The Most Dangerous Deal in America

(Chrysler 300 photographed at Lloyd Bennett Field in Brooklyn, New York)

by Daniel Roth September 2007 Issue

Inside the secretive world of Cerberus Capital­­­—and why its plan to save Chrysler spooks Wall Street.

Photograph by: Jason Schmidt

This is what the people came for, but Stephen Feinberg looks as if he’d rather be anywhere else. He stands motionless on one end of the sprawling stage, practically hiding behind a lectern decorated with the massive golden coat of arms of Manhattan’s Waldorf-Astoria. The Wall Street investors who pack the room sit expectantly, ignoring—for the first time all morning—their BlackBerrys, which scroll silently in their pockets.

Feinberg, who is 47, sports thinning brown hair and a wispy mustache. Without any notes, he launches into a meandering speech. Between long pauses, he wends his way through market analyses that seem deliberately vague. At the heart of his speech, he sums up the philosophy that guides his company: Reveal as little as necessary; be anonymous; be invisible. “We try to hide religiously,” he says. “If anyone at Cerberus has his picture in the paper and a picture of his apartment, we will do more than fire that person. We will kill him. The jail sentence will be worth it.” There are a few nervous laughs.

Since graduating from Princeton 25 years ago, Feinberg has never given an interview and has never been photographed by the press. Not that there has been much demand until now. On Wall Street, the C.E.O. of Cerberus Capital Management, an investment firm with $26 billion in assets under management, has long been admired. (“You probably think you’re smart,” says one former employee. “Now take your brain and mine, take them to the 28th power, and you have Steve Feinberg.”) To the general public, though, Cerberus has been just another shadowy buyer of companies in an already overpopulated field. The firm’s purchases include a grab bag of brands that lurk on the edge of consumer consciousness: Fila sporting goods, Mervyn’s department stores, Alamo and National rental cars, Air Canada, the GMAC lending arm of General Motors.

All that changed on May 14 when another mustachioed C.E.O., Dieter Zetsche of DaimlerChrysler, announced he was selling Chrysler to Cerberus for $7.4 billion. (Daimler is retaining a 20 percent stake.) It marked the historic end of the German carmaker’s cross-cultural business experiment and the return of an American icon to U.S. soil. Feinberg didn’t even bother to appear at the press conference. “We hesitated [at making the deal],” he says at this meeting a month later, the annual gathering of Cerberus investors, “because we knew it would get an insane amount of press, and boy, we don’t like that. But the deal was so good.”