Chrysler won't repay federal bailout 'loans'

Chrysler LLC will not repay U.S. taxpayers more than $7 billion in bailout money it received earlier this year and as part of its bankruptcy filing.

This revelation was buried within Chrysler's bankruptcy filings last week and confirmed by the Obama administration Tuesday. The filings included a list of business assumptions from one of the company's key financial advisors in the bankruptcy case.

Some of the main assumptions listed by Robert Manzo of Capstone Advisory Group were that the Treasury would forgive a $4 billion bridge loan given to Chrysler in the closing days of the Bush administration, a $300 million fee on that loan, and the $3.2 billion in financing approved last week by the Obama administration to fund Chrysler's operations during bankruptcy.

An Obama administration official confirmed Tuesday that Chrysler won't be repaying the loans, though a portion of the bridge loan may be recovered by Treasury from the assets of Chrysler Financial, the former credit arm of the automaker which is essentially going out of business as part of the reorganization.

"The reality now is that the face value [of the $4 billion bridge loan] will be written off in the bankruptcy process," said the official, who added that the 8% equity stake that Treasury will be receiving as part of the company's reorganization is meant to compensate taxpayers for the lost money.

"While we do not expect a recovery of these funds, we are comfortable that in the totality of the arrangement, the Treasury and the American taxpayer are being fairly compensated," said the official.

The company filed for bankruptcy Thursday as part of a deal with the federal government, unions, some lenders and Italian automaker Fiat to keep the company from being shut down.

The Canadian government also agreed to kick in about $900 million in bankruptcy financing. According to the filings, Chrysler's advisor assumes that this loan will be forgiven as well.

The Obama administration official said that other money being made available to Chrysler, such as the $4.7 billion that will go to the company as it exits bankruptcy, will be a loan that the government expects to be paid back. In addition, that loan will be secured by company assets, unlike the previous loans to Chrysler.

According to the filing, the company's financial advisor also foresees the need for an additional $1.5 billion loan from the Treasury Department by June 30, 2010.

Lori McTavish, a spokeswoman for Chrysler, said some of the assumptions made by the company have changed since its bankruptcy filing on April 30. But she could not say specifically if the company still hoped for the additional federal loan in 2010.

"The content of the document needs to speak for itself. We are simply not in a position to comment," she said.

Bob Corker, R-Tenn., who took the lead among Senate Republicans in challenging the auto bailout last December, said he was disappointed but not surprised that Chrysler would not be paying back the money.

"I've known for sometime that with the capital structure of the company and the situation it was in, we would not be paid back," he said. "There were several secured lenders ahead of us, and they're not getting most of their money."

Major banks and hedge funds that loaned Chrysler $6.9 billion were offered only $2.25 billion to settle those loans by Treasury. While major banks accepted the offer, hedge funds rejected it, forcing the company into bankruptcy.

Typically lenders who loan bankrupt companies funds to operate during reorganization go to the front of the line on getting the money they are owed repaid. But Corker said Chrysler's dire financial situation left it no chance to even pay back the bankruptcy financing.

He said the fact that Chrysler isn't paying what is owed should be a warning that the $15.4 billion loaned to General Motors by Treasury since December, as well as any bankruptcy financing it might need, is also at risk.

http://finance.yahoo.com/news/Chrysler-wont-repay-federal-cnnm-15142838.html?.v=4

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How STUPID was that? Obama spends 3.2 billion of taxpayer money to prepare for a Chrysler bankruptcy. Why not just have left it for the courts? Once you make the decision to due a bailout the objective has to be for the company to survive without going through bankruptcy. Otherwise, you just don't waste taxpayers money.

This Obama deal has cost taxpayers over 7 billion dollars but an Obama government official says that since taxpayer will get an 8 % stake in the company after re organization they will be fairly compensated. Talk about looking through rose colored glasses - for taxpayers to get that 8% we have to loan Chrysler 4.7 billion more as the company exits bankruptcy and then a possible additional 1.5 billion in 2010. Are you pulling your hair out yet? I'm so stoked about this deal I'm going to go ahead and celebrate with my fourth of July fireworks!!!

I wonder if Obama can get us the same deal with GM.

not at all surprising .....unfortunately

Well....it is bankruptcy....that's how it works.

Kat

So, because of this do we get a write-off on our taxes too? It was our money they used!

