It’s been all go in the US corporate sector.
It seems Chrysler could be hours away from bankruptcy. Meanwhile, the fireworks went off at the Bank of America yesterday. But was the bank’s embattled chairman and chief executive able to avoid the rocket?
As you probably know, Chrysler is number three in the so-called Detroit Three, the massive auto makers that have played such an important role in the US economy for most of the last century.
Media reports from last night suggest that talks between the US Treasury and the company’s creditors seem to have broken down.
Both the New York Times and Wall Street Journal have speculated that the iconic company could file for Chapter 11 late today.
In some ways, this outcome may be no bad thing. If the company goes under, then at least its stakeholders will get a better idea of what they are entitled to. Creditors will know how much money they can get back, workers will know how much of their healthcare package will remain.
This in turn will hopefully lead to some sense finally leaping into the heads of stakeholders in GM and Ford, making it that much easier for a settlement there.
It also seems that if Chrysler does indeed go under, the way will then be made clear for a merger with the Italian iconic company, Fiat.
It is argued that if the two companies pool resources, they will have a better chance of being able to compete.
Then again, not so long ago, Chrysler and Daimler were a part of one big happy family, but it didn’t seem to do any good.
The global auto manufacturing industry is too big. Even during the boom there were signs that capacity was greater than demand. This industry needs to contract. It is not obvious how two massive car companies pooling resources will help.
If you are drunk and struggling to stay on your feet, here is some advice, don’t ask another drunk to try and help you.
As for Bank of America, Ken Lewis must be longing for yesterday, for today he is only half the man he used to be. Or to be precise, his hold over the bank is only half what it was. He is still the chief executive, but no longer chairman.
Mind you, rather than longing for yesterday, it seems more likely that Mr Lewis, along with all the other shareholders in the bank, must be longing for last September, and wishing they had never agreed to the Merrill Lynch merger.
It seems Mr Lewis’ run at the bank is on its last legs. Few expect him to remain at the helm for much longer. But, to an extent, both he and his bank have been the fall guys in this saga. If the merger with Merrill had not gone ahead, it seems there is a chance that this bank would have followed Lehman into collapse. And that really would have been curtains for any hope of an economic recovery for years.
© Investment & Business News 2013