Oppenheimer Funds and Stairway Capital are the two companies leading the charge against Chrysler's reorganization. These minority lenders who control only about 30 percent of the company's debt are making it extremely difficult for Chrysler to reinvigorate the brand. Oppenheimer and Stairway's refusal is hurting America and their greed is causing unneeded joblessness.
Major economic players have blocked reorganization of companies before. In 1933, the Guardian Bank of Detroit was in dire financial straits. The company had made loans to many Detroit autoworkers and when they lost their jobs in the Great Depression, the workers neglected to pay their mortgages. By February, the bank's funds had deteriorated to the point that an RFC (Reconstruction Finance Corporation) loan was required to prevent default. One of the largest deposits in the bank belonged to the titan of Detroit, Henry Ford. The RFC agreed to give a sixty-five million dollar loan if Ford agreed to freeze assets within the bank. Ford, known as an autocrat, refused, and when told that his refusal would destroy the Detroit banking industry, he said, "Let the crash come... I feel young, I can build it up again." The proposed RFC loan fell through, the bank collapsed, and the major depositors went along with it.
As a result, Michigan's Governor called for a bank holiday and shut down all of the banks in Michigan with total reserves up to 1.5 billion dollars. Nearly a million people were left unable to withdraw funds from their banks, leaving them with only what they had in their pockets.
Chrysler's debtors have that same attitude that Henry Ford had: complete selfishness without acknowledgment of the total consequences of their actions. Due to their refusal to restructure their debt they are causing wide scale job loss, the effects of which will be seen across the economy. Thousands off workers are now trapped and have no means of earning a living. These financiers are destroying an American icon because of their greed. Their actions, if they continue, will create a ripple effect much like Henry Ford's did in the 1930s.
Yet what is even worse than that refusal is the halting of innovation. Chrysler, when it has to worry about paying its debtors, cannot add technology and style to its cars. America is at a turning point, and if the debtors refuse to restructure, there is sure to be reverberations throughout the economy.