Free Markets, Free People

Chrysler cost taxpayers much more than the reported 1.3 billion loss

CNN Money headlines an article “US loses 1.3 billion exiting Chrysler” and then says:

U.S. taxpayers likely lost $1.3 billion in the government bailout of Chrysler, the Treasury Department announced Thursday.

The government recently sold its remaining 6% stake in the company to Italian automaker Fiat. It wrapped up the 2009 bailout that was part of the Troubled Asset Relief Program six years early.

"The fact that the company has done so well — that they were able to go out and raise private capital to repay us the loan so quickly, is really the big story," said Tim Massad, Treasury assistant secretary for financial stability.

If the company has done so well, why are taxpayers out $1.3 billion?

Well apparently because the government couldn’t wait to sell their shares to a foreign company, Fiat, giving the Italian automaker a majority share in Chrysler:

Fiat paid the Treasury a total of $560 million for the remaining shares, as well as rights to shares held by the United Auto Workers retiree trust. Fiat now owns a 53.5% stake in the company.

And CNN continues to propagate the myth that Chrysler paid back its loans early:

Originally, the government committed a total of $12.5 billion to the struggling automaker, Old Chrysler, and the company’s newly formed Chrysler Group. Of those funds, $11.2 billion have been returned through principal repayments, interest and cancelled commitments, the Treasury said. The new Chrysler Group paid back $5.1 billion in loans in May.

Actually that’s not at all the case:

The Obama administration already forgave more than $4 billion of that debt when the company filed for bankruptcy in 2009. Taxpayers are never getting that money back.

[…]

The Obama administration’s bailout agreement with Fiat gave the Italian car company a “Incremental Call Option” that allows it to buy up to 16% of Chrysler stock at a reduced price. But in order to exercise the option, Fiat had to first pay back at least $3.5 billion of its loan to the Treasury Department. But Fiat was having trouble getting private banks to lend it the money. Enter Obama Energy Secretary Steven Chu who has signaled that he will approve a fuel-efficient vehicle loan to Chrysler for … wait for it … $3.5 billion.

[…]

So, to recap, the Obama Energy Department is loaning a foreign car company $3.5 billion so that it can pay the Treasury Department $7.6 billion even though American taxpayers spent $13 billion to save an American car company that is currently only worth $5 billion.

There’s your story.   Taxpayers mugged again by the Obama administration.  Film at 11.

~McQ

Twitter: @McQandO

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14 Responses to Chrysler cost taxpayers much more than the reported 1.3 billion loss

  • Ever since I lusted for a 1970 Dodge Challenger, after seeing “Vanishing Point” (in the THEATER), the Chrysler products have been more and more like the Lara products.
    /sarc

  • Good thing Obama bailed out the automakers.  If he hadn’t, we might no longer have an American Italian auto industry!

  • Ugh.  There was supposed to be a strikethrough above through American…
    i.e. “<del>American</del> Italian auto industry”

  • But Fiat was having trouble getting private banks to lend it the money.

    That’s kinda like that green car story from the other day, innit…???
    It’s almost like people with “skin in the game”…and market research an’ stuff…just don’t like the risk they see for the returns they expect.
    Huh.
    So, what was the motive for the “Brights” to step in and prevent Chrysler from undergoing a REAL bankruptcy…???

  • “Chrysler cost taxpayers much more than the reported 1.3 billion loss”

    But they saved the union!

  • “Film at 11.”
     
    If only – what you meant to say was the reporter who wanted to do THAT story was pink slipped and escorted to the door after a call from the White House. The DOJ will be bringing him up on charges of racism.

  • “C
    NN Money headlines an article “US loses 1.3 billion exiting Chrysler” and then says:”
     
    Oh, and I forgot to mention we MUST have tax increases, spending cuts just won’t solve the budget problem.
     

  • I thought Obama and Sheriff Joe were going to eliminate waste and fraud in government?

    • I think they meant, “Freelance waste, fraud and abuse”.
      Like the Soviet Union, where crime was taken off the streets and industrialized in the KGB and Politburo.
      Important distinctions…

  • Key quote by Mr. Massad: ““This is a major accomplishment…”

    I guess the fact they we only lost 1.3B could be viewed as an accomplishment.