A handful of banks remain opposed to the government-backed plan to rescue Chrysler Corp. after three days of negotiations here, but Treasury officials expressed confidence the plan will receive final approval on schedule, by mid-June.
Deputy Treasury Secretary Robert Carswell said nearly all of the 300 U.S. and foreign banks involved in the Chrysler plan have agreed to detailed loan terms. Chrysler's creditors are expected to contribute $642 million, primarily in interest concessions, as part of $2.03 billion in private assistance provided in the Chrysler aid package.
But the banks have insisted among themselves that their participation must be unanimous. Thus, even a single holdout could block the agreement and force Chrysler into bankruptcy.
Carswell said he doubted that any of the banks would want "to be known as the ones who pulled Chrysler down."
Two of the approximately 20 "recalcitrant" banks are based in Detroit, the center of the auto industry, he added. "Do you really think, in the end, a Detroit bank will put Chrysler into bankruptcy?" he asked rhetorically.
Carswell didn't name any of the holdout banks, whose outstanding loans to Chrysler total less than $30 million.
They include several banks which have sued Chrysler or its subsidiaries, laying claim to company assets to protect their loans.
The suits include one for $10 million by Banque Bruxelles Lambert, another for $1 million by First Security Bank of Utah and one for $716,500 by the People's Trust Bank of Fort Wayne, Ind., all against Chrysler. Suits against Chrysler Financial Corp. have been brought by the York Bank and Trust Co. of York, Pa., for $1.5 million, and by the American National Bank and Trust Co. of Rockford, Ill., for $525,167.
Other banks have threatened lawsuits, or have made it clear they don't want to take part in the Chrysler aid plan because of its risk.
The objections reportedly are centered among small U.S. banks and a number of European banks that were willing to accept Chrysler perferred stock after 1983 instead of payment on deferred-interest obligations. Carswell said the problem of the stock conversion has been resolved.
The three days of meetings between Treasury officials and representatives of 130 of Chrysler's creditor banks were called a success by Carswell, permitting the printing of the final loan documents.
Treasury officials hope to have the documents signed by June 13 -- a Friday, an omen that Carswell refused to regard as unlucky.
At that point, Chrysler would be able to draw the first $500 million installment of the government-backed loans approved by Congress in December, a cash infusion the auto company desperately needs.