Chrysler Repays Federal Loan

Edward Niedermeyer
by Edward Niedermeyer

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…

Edward Niedermeyer
Edward Niedermeyer

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  • Segfault Segfault on May 17, 2010

    (Sorry, I've already had most of my nightcaps for tonight...) So, did they repay the loan with borrowed money like GM, or not?

  • Vento97 Vento97 on May 17, 2010

    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...

  • Jerry Sutherland Jerry Sutherland on May 17, 2010

    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.

  • Windswords Windswords on May 18, 2010

    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