Bailout Watch 356: "Taxpayers Should Own Chrysler, Not Fiat"

Ronnie Schreiber
by Ronnie Schreiber
bailout watch 356 taxpayers should own chrysler not fiat

American taxpayers have loaned Chrysler $4b. The Auburn Hills automaker has their hand out for an additional $3b. And what do the taxpayers get? A full newspaper page ad thanking them and a bunch of IOUs. Meanwhile Fiat is looking to pick up a third of Chrysler from Cerberus for little more than blue sky and a business plan. Political and economic ideologies aside, it doesn’t seem fair. Senator Jeff Bingaman (D-NM) agrees. During the confirmation hearings for the incoming administration’s Treasury Secretary, Sen. Bingaman asked Timothy Geithner what’s up with that. “It’s hard to explain why the American taxpayer shouldn’t own Chrysler,” the Senator asserted. True dat. When Daimler bought Chrysler, they didn’t ask U.S. taxpayers to finance the deal. When the Germans off-loaded ChryCo on Cerberus, no taxpayer subsidy was involved. If Fiat isn’t anteing up any cash– which it isn’t– somebody’s got to pay for adapting the Fiat platforms for the American market and retooling the plants. (At least in theory.) Cerberus, Chrysler and Fiat are hoping that the Italian job is compelling enough to obscure what’s really happening here: U.S. taxpayers are being fleeced. Again. Still.

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  • Essen Essen on Jan 23, 2009

    I'd rather they burn through Fiat's money then mine. Chrysler is not worth saving, if it is, Cerberus has the cash to fix it. If they don't want to do that, they can sell Jeep,scrap the rest and call it a day.

  • Wsn Wsn on Jan 23, 2009

    TheRealAutoGuy said: Sorry, guys, it’s not a plot. It’s “tough medicine” to fix a tough problem. The cost of Chrysler liquidation would make the $4B seem like chump change. THAT’s the truth, no matter how difficult it is to swallow. No, you have got the truth backward. This Cerberus' tough problem, and thus Cerberus should be the one to take the "tough medicine", not us. No matter what the liquidation cost is, that's Cerberus' problem, not ours. When Cerberus was still in its golden days and earning money by correct decisions, I don't remember it shared any wealth with the rest of us. Why should we bail it out when they lose money by wrong decisions? You know it's a plot, when one guy takes the tough medicine to fix another guy's tough problem.

  • Windswords Windswords on Jan 23, 2009

    Cerberus has rules it set up that prevent it from moving money from one owned asset (probably an LLC like Chrysler) to another. Banks, pension funds, and individuals have invested in the various assets of Cerberus knowing these rules. Now I know what some of you are thinking. "Screw the rules, Cerberus made them, they can break them. Let them divert money from their other investments into Chrysler". I'm not a Wall Street banker, an MBA, or politically well connected. I have in the past slept at a Holiday Inn Express so I will attempt to shed light on this. So let's say that one of the Cerberus companies is a shoe maker. They are doing very well now and earning a profit and therefore a return on investment. You run a pension fund for teachers and other "edumacational" workers (good hardworking union folk) and are invested in that company. Cerberus says they are going to divert some or all of that profit to Chrysler because "it's the right thing to do". The hell with the rules. What are you going to do? That's your investment profit for the the retirement of the people who are paying your salary. You're going to take them to court, that's what. And Cerberus would lose. That's why they are not "spreading the wealth around". It gets worse. The shoemaker has an outstanding loan with a major mega bank. The bank is not going to look too kindly to having the profits diverted to Chrysler. It has to consider that a risk to it's loan to the shoe maker. They are going to do something too, and it involves lawyers. Cerberus has publicly stated that in exchange for taxpayer funds that it won't make a profit on the sale Chrysler. Nardelli was the only CEO to offer to pay himself $1 in salary. Nardelli was the only one to say if saving Chrylser meant he had to lose his job, so be it (can you imagine in your wildest dreams Rick Wagoner saying that!?!?). Furthermore they are literaly "giving away" Chrysler at least in a monetary sense. They know they are in over their heads. They want to get out. Now Cerberus agreed to 'give' 35% of Chrysler to Fiat with no exchange of money. For this Fiat gets access to NA dealer network and ready made factories and Chrysler gets access to small cars and engines and markets outside of NA. In essence this is barter. Since money is not changeing hands you can't say to Fiat "you fix Chrysler". Fiat won't own a majority even if the deal goes thru and they don't have the cash anyway (unlike Chrysler who used have plenty before Daimler hoovered it up). The government should never allowed Daimler to take over Chrysler in the first place. There were many who warned that this would not end well. If we could sue the Dept of Commerce (if they're the right agency) for malpractice and dereliction of duty it would be wayyyy more that $7 billion.

  • Dzwax Dzwax on Jan 23, 2009

    Daimler raped Chrysler. I would rather put my tax money into Chrysler than GM.