The conference room where Chrysler and Fiat worked out Fiat's 35% stake in the Pentastar probably still smells like hors d'oeuvres and bottled water, and already a Congressman is thinking about making Chrysler return its $4 billion dollar bridge loan.

In fact, Chrysler and Fiat aren't even partners yet. All they have done so far is sign "non-binding term sheet to establish a global strategic alliance." They're engaged, but nowhere near married yet, and it is unclear yet what the final partnership – if there is one – is going to look like. Even so, Representative Barney Frank of Massachusetts has said the pact "might well trigger a repayment" depending on Fiat's ultimate interest in the company.

The government, of course, wants to be repaid the money it gave to Chrysler. Having Fiat arrive with a potential life preserver and a plan that makes sense would appear to be good for everyone, including the government's chances of getting its money back. After all, if you believe all the writing on all the walls, Chrysler is doomed if it doesn't get hitched on the quick, which would make that $4 billion just another chapter in history. So announcing that if Fiat and Chrysler do tie up, the union might start off $4 billion poorer doesn't strike us as smart business, nor smart politics, nor sound financial planning with taxpayer money. We can only hope sense will prevail and Chrysler and Fiat will be given the time and resources they need to put a viable long-term plan together.

[Source: Freep]

Share This Photo X