The day after threatening to extend its production shutdown, Chrysler has officially announced it’s hitting-up Uncle Sugar for another $3b– on top of the $4b recently transferred to its account. At the same time, it’s asking for an as-yet-unspecified amount of U.S. Treasury “investment” in Chrysler Financial. As duly appointed guardians of the public trust, the Treasury Department “declined to discuss the talks.” “We’re in touch with the automakers and their financing sources and continue to evaluate their financing needs,” Treasury spokeswoman Brookly McLaughlin said on Sunday. Speaking to reporters at the don’t call it the Detroit Auto Show, ChryCo CEO Bob Nardelli was equally tight-lipped. According to The Detroit News, Boot ’em Bob refused to say how much Chrysler Financial was seeking, but said he hoped “it would provide the kind of support for us in a similar fashion that GMAC was able to provide to GM.” So, what, another six billion? By Friday? Before the automakers try and make the case that they can pay the money back? The raid on the public purse continues.
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Truly sad. MBA, PHD, PE. CEO, CFO, COO. Looting our pockets.
Chrysler is toast and most car buyers will steer clear of their products for fear of their major purchase being orphaned.
With regards to the Detroit News article, the way I read it is that if Cerberus isn’t going to loan their own LLC any more money to sell cars to people with marginal credit histories – then why should the US taxpayer?
@ RF
Are you sure you’re not making this stuff up?
Have billions of dollars suddenly become chicken feed?
I sit here still thinking $1,000 is a lot…..I just can’t get my head around tossing BILLIONS around like confetti.
I too wondered if Cerberus would rethink the strategy that is ever changing that fork in the road dynamic. They cannot ignore the possibility of a merge of Chrysler into GM. All that engineering talent and product knowledge, gone?
It would not be good if some foreign auto maker scooped up Chrysler in a fire sale for the simple act of gaining the knowledge base that is American engineered products.
I wouldn’t be the least bit surprised if Cerberus isn’t milking the money from the government and moving it into their coffers instead of Chrysler’s.
Cerberus is a shoe in for the money. Look for Chrysler financial to get the same deal as GMAC with even worse terms for the taxpayers. Cerberus will have all your money!
“I wouldn’t be the least bit surprised if Cerberus isn’t milking the money from the government and moving it into their coffers instead of Chrysler’s.”
This. I have long believed that Cerberus’ strategy for bailing out of Chrysler with minimal burning to their person involves creaming off as much of the federal bailout cash as they think they can get away with. Certainly, that they need a further cash infusion suggests very strongly to me that they’ve already creamed off the first lot and that only the absolute bare minimum required to keep things moving in Auburn Hills is getting there. Clearly Bush isn’t going to say no, so they’re putting in their claim before Inauguration Day. (That said I doubt Obama would deny them either, but hey, better to stick with a safe bet.)
As soon as the bailout taps are turned off, Cerberus will throw Chrysler into C11 (or C7) – this is as predictable as the sun rising tomorrow. Unfortunately, for the sake of his ‘legacy’ (not have Chrysler fail on his watch), Bush missed the opportunity to do something actually worthwhile for once and stop any of the TARP money going to Chrysler. Whether you agree with the GM bailout or not, there is at least an argument for it based on the number of jobs and suppliers at risk. With Chrysler, it’s around 50,000 directly-affected jobs. That’s quite a lot, but not even close to the scale of GM or Ford – in fact I remember a comment during the Congressional hearings to the effect that, “This is about GM and Chrysler is along for the ride – if it was only Chrysler no-one would be very interested in saving it.”
One assumes Cerberus’ lobbyists are well-paid for their services.
HPE and others
I don’t think that Cerberus is skimming federal funds for the corporate mothership– directly.
They’re using your money to prop-up a losing investment. At this point, all they simply want to exit without losing money (i.e. face) OR facing Congressional enquiry into their non-management.
The government spends more than that researching global warming every year. Chump change.
But what’s the endgame, RF? I don’t see how Chrysler can be a profitable enterprise in its current form, or even close. No-one’s insane enough to buy it; they’re burning billions a month; even this extra money will be all gone soon. There isn’t any resolution to this mess apart from bankruptcy, and it’s coming whether Cerberus likes it or not.
There’s an old adage in crooked business circles that time is the most valuable asset of all – given enough of it, you might even wriggle off the hook. I assume this is the card that Cerberus are playing. But the situation is waaay too screwed up for that – surely they know that better than anyone. So why not throw the whole lot into C11/7 now and save everyone the effort?
