• Apr 20th 2009 at 9:01PM
  • 35
Earlier this month Chrysler Financial (CF) turned down a $750 million loan from the government meant to allow it to continue providing loans to dealers. This is where it turns into he-said-she-said: a source told the Washington Post that CF turned the loan down because a condition of the loan was having the "top 25 executives sign waivers regarding their compensation." Supposedly, some of the execs wouldn't do that.
Another source refuted that, saying there was no way executives would turn down a loan if it would help the company survive. Nevertheless, CF's response to the story seems a little disingenuous. The company said "Executives have not been presented with any new demands with regard to executive compensation." That's straightforward enough. But then it adds, "As a TARP recipient we remain in full compliance with current executive compensation requirements."

When Chrysler Financial received its TARP loans there were no stipulations at all about executive compensation -- they hadn't been drafted yet. So yes, it is "in full compliance" with the current requirements as it stood when it borrowed the money. Then CF said it didn't any more TARP funds, however, it is going to borrow money at a higher interest rate from a group of banks. Which means it still wants money, just not the government's money, and it's willing to pay more for it. Sounds curious, no? Hat tip to Roger

[Source: Washington Post]

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    • 1 Second Ago
      • 6 Years Ago
      Not wanting to take a pay cut to save the company...sounds perfectly American.
        • 6 Years Ago
        Ah, yes, the Unions, Obama, the entire Democratic party, AND myself are all responsible for Chrysler building cars "no one wants to drive." Got it.
        • 6 Years Ago
        Because He's(Obama) not putting the same pressure on the unions?
        Going after a handful of executives is a symbolic gesture at solving the problem.The real waste of taxpayer money is with the systemic corruption in the union/democratic party dynamic.the UAW needs to make concessions but they made Obama and He owes them.
        There's Your,with all due respect, blame Lucas
        • 6 Years Ago
        Lucas.You sound like a petulant little baby.
        I didn't say the unions,Obama,the entire Democratic party and You were responsible for making cars "no one wants to drive".
        My point was that Obama is not using his influence on the unions, who are receiving taxpayer money,because He is beholden to them.
        • 6 Years Ago
        JC: When did the unions, and which unions received taxpayers (bailout) money? This is news to me. The truth my brother, nothing but the truth.

        While the President's task force could referee the catfight between the unions and the companies, it not the government's business to twist the union's arms.

        This is actually a three-way fight. Companies vs. Unions vs. BondHolders. The gov't cannot make the unions or the bondholders do anything that they don't want to do. The can't even (legally) force the companies to do anything that they don't want to do. The government (WISELY) laid out terms and conditions under which they will continue to lend money to these companies. Companies don't like the terms, they are free to walk away.
        • 6 Years Ago
        Yup...but somehow it will be Obama's fault.
      • 6 Years Ago
      Curious? no. Sounds smart to me. The government should not be controlling the private sector. Socialism anyone?
        • 6 Years Ago
        Stupid / ignorant comment, These asswipes went to the government, not the other way around.

        The much ballyhooed PRIVATE sector was in TOTAL COLLAPSE. They FAILED. The Government (Bush & Obama) saved their bacon. They were more than happy to accept the government's checks and restrictions,because their assed were on fire. Now that the worst has passed, and they are starting to make money again, they whine like little bitches.

        As someone that once lived in a socialist country, 30 yrs ago, You ignorant right wingers love to throw that word around, but don't actually know what socialism is.

        When the government starts controlling the supermarkets, NFL, NBA, MLB, all universities, religion, what you read etc,etc then you have arrived at socialism's doorstep. Until then, you're just a whiny bunch of sore LOSERS.
      • 6 Years Ago
      @John P.

      Either you were born retarded or you're being paid off by thieving corporate executives. Which is it?
      • 6 Years Ago
      Can't say I blame them for wanting the govt. to keep their grubby little hands out of the car business, but isn't it a little late for that now?

      Something about this story sounds a bit fishy to me. It'll be interesting to learn more as things shake out.
        • 6 Years Ago
        noticed the same thing on my first pass

        Then CF said it didn't any more TARP funds, however

        Then CF said it didn't (need) any more TARP funds, however
        • 6 Years Ago
        "Can't say I blame them for wanting the govt. to keep their grubby little hands out of the car business"---------------John, are you somehow implying that government came to Chrysler and said "we want a stake in you"????? It was the automakers who came to the government for money.....they asked the government to save their failed businesses.

