by Calculated Risk on 9/04/2008 12:24:00 AM

From Michael J. de la Merced and Vikas Bajaj at the NY Times: Investments Are Faltering in Chrysler and GMAC

Mr. Feinberg’s giant investment fund, Cerberus Capital Management, is racing to salvage multibillion-dollar investments in Chrysler, the smallest of the Detroit automakers, and GMAC, the financing arm of General Motors.

But for Cerberus, named after the mythological three-headed dog who guards the gates of hell, the news keeps getting worse.

On Wednesday, Chrysler ... said its sales in the United States fell by a third in August — nearly twice the industry average ... Honda eclipsed Chrysler as the nation’s No. 4 seller of cars, and Nissan is closing in fast.

The same day, GMAC, in which Cerberus holds a 51 percent stake, said it was trying to stanch the bleeding from ... home mortgage lending. GMAC and its home loan unit, Residential Capital, announced that they would dismiss 5,000 employees, or 60 percent of the unit’s staff, and close all 200 of its retail mortgage branches.

The mythical Cerberus - an unfortunate choice of names - had two tasks: to keep the living and righteous out of hell, and to ensure that no one exits. Perhaps the founders forgot about the second task, because it appears GMAC and Chrysler are now in hell, and based on mythology, there is no escape.