REPORT: Unsigned waivers to blame for Chrysler Financial rejection of gov't cash
by Frank Filipponio on Apr 21st 2009 at 11:40AM 
Over the past two days, we've told you what we've heard about the latest short-term federal aid coming to Chrysler and GM. According to the latest reports, it will be $5B to the latter and $500M to the former. We also mentioned it had been reported that Chrysler Financial had inexplicably turned down an additional $750M in government aid during this most recent round of handouts. It had been speculated that it was because of a refusal by CF execs to sign off on executive compensation limits in the terms of the government agreement.
Although CF denied it, the fact that they appeared to be going elsewhere for additional loan money seemed to confirm that they might not have been entirely happy with the terms of the government handout. Well, The Detroit Free Press is now reporting that a recently released report by the special inspector general's office confirms that unsigned waivers were the real reason behind the rejection. The Freep is reporting that at least some of the top 25 executives at CF "refused to sign waivers releasing the Treasury Department and the company from legal responsibility for placing strict limits on executive compensation."
Even without the three-quarter-billion-dollar handout to CF, a total of $13.4B has been given to GM and Chrysler out off the $17.4B in loans President George W. Bush authorized back in December. Meanwhile, President Obama has continued to add restrictions to these handouts, rejecting the initial restructuring plans from both companies, essentially firing Rick Wagoner and telling Chrysler to make a deal with Fiat. While Chrysler has until next Wednesday to finish that deal, CF has apparently turned down the funding over the waiver issue, which had been added early this month.
[Source: Detroit Free Press]
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Reader Comments (Page 1 of 1)
John Johnson 11:46AM (4/21/2009)
Lol sweet. So they don't get the fact that they won't get paid? Anyone with that little foresight (or that much greed) should be fired - perhaps even treated as a criminal, since their greed is wasting tax dollars (I guess that makes them politicians).
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Matt 12:36PM (4/21/2009)
I'll be damned if Chrysler is the last company who should be turning down aid right now. I mean, come on...
BigWill 11:55AM (4/21/2009)
Or it may be the fact that the TARP bailouts are turning out to be non-repayable because the government wants to unilaterally turn the loans into equity stakes. CF is doing what a lot of banks would have done if they had known the real price of accepting TARP money.
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why not the LS2LS7? 12:15PM (4/21/2009)
Some repayments are being rejected because the banks would fall below minimum capitalizations. The point of the TARP was to ensure the banks were liquid. If they were to reduce their reserves to dangerous levels just because they want to give themselves 7-figure bonuses, we would not be well served.
Sea Urchin 12:25PM (4/21/2009)
Government will release the results of a so called stress test later this month, if most banks will pass they'll be able to return the money. Certain institutions will pass, like Goldman Sachs.
Cole 1:29PM (4/21/2009)
More like "TRAP" money... it was just the foot into the door to nationalize the auto industry. The White House has been so disingenuous with these guys its amazing. By refusing to accept repayment the White House effectively starts controlling the Co's... they can structure pay for the white collar workers so that the Unions don't have to bring the blue collar pay scale inline with the import non-union mfg's and dictate that we only drive little hybrids.... so underhanded its amazing.
why not the LS2LS7? 1:35PM (4/21/2009)
Cole:
The White House has not refused to accept repayment from the auto companies. They have refused to accept repayment (so far) from some banks, because the evidence showed the banks would not be adequately funded if they paid back the loans right now.
Joshq 6:37PM (4/21/2009)
Let the idiots go under then. If they can't accept being paid a "not outrageous off the charts salary for failure" then F them.
P.S. Stop being so paranoid
BigWill 8:39PM (4/21/2009)
Here's one reason why I'm skeptical about the TARP repayment rejections:
http://online.wsj.com/article/SB123879833094588163.html
As for regulating executive pay, it's the same thing only different. Execs who do what the government tells them to do will mysteriously end up with some exemption from the pay caps. Not that I'm a big Rick Wagoner fan, but do you see the PTFOA forcing Fritz Henderson to work for the same $1 as Rick Wagoner did?
dukeisduke 11:57AM (4/21/2009)
They should just get on with parting out Chrysler. Sell the Jeep line to the highest bidder, and find someone to take over minivan production.
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Yaroukh 12:49PM (4/21/2009)
ROFL at Alan's bubble :))
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Chris 1:00PM (4/21/2009)
Best bubbles so far!
Miacol 1:29PM (4/21/2009)
Remember Chrysler Financial and Chrysler are two different companies, Chrysler Financial turned down the money not Chrysler. Chrysler took the 500 Mil.
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jpm100 5:46PM (4/21/2009)
That's a small consolation.
And CF has taken TARP money already eventhough Cerberus is one of the wealthiest entities in the world.
Cerberus also runs GMAC. They cut off both Chrysler and GM from sales worsening an already bad downturn. Only Ford controlled its own fanancial arm and by coincidence they didn't take any money either.
And considering the ilk of CF and Cerberus caused the recession, leading to sales to fall of a cliff, I'd say that's a damn small consolation.
Chris 3:36PM (4/21/2009)
"Rick, you got fired."
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Chris 3:37PM (4/21/2009)
Supposed to have a "heart shape it!"
The heart symbol must've effed up.
Anywho, love it!
Randy 11:36PM (4/21/2009)
Poor Rick Wagoner! The guy is going to go on interviews and people will be saying "Hey can you sign this picture that I printed from AutoBlog?" and "Oh cool, and can you sign this one for my kids?"
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Glenn 12:37AM (4/22/2009)
Well no wonder the UAW is so annoyed ... I was totally floored by the Union's lack of understanding about how to make Chrysler successful. But now this.
I love Chrysler, but what the heck are the heads of Chrysler thinking?
A bad sign as it shows they do not have their eye on the ball. It just looks so much like running to empty the safe before the ship sinks. Who hires these twits to run these companies anyway.
Ford is looking like it is the only smart domestic brand out there now. I would never have seriously consider buying a Ford, but they are getting my attention now.
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Chris 1:57AM (4/22/2009)
the thing with Ford is that they got into a financial mess several years before GM or Chrysler pushed the "OHSHI-" button, thus had time and a better economic climate to assist with them reorganizing. Chrysler was under the German occupation with was sort of like Kelly's Heros...only in reverse. Now that Cerberus got it's heads into each company they're trying to scoop up the financial arms and dump the automakers themselves. so far they have GMAC, and Chrysler's tied to CF until they find someone crazy enough to buy in.