Chrysler's congressman: Hedge funds blocked plan to prevent Chrysler bankruptcy

A deal to keep Chrysler out of bankruptcy was in place but blocked by nearly a dozen investment firms and hedge funds, the lawmaker representing Chrysler's corporate headquarters said Thursday.

"It almost happened," Rep. Gary Peters (D-Mich.) said in a conference call to react to news that Chrysler would be eased into bankruptcy. "It really did happen except for a dozen hedge funds who stood in the way."

Peters said that negotiations persisted late through last night and were on the table as late as this morning. The administration announced its conclusion to reporters in a 10:45 a.m. conference call.

"It looked like we were going to be there last night," Peters said. "Unfortunately, we basically had a handful of hedge funds and investment firms that held firm."

Peters said that he'd spoken to Obama before the president's public announcement on assisting the automakers early this afternoon, and that Obama had communicated the displeasure toward the hedge funds and other firms he voiced firmly during his statements Thursday afternoon.

"These hedge funds really wanted a power raid, while all the other parties were making concessions," Peters said. "Many of these bought the shares at pennies on the dollar."

Peters's remarks play into an emerging point made by the administration and lawmakers blaming the financial industry for forcing a Chrysler bankruptcy.