Saturday, May 09, 2009

Administration official says forget Chrysler money payback

The reality is that much of the money loaned to Chrylser before and during its bankruptcy process won’t be recovered, said an administration official, speaking for the Auto Task Force, which is a joint effort of the White House and Treasury. (We tried to get the official to speak for attribution, but the official declined.) The face value of the $4 billion loan approved by the Bush administration will be by and large written off during the bankruptcy process, according to the official and Chrysler’s bankruptcy filings. The administration has also pledged to give Chrysler up to $3 billion to keep the company afloat during restructuring.

So that’s about $7 billion gone right there. The administration will do what it can to recover a portion of that money, said the official. A “loss-sharing agreement” between Chrylser and the administration will mean “some” of the $4 billion will be recovered. And the Treasury will get an eight percent stake in the Fiat-Chrysler alliance when it emerges from bankruptcy, along with warrants in the company, in exchange for the aid.