Why again did the government pay 7.2 Billion dollars to a privately held company? Link An administration official confirms that a $4 billion bridge loan and $3.2 billion in bankruptcy financing won't be paid back by Chrysler following bankruptcy. NEW YORK (CNNMoney.com) -- 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. "Certainly there are red flags," he said.
Obama decided to give the taxpayers' money to the union's retirees instead. Gotta love that liberal social agenda at work, crippling the banks and the manufacturing industry...
As a general rule of thumb, if you have nothing meaningful to contribute, but only seek to insult other posters, maybe you shouldn't post.
Eh, I think Obama should just cut the crap and attempt to reform the system, instead of half-measures meant to appease corporate interests and a certain section of the voting bloc. It's painfully obvious that many of the corporate heads of America need to be saved from themselves; lax regulation and sunny times let them get away with crap but now that the tables have turned, a LOT of weaknesses have been revealed in the American economy; a mixture of a lack of innovation, accountability and in general, stupidity at the very top. I understand Obama's decision process but I am disappointed that so much was committed and lost. I am even more disappointed in the companies in America. Something needs to change. Obama needs to lay the pimp hand down if corporate America is unwilling to start this change itself. And for what? Bankruptcy and collapse? We could be paying German CEOs 1/4 of the salary for 1/4 of the fail.
Cuttino was left-handed, so I hope he could use it more often than not. Did anyone expect Chrysler to pay their bailout back?
Um... [rquoter]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, [/rquoter]
Can I cash in my shares now? No? Guess I don't own any of it. Government no longer = American tax payer. The only money I expect back from bailouts are from companies who realize what a mistake they made to take it.
