio Marconi and -- unease I believe.
Great challenge you know let's let's make the other leader.
And not only in Europe but also worldwide -- and it's it's your risk of course but.
You know better than that and just sort of waiting around to see what what happens and see what the other big guys do it's obviously you do have to combine with some others and combine your forces globally.
If you are going to make it Marchionne is big point is he's in the end they're only going to be a handful of a big auto makers he wants to be among them.
He wants to be among them is right -- one of the big players well we didn't hadn't heard much about Sergio Marchionne until couple weeks ago really but now we hear about -- all the time right up there and Carlos -- of -- Nissan and some of the other big auto -- CEOs Greg Burke thanks very much.
Good stuff Greg Burke from Fox -- joining us from Italy today with that other.
Part of the story -- -- moved over just a couple of the other headlines that are crossing here and -- including the fact the crisis says most of it's manufacturing operations will be temporarily idled.
As of the fourth of may which is next week is part of this restructuring in the bankruptcy filing only became official.
That's obvious talking to David Lee Miller -- what was that you know five or six minutes ago as the filing officially -- came down.
In the courts in New York filing for Chapter Eleven bankruptcy.
Protection it says during the restructuring it will be the government that will provide what is known as the -- Financing -- protection financing and most importantly that all of the warranty claims will be honored.
This coming out of the court process today supply agreements and -- will be honored the dealers will keep operating so dealers will keep operating.
A warranty claims will be honored supply agreements honored and the government as we expected will provide the debtor in protection financing as Chrysler has officially filed.
For bankruptcy protection in New York while -- a great job everybody in putting together this.
Last hour for us -- just back from Fox News or she was promoted Greg Burke David Lee Miller on and then bring up the other side of this which I Italian story.
We do you have a special tonight though Chrysler on the brink at 9 PM eastern time tune into Fox Business deal could -- is going to be hosting that show working through all these details we expect more details throughout the day -- the story will continue.
And -- it will and we'll continue a while longer suppress the story's not over.
Absolutely and in this general -- story that we'll follow it we'll stay on top of all of that and we'll see you tomorrow here.
Same -- time for fox this -- dot com live if you can't catch just like any day at noon eastern time you can always watch the podcast which is available on iTunes have a great day everybody -- -- --
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