Have Chrysler’s secured lenders blinked? According to a press reports it looks like that may be the case.

The NYT for one is reporting that the banks have agreed to take $2 billion in cash and 10% of the company in exchange for cancelling $6.9 billion in secured debt. Now bear in mind that this agreement has to be approved by a large percentage of the creditors so a deal isn’t done yet.

The other news is that the UAW will get 55% of the company and Fiat will end up with about 35%. It must take a European perspective on business to go into a deal in which your workers have majority control of the business. Or maybe Fiat figures that since it isn’t putting up any cash the down side is so limited that it’s worth a flyer.

The larger question is what implications this might have for a GM deal. The conventional wisdom is not much. The logic I’ve heard for that position is that the Chrysler’s creditors weren’t convinced that the government wouldn’t let the company be liquidated if it did end up in the courts. Viewed from that perspective they caved. In the GM case, the creditors are absolutely certain that the government won’t let it go down. Therefore, GM’s creditors are going to bargain harder because they know the company is going to survive come hell or high water.

It makes sense but one has to wonder just how much politics and behind the scenes arm twisting is going on. I rather suspect that the last thing the banks want right now is a lot of press painting them as the bad guys who forced either one of these companies into a bankruptcy proceeding. Having just survived a bout of populist rage in Congress over bonuses, I doubt they want to risk another go round as the slayers of American icons. I imagine that less than subtle suggestions in this vein may have been directed to them.

In trying to figure out which way things go it might be worth remembering that it’s not business as usual right now.