The Obama Administration appears about to walk away from $7.5 billion in taxpayer money used to prop up Chrysler. This little information nugget was buried in Chrysler’s filing before the bankruptcy judge last week and confirmed by Administration sources. So much for responsible government and transparency!
The Bush Administration pumped $4 billion into Chrysler to keep it alive long enough to go into bankruptcy well-prepared. Obama has waived the $4 billion and a $300 million fee. In exchange, taxpayers are receiving an 8 percent stake in a company likely worth zilch.
In addition, the Obama Administration loaned another $3.2 billion to keep Chrysler operating in bankruptcy. Expected repayment: zilch.
But the plan is to use Chrysler’s assets to pay off creditors and replenish the UAW’s fund for its retirees, with enough left over to make the new Chrysler a pretty bride for Fiat the Italian groom. There’s nothing wrong with Fiat acquiring a controlling position in a new Chrysler. But the taxpayers shouldn’t be asked to fund a $7.5 billion dowry. Before any monies are paid to the autoworkers’ union, Fiat, or any non-secured creditor, taxpayers should get their money back.
"There’s nothing wrong with Fiat acquiring a controlling position in a new Chrysler."
Aquiring? Wouldn't that involve Fiat actually paying some money? If Chrysler is to be aquired why not put it out for bids? It seems to me like the chosen One is giving a %age of Chrysler to Fiat without getting much of anything in return. Throw the taxpayers and creditors under his bus, and reward the UAW and for some strange reason, Fiat.
I concur. Our apparent "grant" should not be supplementing UAW nor greasing the skids for Fiat. This is absolutely insane but not shocking given the current administration and the puppet master that's pulling the strings. I concur with J.D. Chrysler should pay back but more importantly, Obama should demand it back. Unfortunately, underneath the charm, big talk of change and transparency are irresponsible government and translucency.
Phil,
I am using the word "acquire" in a broad sense. Fiat is supposedly transfering various small car technologies to Chrysler in lieu of cash. It's a sweet deal, no doubt about it, since if Chrysler goes down, it can't use the technology. But, ex ante, exchange of value does mean there is an acquisition.
Lost in the write-up is that the UAW will own 55% of the company. The creditors are being asked to take $0.25 on the dollar while the UAW gets over $0.40 on the dollar. Tax payers get nothing. That is how Obama is protecting the tax payers.
What I don't understand is: Why aren't there SCREAMS of outrage by banks, Fox News and Republican politicians about the high-handed government intrusion in business, refusal to take loans back and the proposed giveaway to Fiat?
Where can I find a summary of this "taxpayer hosing" to share with some of my dim-witted friends-no big words, thanks.