With the May 1 bankruptcy deadline fast approaching, there appears to be little headway made in getting the major banks that hold Chrysler loans to agree to restructure that debt to help the company survive. The New York Times reports that the banks are pushing back in negotiations with the Treasury Department and the automaker in an attempt to get a better deal:
 

The senior lenders to Chrysler are planning to make a counteroffer to the Treasury Department this week, pushing back on a debt-reduction plan they say is too coercive, people briefed on the matter said Monday.

The Treasury Department has asked these lenders, which consist of banks and hedge funds, to reduce their $6.9 billion in debt holdings to about $1 billion. The goal is to help preserve Chrysler’s financial viability as it pursues a merger with Fiat, the Italian carmaker.

The banks contend the Treasury’s plan offers no concessions in exchange for a nearly 86 percent reduction in the value of their holdings. A steering committee of eight of these firms is now deciding whether to ask for equity in a combined Chrysler-Fiat, one of these people said.

Among the banks that hold secured debt in Chrysler are several that received tens of billions of dollars in federal bailout funds, swapping equity in exchange for loans from the federal government to keep them alive. That is, in essence, what they are being asked to do to help Chrysler stay alive.

The intransigence of those banks, especially JP Morgan Chase, has sparked a protest by activists who are urging a boycott of those banks that relied on taxpayer money for their own financial survival but refuse to help the automakers and autoworkers do the same thing.