DOE "Green Car Retooling" Loan Program Under Republican Assault, Are Chrysler's Finances At Risk?

Edward Niedermeyer
by Edward Niedermeyer

Reuters reports:

Republican leaders in the House of Representatives want to halve the balance of a U.S. government loan fund established to help the auto industry make more fuel efficient cars and trucks.

If plans to shift some $1.5 billion from the Energy Department advanced technology fund to disaster assistance are carried out, serious questions would be raised about Chrysler’s ability to fully capitalize on its bid for new financing.

That the DOE loan program is under attack comes as no surprise: it’s been savaged by both the GAO ( twice) and the Center for Public Integrity for a lack of clear goals, weak oversight, misappropriation, and political patronage (more on the patronage bit here). And with the Solyndra DOE loan scandal blossoming, it’s no surprise to see ATVM going under the axe (although Rep Steny Hoyer is leading the Democrat pushback). What’s worrying about this development, however, is that Fiat-Chrysler CEO Sergio Marchionne has said that the DOE loan was “a crucial part” of negotiations over its recent Wall Street bailout loan refinancing. When GM quit the program earlier this year, Marchionne also said that

I have neither the arrogance nor the cash to show any disdain toward the DOE process.

Chrysler also cites its ability to secure the DOE loans as a major risk factor in its latest 10-Q SEC filing. And with only about $10.2b in cash and equivalents on hand at the end of June, there’s a chance that this attack on the ATVM loan program could deal a body blow to Chrysler’s finances. Here’s hoping Sergio has kept the runt of the bailed-out automaker litter from dependence on this apparently corrupt, and politically vulnerable loan program.

Edward Niedermeyer
Edward Niedermeyer

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  • Jhott997 Jhott997 on Sep 15, 2011

    If the fate of Chrysler as a corporation depends on these loans (which very well may be the fact...) then Chrysler SHOULD NOT get any loan. A "loan" or grant of this type should be used to support individual and specific programs, not to keep entire corporations afloat. Generally, there is and has been SO much wrong with all the intervention in the auto industry that has occurred since 2008, it disgusts me.

    • See 1 previous
    • Scoutdude Scoutdude on Sep 16, 2011

      @highdesertcat I agree, they were already paid to take the company off our hands so we should not be increasing the amount of the "loans". GM opted out of their allotment and that amount should not have been added to "Chrysler"'s.

  • Austin Greene Austin Greene on Sep 15, 2011

    Who's that plumper standing next to Marchionne? Finally something from Fiat-Chrysler that I'd like to merge with.

    • Edward Niedermeyer Edward Niedermeyer on Sep 15, 2011

      Er, that's EPA Administrator Lisa Jackson. I think you meant to say "big government has never looked so good."

  • Advo Advo on Sep 16, 2011

    So what in America is subsidized? Employer subsidized health care is the biggest. Mortgage tax write-offs is next. All those sports stadiums built with public money for the benefit very wealthy owners and players is prominent. Expensive sports tickets and luxury boxes look like excessive costs of doing business. Tax breaks for land developers or businesses like automobile assembly plants come to mind. Even charitable donation tax-breaks are subsidies. So all of this is distorting what people truly would want, need, and buy with their money if it wasn't being influenced by all this. And distortions mean less efficiency, lower wealth generation and growth, and a poorer overall economy than what would otherwise be. How much of these do you want to keep?

  • Praxis Praxis on Sep 16, 2011

    Now that Chrysler is Italian shouldn't they follow the lead of their political leaders and have their hat out grovelling to the Germans?