Guarding the Gates to Hell

by roxy and avahome

In mythology, Cerberus is the many headed dog that guards the gates to hell.  In modern times, Cerberus is a hedge fund group -- a many headed beast that has been devouring companies at a rapid rate. A hedge fund group with over 16 Billion in assets (as reported here) and allegedly bigger than "Cisco, Coke, Or McDonald's".

Cerberus was founded by Steven Feinberg in 1992 with just a little over 10 million dollars.  The shopping spree started in 2003, with Cerberus more than doubling its assets during a two year period.

 

Business Week ran a story in 2005 on the meteoric rise of Steven Feinberg's company. David M. Rubenstein, co-founder of the Carlyle Group is quoted as saying "Feinberg may have perfected a new business model."

Cerberus Capital Management [snip] has been quietly discussing an offer for Morgan Stanley's (MWD ) aircraft-leasing business for up to $2 billion and negotiating for a big stake in Israel's second-largest bank, Bank Leumi. And it's still digesting a $2.3 billion purchase in May of Meadwestvaco Corp.'s (MWV ) paper businesses -- a deal that included 900,000 acres of forest.

They subsequently bought the controlling share in Albertson's.  Little stood in their wave of aquisitions.  In January of 2006 USA Today reported on the relationship between Congressman Jerry Lewis and Cerberus (hat tip Avahome).

Both Lewis and the investment company, Cerberus Capital Management, benefited from the relationship. Eighteen months after the fundraiser and the House vote, Lewis won the chairmanship of the Appropriations Committee. He acknowledges that the fundraising efforts of Cerberus "played a very significant role" in winning the post. The ties between Cerberus and Lewis, a 14-term congressman from Redlands, Calif., have not been publicly examined before.

 Back in July of 2007 the Financial Times reported that Morgan Stanley backs Cerberus

Morgan Stanley has won a role advising Cerberus Capital Management's 6.6bn deal for an equipment rental company [United Rentals] after the bank also underwrote the private investment firm's acquisition of Chrysler.

And now here we are in October of 2008 and we have Cerberus with their hand out, making the case for why they should be beneficiaries of the Corporate Welfare Program (otherwise known as the Great Financial Bailout). [Rueters via MSNBC]

Cerberus Capital Management, the private equity firm that also controls Chrysler LLC, has been discussing the matter with the U.S. Federal Reserve for over a month, the newspaper reported, quoting unnamed people familiar with the talks.

Also, via MSNBC the AP is reporting that the scope of the bailout bill is "limited to virtually .... anything". Exactly how far will $700bn go when every corporation in America has their hand out? How on earth did a bill like this get passed?!

The $700 billion bailout bill is so vague that virtually any U.S. company could be eligible for government help.

Yes, people, feed the beast.

[sigh]

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niggling at me ... I think I am missing a big piece of the picture, but can't seem to put my finger on what strikes the discord.  Thoughts?

is the inclusion of over 600 different finance 'industry associations' whose many thousands of lobbyists had access to our legislators on those long days when our representatives were representing us in marking that bill up.

Well, maybe having one of the causes of the problem also running the bailout from his seat in the Treasury has something to do with it, too.

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"I hope we shall crush in its birth the aristocracy of our moneyed corporations which dare already to challenge our government in a trial of strength, and bid defiance to the laws of our country." - Thomas Jefferson

but it seems to me that somebody ... somewhere ... who's last name was Paulsen ... knew what was going on with all of this, and we were duped into a state of panic so that BNs of dollars would be apporpriated to finish off a job that they just might not get 4 more years to complete.

Greenspan saying "The model failed." does not make me feel any better ...

 

so would appreciate your keeping your eyes open for the answer, if you would. 

Did Paulson get any degree of immunity written into that bill?

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"I hope we shall crush in its birth the aristocracy of our moneyed corporations which dare already to challenge our government in a trial of strength, and bid defiance to the laws of our country." - Thomas Jefferson

H.R. 1424, Sec. 119 looks like it. No immunity, huge latitude.

on an important issue!

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"I hope we shall crush in its birth the aristocracy of our moneyed corporations which dare already to challenge our government in a trial of strength, and bid defiance to the laws of our country." - Thomas Jefferson

Here is the section you reference ... I have read it thru a couple of times, and though I am thinking it is written in English, I still can't see where the loophole is.


SEC. 119. JUDICIAL REVIEW AND RELATED MATTERS.

    (a) Judicial Review-

      (1) STANDARD- Actions by the Secretary pursuant to the authority of this Act shall be subject to chapter 7 of title 5, United States Code, including that such final actions shall be held unlawful and set aside if found to be arbitrary, capricious, an abuse of discretion, or not in accordance with law.