        As far as exec compensation, who ever pays orders the music, government pays, so them they tell Chrysler or GM to jump, they have to ask how high. If these companies have a problem with that...............they can return the money back, but they can't because they running failed businesses. Look at Ford, Ford does whatever it wants because..................................they run their business, like business.
        • 6 Years Ago
        Sea Urchin, If you read the article you'll see that there were no stipulations in the original agreement as to executive pay. In light of things that have been happening can you blame them for being skittish now? I did mention it's a bit late now to be crying since they did take money so I think you and I are on the same page here.

        After AIG officials were paraded out as some sort of robber barrens by the "stunned" administration,... oh yeah, the same one that had actually had the bill altered to allow for the bonuses, their houses were staked out by angry citizens wielding pitchforks in Connecticut.

        I don't know all the details of this, but I do know that this class warfare thing going on isn't a one sided story. Hey, you could be right, but I'm not ready to throw these guys under the bus. I think there's more to this story then we know right now that's all.
        • 6 Years Ago
        Typo Alert. Can you find it?
        • 6 Years Ago

        You realize an asset doesn't mean cash, right?

        They can have assets (buildings, equipment, inventory, etc.) of $24 Billion and $0 in cash. You can't pay the bills with a box of bolts....
        • 6 Years Ago
        I agree with both of you in a way...unfortunately where I'll likely to get ripped on is by saying that Chrysler should have been left to collapse on its own and then the assets would have been picked up by competent companies which actually know how to run a car business.

        I believe what we are about to see is a case of good money being thrown after the bad. It's a fundamentally flawed company at every single pillar of its structure. Whether it's the product, supply chain relationships, quality, politics, innovation. Fiat needs to buy them and do what it needs to do. For current management it is game over.
        • 6 Years Ago
        @John P

        Have you read the news? Or perhaps you re following the wrong news reports (FauxNews?) ? Barack Obama is exerting pressure on unions, as a matter of fact, cutting cost and renegotiating contracts with the unions is a pivotal part of his load conditions. His administration is actively engaged in mediating talks between car bosses and union officials.

        Pointing fingers to these 'corrupt Democrats' is the pinnacle of hypocrisy considering it's Republicans who are in the pocket of big oil, big halliburton, the military industrial complex, Blackstone (real estate), Enron and the list goes on.
        • 6 Years Ago
        John P.:
        Maybe the Obama administration should have read the bill they signed. Then they would have known it allowed for AIG bonuses to be paid.

        Haliburton is so sucessful (not!) it has been up for sale. The owning company doesn't want it anymore. And Enron was the Clinton administration. They wanted "help" from Bush when they got into trouble and Bush told them no. That's why they imploded. Do you get all your news from (P)MSNBC?
        • 6 Years Ago
        Chrysler Financial doesn't need Government loans because in 10 days it won't be financing Chrysler vehicles anymore since it's pretty clear that Chrysler will be liquidated. Sorry folks, just telling it like it is.
      • 6 Years Ago
        • 6 Years Ago
        I agree with Ian.

        Chrysler Financial is not Chrysler LLC. ChrysFin should be in a much better financial health situation than the troubled carmaker. Besides the financial arm doesn't have to worry about numerous physical assets like assembly plants & manuf facilities that would continue to draw from their profits. They just need extend new vehicle loans to as many Chryslers as possible & be competitive in the used-car loan market too.
      • 6 Years Ago
      Chrysler Financial = Cerberus.

      Cerberus is one of the richest private entities in the world. TARP money was just gravy.
      • 6 Years Ago
      Are you frakking morons!?

      • 6 Years Ago
      Keep in mind, this is Chrysler Financial. That may or may not be wholly owned by Chrysler itself.

      GMAC is owned at least somewhat by Cerberus, not GM. It is incestuous, and convoluted.

      However, they are absolutely right, it is not proper for the government to manage pay scales, whether the scales are currently wrong or right.

      If control is the term of agreement, then there should be no agreement. Even if it has gone too far already, that is not an excuse for it to go further.

      Now, banks that did not ask for TARP, like Wells Fargo, were forced to take that money. Now the government is saying that they don't accept repayment when the banks want to get out from under the government's thumb. Especially after having seen what happened to AIG executives who were under valid and lawful contracts for performance bonuses. Their families were exposed, and their valid compensation was coerced from them under threat of taxation, or the legal consequences of refusing to pay taxes.

      Now the government says that banks cannot pay back, to avoid government control, and the government is talking about converting their "loan" principles to common stock equity, and claiming national ownership of at least a portion of those banks. A Hostile Takeover by the government, which is NEVER supposed to happen.

