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]