By on November 2, 2009

Green with ENVI...

From the just-released GAO report (PDF) on the auto bailout:

Chrysler’s shareholders, including Treasury, have agreed that  Fiat’s equity stake in Chrysler will increase if Chrysler meets certain benchmarks, such as producing a vehicle that achieves a fuel economy of 40 miles per gallon or producing a new engine in the United States. Treasury officials stated that they established such up-front conditions not solely to protect Treasury’s financial interests as a creditor and equity owner but also to reflect the Administration’s views on responsibly utilizing taxpayer resources for these companies. While Treasury has stated it does not plan to manage its stake in Chrysler or GM to achieve social policy goals, these requirements and covenants to which the companies are subject indicate the challenges Treasury has faced and likely will face in balancing its roles.

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10 Comments on “Bailout Watch 567: Feds Mandate Chrysler Green Car...”

  • avatar
    Rod Panhard

    Seems like fairly low requirements for a company whose only strong suit is “building economy cars” and “advanced diesel engine technology.”

    Now, getting them to sell will be a totally different story….

  • avatar

    That’s a pretty strong statement for the GAO. Not quite as strong as CBO head Douglas Elmendorf strongly hinting that his analyses of the health care bills are unreliable, since by law he’s forced to assume that Congress will actually make large future Medicare cuts of exactly the same type that Congress has been suspending every year since 2003. Still, it’s a pretty strong way for the GAO to say, “the Treasury says that politics won’t affect anything, but in reality some political pressure is inevitable even with the best intentions.”

  • avatar

    Setting mandates like this for a company limits its freedom of action, and therefore necessarily implies lower profits. Since Chrysler operates on tax payer money, this mandate therefore is the perfect equivalent to a tax increase on all Americans.

  • avatar

    So it looks like Chrysler will finally be building “cars Americans want”. Or not.

    Such a federal mandate will kill Chrysler if the cars Americans really want aren’t these. Which will lead to more federal regulation, but only after Ford cleans up more of the US market.

  • avatar

    This was put in place from the beginning as Chrysler emerged from bankruptcy as a new company months ago. This is nothing new, it was well know to all parties that as Fiat reached certain milestones they could gain addition ownership.

  • avatar

    So, they won’t let a Sublime Challenger count as a green car?

  • avatar


    Don’t gloat too soon, the show is not over.

  • avatar

    Good to know that the government won’t force the manufacture of Obamamobiles or Pelosi cars, like those right wing wackos were predicting.…


  • avatar

    The title for this post should have been, Fascism 101

  • avatar
    Jeff Puthuff

    Fiat’s equity stake in Chrysler will increase if Chrysler meets certain benchmarks

    Key word here is if. There’s no mandate; it’s just smoke and mirrors that the Treasury is using to get out from under the wreck that is a subsidized Chrysler. A transfer of ownership to Fiat in exchange for a maybe.

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