REPORT: Chrysler Financial repays $1.5B in government loans
According to a variety of reports, Chrysler Financial has reimbursed the $1.5 billion it was loaned on January 16 through the Treasury Department's Troubled Asset Relief Program (TARP) – making Chrysler's financial arm the first auto-sector company to pay back its government loans.
Chrysler Financial says it used the funding to provide more thatn 85,000 consumer loans for vehicle purchases and said the quick pay-off was due to provisions contained withn the loan that would increase costs over time.
Although Chrysler Financial is still offering insurance and financial products to consumers at dealerships, GMAC Financial Services replaced Chrysler Financial as the automaker's preferred lender when the Pentastar people filed for Chapter 11 earlier this year.
[Source: Reuters]
Reader Comments (Page 1 of 2)
seppling 5:39PM (7/14/2009)
*clap clap*
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Level 5:44PM (7/14/2009)
now if Wall street could pay back some of the over 300B they were given...lol I wonder how long will it take for Chrysler and GM to pay back the loans to rid off the government task force....
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cdwrx 6:53PM (7/14/2009)
Goldman Sachs paid back its $10B loan. It's a start.
David 7:20PM (7/14/2009)
cdwrx - yeah, by robbing Peter to pay Peter, and the taxpayer is Peter.
Chris 7:32PM (7/14/2009)
How about getting onto Barney Frank and using the repayments to pay down debt? Being the typical spender of other people's money he wants to use repaid TARP money for other projects instead of paying the debt we incurred having TARP.
and they wonder why we are in such dire straights
Taglane 5:50PM (7/14/2009)
Nice! Though, even though they [GM/Chrysler] *will repay the loans* we'll never hear the end of "zomg tehy stooled my moneyz!"
quite sad really.
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drew 6:18PM (7/14/2009)
GM, stop hiding in the corner, come on, your next. Pay up. You cant spend your whole life dodging it.
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montoym 7:12PM (7/14/2009)
You realize this was Chrysler Financial and not Chrysler itself right?
My guess is, this is simply a case of a bank paying back the TARP funds they were forced to take. That $1.5B pales in comparison to the money given to Chrylser and GM themselves independent of their financing arms. When they pay that back, then it will be time to celebrate.
Tourian 6:26PM (7/14/2009)
Good for them. When the auto sector is done completely paying back their bailout bucks, I can't wait to see what the naysayers who said they were robbed will come up with.
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gerbick 6:26PM (7/14/2009)
I bet somewhere, Lee Iaccoca is proud.
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twg 6:45PM (7/14/2009)
So, let me get this straight... in January, they were in such bad shape that they needed one and half Billion dollars in bailout money, but even with the economy in the proverbial toilet, they were able to pay it back in six months... Something seems fishy about that.
--
As for "zomg tehy stooled my moneyz!" , just because the Financial arm of Chrysler was able to pay back a loan doesn't mean the creditors (including the gov't) will ever see the debts repaid. They aren't the same thing.
The auto industry got $85 Billion in bailouts. GM got $50.7B for 60% ownership, but the most that GM was EVER worth (100% of market cap at the absolute peak) was $56B. Do you REALLY think the taxpayer will ever see that money again? GM would need to reach a market cap of $83.3B.
Given that GM sales are still dropping... how likely does anyone think that is to happen?
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jpm100 6:54PM (7/14/2009)
When did GM become responsible for the entire $80 billion?
Some of that is Chrysler and Cerberus'. And the rest when to suppliers which should then be split among GM, Chrysler, Ford and a few Japanese makers to varying degrees.
montoym 7:25PM (7/14/2009)
You're confusing market cap with the ability to pay off debts. They aren't remotely the same thing. All the market cap is is the share price of the company's stock times the number of outstanding shares. It doesn't say much about how much the company makes every year, or how much the company is actually worth.
For instance, Exxon-Mobil has a market cap of around $323B. Would you not agree that they are easily worth much more than that? They routinely are able to post large profits virtually every quarter. Another example is Ford. Their market cap is only about $16B, would you not also agree that they are worth far more than that in actuality? A company does not have to be worth more than the debts they are paying off in order to be able to pay them off.
Bringing it to a consumer standpoint. That's like saying that in order to be able to by a $500K house, you must prove that you have $500K(or are worth $500K anyhow). That's not the way it works at all, you chip away at it and over time and the debt is paid off. Same will happen for Chrysler and GM. As they become profitable thanks to the changes made recently, they will be able to funnel some of those profits back to the gov't. in order to pay off the debts.
Is this really that difficult a concept to understand?
Charger06RT 6:47PM (7/14/2009)
Way to go Chrysler! This is good news.
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Who 'Dis? Who 'Dat? 7:13PM (7/14/2009)
I'll second that!
MikLawry 11:00PM (7/14/2009)
Amen to that brother!!! Go Chrysler!
Judy Zik 7:00PM (7/14/2009)
I think we are not getting the whole story here. If Chrysler and it's dealers are no longer using Chrysler Financial then in order to change to GMAC they would have had to pay back all their existing credit lines to Chrysler Financial. Thus leaving Chrysler Financial with their money back but no business. No matter anyway since they are being absorbed into GMAC.
This is not a way to go Chrysler. They didn't earn the money to pay back the loans.
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Art 7:42PM (7/14/2009)
with WHAT revenue? i haven't seen any more chryslers on the road as of recent
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bugeye 8:05PM (7/14/2009)
Finance blogger Felix Salmon notes the loan was repaid using other funds borrowed from the federal government. See
http://blogs.reuters.com/felix-salmon/2009/07/14/when-talf-displaces-tarp/
Salmon's take:
So, yay, the government got its TARP money back. Because some other arm of the government (the Fed) was willing to lend the same amount of money even cheaper, through TALF. This is an improvement how?
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MikLawry 11:03PM (7/14/2009)
Well, I don't think that it is fair to say that just because you have not seem more Chryslers on the road that they are not selling cars. I see new Jeeps, 300s, Chargers and Calibers all over the place here in the Washington Metropolitan area. Lets root for the home team for a change, the better they do the sooner you can get your money back. I know you like the sound of that right?
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