      So I can completely see why Chrysler Financial would rather go down, and re-sprout as something else, in the market, than to put themselves under the government's thumb.

      Nationalizing private enterprise under taxpayer funded socialism is called something. National Socialism. Does that ring a bell for anyone?
        • 6 Years Ago
        Oh give over. National Socialism doesn't ring any bells, because red herrings don't make good clappers.

        It's a huge stretch to say that time-limited government stock ownership is in any way nationalization. It's a huge stretch to say that government assistance with a socially responsible attitude is socialism. Yes, in both cases there's some overlap between what the Obama administration is doing and those ideologies; but just as kites fly, I'm sure you wouldn't want to take a low orbit flight on one.

        Then you put the two words together to invoke Hitler. Note that the party he was involved with was only *called* "National Socialism". It wasn't "socialism" by any means, and the "nationalism" part was something we'd refer to as "patriotism". It was what we call "facism". Cherrypicking words out of context doesn't help to prop up your shoddy argument.

        Now, for a bonus point, would you like to tell me who was all about patriotism?

        If this was a political history class, you'd fail. You'd fail hard.
        • 6 Years Ago
        About the AIG bonuses, I think you put your finger on what shocked me (I can't talk about other people). We are talking about performance bonuses, obviously there has been a performance issue at AIG in particular in the branch which was handling the credit default swaps. It is abnormal that they get large bonuses when they ruin the company.
        Where I work if our performance is bad we do not get bonuses if it is very bad we get fired. I think it is pretty obvious that a lot of people should be in the second case
        • 6 Years Ago
        Brilliant comment! I read the bank repayment article Sunday on reuters. Yea I completely agree, but you know what you are seeing though right? You're seeing "under the blanket" nationalization of banks and in part the car industry. The shadow of government is lurking and I believe ultimately it will result in further deterioration of the US economy.
      • 6 Years Ago
      Corporate GREED. As part of the retail car industry for the past 30+ years, all I can think about is all the Chrysler car dealers throughout this country. Sales, Parts and Service and all their families. Corporate America has got to wake up!
      • 6 Years Ago
      This, and the fact that they have no important new product is the end. Period.
      • 6 Years Ago
      Another proof for me that this is way too big game for me to understand. Because I can't imagine who would approve the loan to Chrysler. Robert Mugabe?
        • 6 Years Ago
        The loans didn't go for new car designs that's for sure. They are in the hands of unions. That's what this is really about. I can't think of another reason to loan the money, or for the companies to take the money.
        • 6 Years Ago
        John P. : Does your house have a monthly operating budget? You know the list:

        Milk, Toilet Paper, Eggs, Sugar, Rice, Pasta etc., etc.

        Mortgage, Electric Bills, Gas Bills, Telephone Bills, Taxes etc., etc...

        Monthly Train Passes, Bus Passes, Gasoline, Tolls, Car Note etc., etc.

        Auto Corporations have pretty much the same bills as we do, only magnitudes more. Could you even begin to imagine what GM's monthly electric bill is for all of their plants combined? Here is an idea. 10 years ago I did a energy survey for Rutgers University (New Brunswick, NJ) campus. Their bill was estimated at over $4 million per month. They don't even have the power hungry, heavy equipment that a car company would have.

        The Bailout money did not go directly to the unions, it went to pay their "Operating Costs".

        Parts, Labor, Utility Bills, Taxes, Advertising, Warranty Service and Repairs etc. etc.

        Stop listening to the Right Wing Extremist whackos nee Conservative talk radio/tv, who are still bitter about losing the election.
      • 6 Years Ago
      O.K. boys and girls, a couple things:

      1.) According to the original source article Chrysler financial said that this is plainly untrue, they also said due to the decrease in vehicle sales they do not need the money.

      2.) 750 million is a pittance anyway.

      3.) Ever since the fall I’ve read comments from everyone from fanatical cult like free market fundamentalists, to death to the ruling class anti capitalists nut jobs decrying these bailouts. Now there seems to be outrage that a financial institution (for whatever reason) did not take taxpayer, non private money. Make up your minds.

        • 6 Years Ago
        Fascists/Socialists taking over! Must move to Idaho, join tax revolt, dig my own sewers, build my own roads, charge others to drive on them and kill my own food. Ayn Rand is great savior! Devote my life to Randism.
        • 6 Years Ago
        Davew: Finally some one with a rational thought.

        Back in September when GWB and company handed out TARP money with no oversight or conditions, everyone was a twitter (no pun intended). Now that BHO and his crew imposed said oversights and conditions, the said same bunch of jackasses are crying out the otherside of their faces.

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