Top Bankruptcy Attorney Thomas Lauria: White House Threatened To Use Press Corps To Destroy Firm's Reputation For Opposing Chrysler Bankruptcy Plan

Steve Rattner is the leader of the Obama administration's Auto Industry Task Force. Thomas Lauria is the Global Practice Head of the Financial Restructuring and Insolvency Group at White & Case.

ABC reporter Jake Tapper reports that "Lauria told ABC News that Rattner suggested to an official of the boutique investment bank Perella Weinberg Partners that officials of the Obama White House would embarrass the firm for opposing the Obama administration plan, which President Obama announced Thursday, and which requires creditors to accept roughly 29 cents on the dollar for an estimated $6.8 billion owed by Chrysler." Perella Weinberg Partners, which owned Chrysler debt through its Xerion Fund, "was one of Lauria's clients in this bankruptcy, but no longer is. Before the Thursday deadline, Joseph Perella and Peter Weinberg tried to join the larger creditors -- JP Morgan Chase, Citigroup, Morgan Stanley, and Goldman Sachs -- who are owed roughly 70% of Chrysler's debt and had already agreed to participate with the administration's plan. All four financial institutions are recipients of up to $100 billion in federal government bailout funds, though the Obama administration insists the matters were kept completely separate."

Perella Weinberg Partners, Lauria said, "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. That’s how hard it is to stand on this side of the fence."

Lauria has said his clients "are mainly fiduciaries for pension plans, college endowments, retirement plans and credit unions who invested in low yield supposedly very secure first lien debt" with Chrysler.

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

ABC News reporter Jake Tapper reports further that "President Obama singled out Lauria's clients for criticism when he announced the Chrysler plan on Thursday. 'While many stakeholders made sacrifices and worked constructively, I have to tell you some did not,' the president said. 'In particular, a group of investment firms and hedge funds decided to hold out for the prospect of an unjustified taxpayer-funded bailout. They were hoping that everybody else would make sacrifices, and they would have to make none.' Lauria said the president's assertion that his clients weren't willing to make any sacrifice is false. The clients were willing to take 50 cents on the dollar from Chrysler for their debt, he said. President Obama also said of Lauria's clients, 'I don't stand with them. I stand with Chrysler's employees and their families and communities. I stand with Chrysler's management, its dealers, and its suppliers. I stand with the millions of Americans who own and want to buy Chrysler cars. I don't stand with those who held out when everybody else is making sacrifices.'"

Lauria responded by saying that Obama "stands my clients up as basically the reason Chrysler is going into bankruptcy. He wrongly says they're not willing to make any sacrifice. And then he says he does not stand with us." Tweet