Cerberus is still looking for a buyer.
In the meantime, even if a mere 10 % of another loan is siphoned off to Cerberus as “administrative costs”, that’s a $400,000,000 inflow.
I assume that’s Cerebus’ executive group in the pic.
Well, as Bullwinkle might say if he were running the treasury (not sure he isn’t):
“No doubt about it. Got to get another printing press.”
This is probably the last opportunity to torpedo Chrysler early before they suck down too much federal money and the government goes all in. I sincerely hope they do it.
Cherebus just got $4B to support Chrysler. $1B to support it’s 51% of GMAC. Now it want’s more to support Chrysler Financial?
This can’t be legal. If they get this, this is the most asinine thing I have ever heard.
Shouldn’t someone be suing or investigating this in the courts?
We elected those assholes that are giving all this money away. BILLIONS of our taxes. WTF is going on? Isn’t there anything else wrong in the U.S. that needs out tax money more than poorly run auto companies?
A year ago, I would have said this writer was wearing a tinfoil head covering, but any more, I’m not sure of anything. (You have to actually scroll down to the beginning of the article once you click onto the link)
http://www.theinternationalforecaster.com/International_Forecaster_Weekly/The_New_Gods_Of_Finance_Will_Crush_The_Middle_Class
@ RF,
So what did they spend the $4B on? The company hasn’t been operating since they got the money. Sure I know, paying suppliers, fixed costs, etc., but $4B? GM isn’t burning cash that fast even when they are building cars that lose money on each sale.
I don’t have time to dig up a clip but Matt Lauer, on “The Today Show” this morning, was asking Nardelli a pointed question about Chrysler’s prospects. It was along the lines of, “nobody seems to like your products… how are you going to return to profitability if no one will buy your cars?” [I didn’t catch the entire exchange, as the dog chose that moment to throw up and my attention wasn’t fully focused on the TV, but Lauer implied this question was actually raised by a Chrysler dealer.]
Nardelli, in his response, chose to lay all the blame on “tight credit.” Chrysler sales would jump 25% if “people could get financing.” I can see where this would be true if Nardelli meant, “financing to 130% of MSRP…”
Wow, menno, happy little article THAT was. But yes, and as George Carlin once said: …and you and me ain’t in the club”. It still kinda baffles me that good ol’ “W” can say “I’m a ‘Free Market’ guy” and then play along with this and the irony isn’t pointed out to everyone everywhere.
Whether your a Detroit cheerleader or hater or anywhere in between becomes moot when the rules are changed to protect the guilty.
Well, Ralph, our Federal Deficit is in reality something along the lines of $27 TRILLION ($20 TRILLION “hidden” but still reality, apparently). Just after Ronny Ray-gun was inaugurated in 1981, the deficit was $1 TRILLION, and that had taken 204 years to “accomplish”. As of a few months ago, the not-hidden deficit was under $4 TRILLION.
Anyone with any math skills beyond 2nd grade arithmatic should be able to figure out quickly enough, that running up debts this big, this fast, is simply not sustainable.
History says that foolishness catches up with nations. It certainly catches up to people and organizations, as well.
From a Christian perspective, this entire picture could be seen in another light.
Note: Non-Christians will not only not understand the attached article, but will be infuriated. So, don’t even bother looking. May as well keep your blood pressure in control.
http://www.wnd.com/index.php?fa=PAGE.view&pageId=85871
Suffice to say that the Roman Empire, the Weimar Republic of Germany (1920-1923 hyperinflation) and Argentina (before dollar par / after dollar par) are all stories which historians note that we Americans might be interested in learning about as we move on.
Does anybody remember how much Chrysler originally asked for? Anybody? Bueller?
7 Billion.
Does anybody remember how much Chrysler originally got? Anybody? Bueller?
4 Billion.
They are asking for the rest of their original request (and so is GM now).
So the article title really is “Chrysler Seeks the rest of it’s requested loan from Treasury”.
By the way, in this past absolutely terrible year Chrysler sold 1,450,000 vehicles in the US. More than Honda. But worldwide they sold 2,007,081. On a global basis in 2008, Chrysler’s sales were down 25% I thought Mr. Lauer said nobody likes their cars? Before you say it was all fleet sales, last year they cut their fleets sales by 200,000 units.
Isn’t it obvious? Cerberus made a bad bet, and now gets the government to cover their loss, before they jump ship and sink it in the ocean.