ANALYSIS - Chrysler lenders face backlash, tough fight

By Poornima Gupta

DETROIT (Reuters) - The deal that could have saved Chrysler LLC fell apart over the objections of a handful of fund managers and touched off an immediate debate over the responsibility of investors and the role of government.

The 20 or so funds that balked at the terms of a government-brokered deal to cut Chrysler's $6.9 billion in debt were blamed by critics -- including U.S. President Barack Obama -- for pushing the U.S. automaker into bankruptcy on Thursday.

Now, the funds face a tough fight in bankruptcy court and the court of public opinion.

In a televised appearance from the White House, Obama termed the dissenting Chrysler debtholders "speculators" who had endangered the automaker's future by holding out.

"I don't stand with those who held out when everybody else is making sacrifices. That's why I'm supporting Chrysler's plan to use our bankruptcy laws to clear away its remaining obligations," Obama said.

Michigan Governor Jennifer Granholm vowed the three fund management firms whose opposition to the Chrysler deal was made public -- Oppenheimer Funds, Perrella Weinberg Partners and Stairway Capital -- would not get any state business.

Other states with significant auto-related business were considering similar moves.

One of the holdout creditors, Perella Weinberg, switched sides on Thursday, saying it had concluded the Treasury's offer was "in the best interests of all Chrysler stakeholders, and our own investors and partners."