REPORT: Chrysler Financial to wind down by 2011, executive pay, well, not so much
Cerberus submitted its plans for Chrysler Financial to the U.S. Treasury, and then in an announcement that came as a surprise to Cerberus itself, the Treasury said that Chrysler Financial would be shutting down by December 31, 2011. The lending arm paid back its $1.5 billion loan from the government's TARP program, but much of its dealer financing and loan operations were replaced by GMAC.
Even though Chrysler Financial is a far weaker business than it once was -- its loan portfolio has been more than halved -- Cerberus said that shutting it down wasn't in the long-term plan. The Treasury replied that it got the idea of closure from its talks with Cerberus and the paperwork submitted by the capital management firm. There will most likely be a lot more "They said/We said" before this is through.
What isn't in question is the fact that if you want big money in the banking biz, you should get a job or keep your job with Chrysler Financial. Severe pay reductions were announced for financial firms that hadn't paid back their loans, which means that ChrysFin is excused from those measures. As well, according to pay czar Kenneth Feinberg -- and which would appear to bolster Treasury's take on the company's future -- "the risk of employee departures must be minimized because Chrysler Financial has stated it intends to wind down its operations and will have difficulty attracting new employees."
That means that, according to government's take on Cerberus' take, the company needs to keep pay high so it can keep good people so it can close in two years. To paraphrase Captain Willard in Apocalypse Now, the BS is piling up so fast we'll need wings to stay above it. Stay tuned...
[Source: Detroit News]
Reader Comments (Page 1 of 1)
Avinash machado 10:23AM (10/25/2009)
Wow. The three headed dog got beheaded.
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Santosh Tiwari 10:54AM (10/25/2009)
If GMAC is doing the job (taking care of auto financing), there is no reason for Chrysler financial to exist.
Eventually, I would guess that Fiat financial will provide financing for Chrysler products. I want them to survive and do good business.
I still do not buy the argument that they will have difficulty attracting the employees. Its not the pay but job security that would deter many potential applicants.
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Tim 12:25PM (10/25/2009)
High pay can make up for a lot, including a lack of job security.
I am still not seeing where the government has authority to do this. Isn't Chrysler Financial wholly owned by Cerberus?
zamafir 2:30PM (10/25/2009)
Oh how i wish there was a pay bubble, it's really gotten out of hand. Two decades ago the average investment banker was making what other professionals were making, now they're making hundreds of times as much even when they're failing to produce results. It's a pretty insane corporate culture that needs to be reigned in... but no one's going to, federal or private, so we're all stuck in the same boat. Delightful.
Venom 11:53AM (10/25/2009)
Chrysler and Chrysler Financial deserve to rot and close down.
Garbage company, run by garbage executives producing garbage vehicles.
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accelerating_cubicle 7:54PM (10/25/2009)
anything run by psychotic financiers is well, doomed.
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Stuka 3:10PM (10/25/2009)
So does this mean in 2 years I no longer have to make my Jeep payments to them? :) Although I suppose somebody else will buy up the loans and anybody with a loan through Chrysler Financial will just make payments to them instead :/
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Clavius 3:28PM (10/25/2009)
Ok this is confusing and I reread it twice. What I'm trying to understand is that is the Government saying "Your shutting down deal with it!" or are they saying "So... your shutting down?". Reason I ask is if Chrysler Fin. is part of Cerberus, did the Government talk to C.F. only and they said they are shutting down, which would explain Cerberus's confusion.
I dunno I'll wait for a later post for clarification.. that or I'm just way to confused at the moment lol
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jpm100 4:06PM (10/25/2009)
"The Treasury replied that it got the idea of closure from its talks with Cerberus and the paperwork submitted by the capital management firm"
Sounds like the Treasury Dept. may have spilled the beans on inside information for future plans for Chr. Fin. & Cerberus is playing dumb.
Derek 4:37PM (10/26/2009)
Can't say there are many Chrysler vehicles I've liked (though they've had some fantastic concepts) the one brand I would hate to ever see go is Jeep. If only some young, wealthy, outdoorsy, and visionary American would step in to buy that brand I'd feel a lot better.
Anybody care to loan me a few billion? I'm certain that I can cover the rest and promise to keep AutoBlog readers involved in all future design processes.
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