We're Going to Bankruptcy

Chrysler's lenders offered to swap $2.5 billion in unsecured debt for a 40% equity stake in the company. This is a terrible deal, and they know it will be rejected. Bankruptcy, here we come. There's still the possibility that the banks holding this debt will get a last hour government bailout, however. I wouldn't put anything past this administration. The level of incompetence is such an astounding reversal of the campaign. I guess the difference is that Obama looks good in lipstick. Citigroup doesn't.

Last week, creditors rejected a Treasury Department offer to erase the debt for $1 billion cash. The new offer, which would swap 35 percent of the debt for equity, still falls short of the government's restructuring goals calling for Chrysler to retire at least two-thirds of its secured loans. - Yahoo

The two sides are so far apart that bankruptcy is certain. We'll have to see how it turns out. On one hand, washing away of debt is good, but on the other hand, this administration is so incompetent that they'll probably botch this anyway.