By on May 17, 2010

What, you want more context from a headline? It’s not like we’ve lied to you or anything. Technically, every word of it is true. OK, OK, here’s the fine print: CGI Holding, owners of “Old Chrysler” and Chrysler Financial paid $1.9b of a $4b pre-bankruptcy TARP loan, according to Automotive News [sub]. Though far less than face value, that payback “is significantly more” than what Treasury was expecting in return. In other words, this is great news if you thought the bailout would be a complete loss. Otherwise, it means that the various remains of Chrysler have repaid $3.9b of the $14.3 invested by taxpayers into the company pre-bankruptcy… and unless Chrysler’s IPO brings in about $100b, Treasury will still take a bath on the rescue.

Meanwhile, the AP [via Google] reports that the government has announced a $1.6b loss on its $4b loan to Chrysler, in anticipation of securing another $500m from the revived Chrysler, now partnered with Fiat. As a result, the Treasury no longer considers “Old Chrysler” to be in debt to the taxpayers, because it apparently can’t get the last $1.6b from the liquidating CGI Holdings. Go figure. Meanwhile, there’s a special irony here: just as Chrysler Financial screws the taxpayer one last time before disappearing into CGI Holdings’ liquidation, Chrysler starts making noises about getting back into the captive finance game. And around and around we go…

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10 Comments on “Chrysler Repays Federal Loan...”


  • avatar
    James2

    I get dizzy trying to differentiate among all these these loans and who got them. It seems like D.C. and the Loser Two are trying to play the same stupid games that AIG played, the ones that almost resulted in a financial China Syndrome.

  • avatar
    PeriSoft

    Other issues aside, the point of the loans was never to make money for the government, or even to get it all back. The point was to prevent a bankruptcy of one of the big three that would have domino’d the entire auto industry supply chain, taking the other two down with it.

    The economic consequences of failing to give those loans would have made the few billion written off look like chump change.

    Say we hadn’t propped up mopar, and they went down. Their suppliers went down, and dragged GM/Ford down – who cares? Well, I care, because I sell the stuff I build to the company that makes Ford’s auto show booths. No (or weak) Ford last year would have cost my company half a million, easily – and I’d be writing this message from a cardboard box under an overpass. And the guy who builds our computers… and the guy who cleans his floors… and the restaurants our machinists eat at…

    The world is more complex than just, “Hurr hurr, who cares if stupid US automakers go away, I drive an Audi”.

    There are obviously plenty of other connected issues – the disturbing eagerness of automakers to jump back into the sub prime frying pan for one – but complaining about how we ‘lost’ money on these loans misses the point.

    • 0 avatar
      Stingray

      STFU you insolent. They should have gone broke/belly up/finish/kaput/finito. And the money given to holy Toyota…

      Now, speaking seriously, X2 on what you said

    • 0 avatar
      geozinger

      @Peri Soft: I don’t think that Chrysler and it’s financial arm was ever involved in the real estate game, like GMAC was. To GMAC’s credit (or shame), they managed to sell off the real estate part before the poop hit the fan. The recession happened and GM ran out of time to recover, however.

      Since on this site, GM and Chrysler are being combined into Government Motors, I guess my comments can apply equally to both. Both of them need captive financing in order to move the metal.

      As to the rest of your post, I agree 100%. The people who think that if the D3 were to just dry up and blow away with no consequence to the rest of us (or at least themselves), I believe they are sadly mislead. You cannot drastically shutdown a large part of the economy (7-15% of GDP depending upon who you believe) and not expect drastic repercussions in the rest of the economy.

  • avatar
    segfault

    (Sorry, I’ve already had most of my nightcaps for tonight…)

    So, did they repay the loan with borrowed money like GM, or not?

  • avatar
    vento97

    A message to the Big Three:

    Whaddya mean “A Message to Washington – Invest In America???” Washington just bailed out the two sorriest asses of the Big Three. I won’t mention any names, but their initials are: GM & Chrysler…

    How about investing some of those profits back into your operation so you can ACTUALLY compete with the imports?

    Just a thought…

  • avatar

    I’m not totally onside with tax money in private industry because, as a Canadian, I’ve seen far too many public money social experiments crash and burn.But this was different-as noted above.

    Now that taxpayers have skin in the game I’m hoping that this turns out like the early 80s with Chrysler’s loans.

  • avatar
    windswords

    I think there is an important distinction: In GM’s case, the new GM claimed that it re-payed it’s loans to the gubment. In this case it’s not Chrysler, but “Old CarCo” which is not part of Chrysler LLC anymore. Yeah, you might not like it, but that’s how C11 works. I don’t know if Chrysler owes the government money or not. Most of new Chrysler is owned by the UAW now, so isn’t it the UAW that owes any money? Don’t expect the gubment to pressure them to pay it back anytime soon


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