REPORT: Chrysler Financial turns down government loan over executive pay limit stipulations
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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Reader Comments (Page 1 of 2)
mr.ed 9:34PM (4/20/2009)
This, and the fact that they have no important new product is the end. Period.
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John P. 9:20PM (4/20/2009)
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.
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Sea Urchin 9:58PM (4/20/2009)
"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.
John P. 10:14PM (4/20/2009)
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.
Jared 11:02PM (4/20/2009)
Typo Alert. Can you find it?
Nick 11:31PM (4/20/2009)
@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.
Temple 12:09AM (4/21/2009)
More like Cerberus (owners of Chrysler Financial) doesn't need a bailout to begin with consider it has tens of billions of dollars in assets (they have 24 billion dollars in assets)
They instead want govt' money, but don't want it if their top 25 execs lose a couple million off their bonuses.
They of course don't care if tens of thousands of people at Chrysler or the people working at dealers suffer.
That is what's fishy, not govt' putting demands on taxpayer money.
Tool 1:45AM (4/21/2009)
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.
Noidor 4:30AM (4/21/2009)
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.
geo.stewart 7:41AM (4/21/2009)
Jared-
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
Seminole 8:01AM (4/21/2009)
Temple,
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....
Frank 8:53AM (4/21/2009)
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.
NIck:
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?
Rich 9:39AM (4/21/2009)
geo.stewart: or he could have been referring to John P's "robber barrens". I wonder what he thinks that phrase means?
Randy 9:20PM (4/20/2009)
GREED
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Ian 1:57AM (4/21/2009)
It's not a chairity.
Jei 9:36AM (4/21/2009)
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.
-DUA- 9:21PM (4/20/2009)
Not wanting to take a pay cut to save the company...sounds perfectly American.
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Lucas 9:26PM (4/20/2009)
Yup...but somehow it will be Obama's fault.
jc 9:35PM (4/20/2009)
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
Lucas 9:50PM (4/20/2009)
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.