According to my Giddyup Poll, BHO is pretty incompitenet.
I wouldn't bet on him being well thought of when they talk about him in History Class. How not to manage finances.

They'll be talking about how he tried to save this country from a depression. They'll be talking about how bad the economy was when he became President.

8% of nothing is still nothing.

I've got a suggestion. Let's send Geitner and Obama over to the Treasury for one week and have them try to count 7 billion in one dollar bills ever day for one week. Sorta like when we had to write the same sentences over in school 500 times for conduct offenses. Maybe then they will realize how much of our hard earned dollars they are wasting in deals like we got with Chrysler.

it was worse when Reagan took office ....that is not a legacy!!!

He's on his way to making it legacy and about 60% of his congregation is rooting him on.
He does have a record to beat.

7,000,000,000 divided by average price of 25,000 per vehicle equals

280,000 vehicles.


Let's go get em. They are ours. We'll take that medal deserving granny in the other thread with us. I'm sure she can explain it to Obama.

Isn't it about saving jobs and communities?

If you save a job that is overpayed in the first place, said job is producing a product that is oversaturated in the market place (and therefore will not sell in numbers sufficent to even pay for the workers you must pay)... and worse manufacturing a product that even the stupidest person on earth knows we must stop making... (since the resources for such things grows the less with each day)

What exactally are you saving?

If a community has built itself around a single industry that community has place its eggs in a single basket.

Even small children know this is not a good thing to do.

If they fail then it be time to move on to other more worthwhile projects.

Aren't open world markets a wonderful thing?

See how well it levels the playing fields? See how much cheaper our lives cost now?

Just think, pretty soon every nation will have equally underpaid and underpriveleged workers...

As it continues to creep into the college 'degree' fields, a change of 'heart' will be witnessed...

I garuantee!

Will it be too late then?

Dumbass nearsighted rich ****s are removing the very foundation which allowed themselves to become wealthy...

But we gots friends 'round the globe now...

Not how it works for me, if I owe student loans or taxes, bankruptcy solves nothing.

Hopefully lots of jobs!


Fiat will provide Chrysler with important small vehicles and fuel-efficient powertrains to be produced at Chrysler factories, as well as distribution opportunities in key growth markets outside the U.S., where Chrysler is weak.

In exchange, Fiat gains U.S. manufacturing capacity for its small cars and access to Chrysler's dealer network. Full details weren't immediately available, however.

Did you just insinuate that winx is stupider than a small child?

Fiat got 35% of Chrysler! They will stay here in the US and still employ UAW workers.

Fiat is a small corp with experience in building energy efficient vehicles. They dont currently have a N American market and Chrysler does.

The OP forgot to mention that it was Bush who made the first loan to the Auto-makers after the Senate refused.

Jobs saved winx!

The United Auto Workers union, which has lost thousands of jobs amid a drastic downsizing of the U.S. auto industry, was elated by the prospect of extending Chrysler's life. "As the U.S. auto industry undergoes a restructuring process, this alliance has the potential to preserve a wide range of choices for U.S. consumers, as well as good-paying manufacturing jobs for our communities," said UAW President Ronald Gettelfinger.

http://www.forbes.com/2009/01/20/automobiles-fiat-chrysler-biz-cz_jm_0120fiat.html

Wrong again Fanta. The title of the OP says Obama flushed 3.2 billion. The article clearly stated Bush gave them 4 billion. Once Obama made the decision to let them file bankruptcy he made the decision for the whole 7 billion. So Obama flushed 7 billion dollars of taxpayer money for 8% of a company if we give 6 billion more.

Obama should have NEVER gave Chrysler the additional 3.2 billion unless Chrysler could survive without going through bankruptcy.

Fiat ain't proved sh*t to me.

Gettlefinger Motors.

I didnt know we voted you in as President crickster!


Jobs saved winx!

The United Auto Workers union, which has lost thousands of jobs amid a drastic downsizing of the U.S. auto industry, was elated by the prospect of extending Chrysler's life. "As the U.S. auto industry undergoes a restructuring process, this alliance has the potential to preserve a wide range of choices for U.S. consumers, as well as good-paying manufacturing jobs for our communities," said UAW President Ronald Gettelfinger.

http://www.forbes.com/2009/01/20/automobiles-fiat-chrysler-biz-cz_jm_0120fiat.html