Chrysler Bailout Repayment Lie: How $6 Billion Loss became $1.3 Billion Loss
I read with interest yesterday that Chrsyler had repaid all but $1.3 Billion in government loans. This came as quite a surprise to me considering the projected government losses to Chrysler were almost $6 billion previously. Well, this is just an Obama administration lie. (Yes, L-I-E. I have not used that word in any previous post and do not use it lightly here)
So how do they claim only $1.3 Billion in losses? Simple. As the even politifact points out:
Notice how we keep writing Chrysler Group LLC. There’s a reason for that. That’s the “new” Chrysler company that emerged from bankruptcy in 2009.
We’ll let Gualberto Ranieri, head of communications for the Chrysler Group LLC, explain.
Ranieri likened the generic use of the word “Chrysler” to a fruit salad, which is made up of lots of different fruits: apples, strawberries, blueberries…you get the idea. When you talk about Chrysler, there’s not just one company. There’s the “old Chrysler,” the company that was liquidated in bankruptcy. There’s the “new” Chrysler, aka Chrysler Group LLC, the newly formed company that purchased most of the assets of Old Chrysler in a bankruptcy sale. There’s also the financing firms Chrysler Financial and GMAC.
“We are not responsible for the old Chrysler,” (Chrysler before mid-2009) Ranieri said. “We are not responsible for Chrysler Financial. I am not responsible for my brother’s loans, even though we have the same last name.”
It was not the “New” Chrsyler that did not repay the loans forgiven by the government. It was the “old” Chrysler that did not repay a $1.9 billion loan from the treasury (already erased in bankruptcy), and it does not include the $1.5 billion loaned to Chrysler suppliers to pay Chrysler’s bills. (How much of these supplier loans were written off is not clear) Additionally the government bailout of Chrysler Financial lost $1.6 billion.
Despite its $3.5 billion investment, the Treasury sold its 40 percent ownership of Chrysler Financial to Cerberus Capital Management – the former owner of Chrysler and Chrysler Financial — for just $1.9 billion in May 2010 – representing a loss of $1.6 billion on the deal. Cerberus sold Chrysler Financial to TD Bank in December 2010 for $6.3 billion.
This means that the government really lost up to $6.3 Billion in loans to the “Old Chrsyler”
One side note: I grew up during the 1980s. I remember the stories of people in Russia who learned what was happening inside their own country–not from Russian radio or newspapers– but rather from Western broadcasts that they secretly listened to on hidden short-wave radios.
Why did they listen to foreign broadcasts? Because they the offical news broadcasts did not tell the truth and only presented lies designed to make Russia look good. Reality was different than the claims they heard or read in Russian media.
When writing this post I felt uneasy because: Why did I not just trust the official U.S. government report?