Hedge funder Stephen Feinberg’s grand plan was to revive the sagging US auto industry one investment at a time. But now his Chrysler GMAC bets may send Cerberus itself to the junkyard.
NYT: Stephen A. Feinberg, one of the country’s most powerful — and secretive — financiers, hoped to make a fortune out of the detritus of the American auto industry. Instead, he seems to be losing one.
Mr. Feinberg’s giant investment fund, Cerberus Capital Management, is racing to salvage multibillion-dollar investments in Chrysler, the smallest of the Detroit automakers, and GMAC, the financing arm of General Motors…
On Wednesday, Chrysler, which owns the Jeep and Dodge brands, said its sales in the United States fell by a third in August — nearly twice the industry average — as the downturn in the auto business dragged on. Honda eclipsed Chrysler as the nation’s No. 4 seller of cars, and Nissan is closing in fast.
The same day, GMAC, in which Cerberus holds a 51 per cent stake, said it was trying to stanch the bleeding from a business that was supposed to be immune to the ups and downs of the car industry: home mortgage lending. GMAC and its home loan unit, Residential Capital, announced that they would dismiss 5,000 employees, or 60 per cent of the unit’s staff, and close all 200 of its retail mortgage branches…
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