      (2) LIMITATIONS ON EQUITABLE RELIEF-

        (A) INJUNCTION- No injunction or other form of equitable relief shall be issued against the Secretary for actions pursuant to section 101, 102, 106, and 109, other than to remedy a violation of the Constitution.

        (B) TEMPORARY RESTRAINING ORDER- Any request for a temporary restraining order against the Secretary for actions pursuant to this Act shall be considered and granted or denied by the court within 3 days of the date of the request.

        (C) PRELIMINARY INJUNCTION- Any request for a preliminary injunction against the Secretary for actions pursuant to this Act shall be considered and granted or denied by the court on an expedited basis consistent with the provisions of rule 65(b)(3) of the Federal Rules of Civil Procedure, or any successor thereto.

        (D) PERMANENT INJUNCTION- Any request for a permanent injunction against the Secretary for actions pursuant to this Act shall be considered and granted or denied by the court on an expedited basis. Whenever possible, the court shall consolidate trial on the merits with any hearing on a request for a preliminary injunction, consistent with the provisions of rule 65(a)(2) of the Federal Rules of Civil Procedure, or any successor thereto.

      (3) LIMITATION ON ACTIONS BY PARTICIPATING COMPANIES- No action or claims may be brought against the Secretary by any person that divests its assets with respect to its participation in a program under this Act, except as provided in paragraph (1), other than as expressly provided in a written contract with the Secretary.

      (4) STAYS- Any injunction or other form of equitable relief issued against the Secretary for actions pursuant to section 101, 102, 106, and 109, shall be automatically stayed. The stay shall be lifted unless the Secretary seeks a stay from a higher court within 3 calendar days after the date on which the relief is issued.

    (b) Related Matters-

      (1) TREATMENT OF HOMEOWNERS' RIGHTS- The terms of any residential mortgage loan that is part of any purchase by the Secretary under this Act shall remain subject to all claims and defenses that would otherwise apply, notwithstanding the exercise of authority by the Secretary under this Act.

      (2) SAVINGS CLAUSE- Any exercise of the authority of the Secretary pursuant to this Act shall not impair the claims or defenses that would otherwise apply with respect to persons other than the Secretary. Except as established in any contract, a servicer of pooled residential mortgages owes any duty to determine whether the net present value of the payments on the loan, as modified, is likely to be greater than the anticipated net recovery that would result from foreclosure to all investors and holders of beneficial interests in such investment, but not to any individual or groups of investors or beneficial interest holders, and shall be deemed to act in the best interests of all such investors or holders of beneficial interests if the servicer agrees to or implements a modification or workout plan when the servicer takes reasonable loss mitigation actions, including partial payments.

This game with the automotive bail-out just keeps on giving. The merger of GM and Chrysler according to this article would shed thousands of jobs.
Take a look see for yourself...it's interesting reading!

Mich. race shifts into gear amid auto woes

Less than a week from Election Day, rumors of a potential merger between Chrysler and General Motors remain a large, unknown variable looming in Michigan’s hotly contested 9th district.

The district, represented by longtime Rep. Joe Knollenberg (R), is home to Chrysler’s corporate headquarters, where uncertainty in the company’s future may translate into additional uncertainty in Knollenberg’s difficult reelection bid against Democrat Gary Peters.

I also did a little search on GM's Hummer:
H1 Humvee vs H2 Hummer

and the military switching gears

Pentagon approves Humvee replacement contracts
(notice the contractors Blackwater, and Force Protection Inc.)

Stay tuned!

that both Ford and GM announced they were not declaring bankruptcy -- and now I can't find the article.

Seems it was probably right around the time the bailout was approved and they realized they were in line for some of the welfare money Paulsen was gonna be doling out. This just makes me sick!

thank goodness. And I hope they stay out of the GM Chrysler fray. Someone has got to take the high road!

nytimes.com

DETROIT — The Treasury Department has turned down a request by General Motors for up to $10 billion to help finance the automaker’s possible merger with Chrysler, according to people close to the discussions.

Instead of providing new assistance, the Treasury Department told G.M. on Friday, the Bush administration will now shift its focus to speeding up the $25 billion loan program for fuel-efficient vehicles approved by Congress in September and administered by the Energy Department.........

According to this article Chrylser has been steadily losing money....so one can speculate why G.M. is on Cerberus' radar.....and I assume it would have been because of a bailout.
With the bailout looking like it's not gonna happen then what?