Suprise Suprise... Chrysler Loans wont be paid back

[taught_me_patience]

Another screw job of the taxpayer to the tune of $8B. I'm becoming more disappointed in the Obama administration by the day.




The White House confirmed yesterday that the $8 billion in "bridge loans" the U.S. taxpayer has given to Chrysler over the past six months, including $4 billion in bankruptcy financing, won't be paid back. Taxpayers also won't be getting a big slug of Chrysler stock in exchange.

Instead, the wreckage of Chrysler will be divided up among Fiat, Chrysler's unions, and Chrysler's debtholders. Which means that the taxpayers' $8 billion was just a gift to these three consitituencies.



http://www.businessinsider.com/henry-blodget-my-fellow-americans-thank-you-for-your-8-billion-gift-to-chrysler-2009-5

[Betty]

1. wish I could do that with my mortgage

Fucking Bank of America won't even consider lowering the interest on my loan because I am one of the scum of the earth self employed.

[lynnertic]

24. But, can't you? What about the 'show me the note' tactic?

Or do you already have to be in foreclosure for that to happen?

-just wondering

[DJ13]

2. Small potatoes

Lets talk about the trillions given out to the banks, much of which we will never see.

[bighart]

3. I for one have a very hard time viewing 8 BILLION DOLLARS

as "small potatoes". For someone making say $60k a year that represents roughly 4 working lifetimes. In light of the fed budget it is small potatoes but if you look at it from a tax standpoint, that would be about 1300 years of income taxes on a median income taxpayer in the US.

[KansDem]

11. I think you mistook "8 billion" for "8 million"

If by "working lifetime," you mean, say, 33.5 years, then the total would be $2,010,000 and "four working lifetimes" would bring it to $8,040,000.

8 billion would be equal to roughly 4,000 working lifetimes, if I did my math correctly.

[bighart]

26. You are correct, my mistake.

Just make it EVEN WORSE doens't it. I think the fact that this amount of money can be viewed as a small sum due to the huge sums we are talking about causes the real world implications of this to get lost.

[KansDem]

27. It also means 4,000 of us would have to work a lifetime to pay back these loans.

And that's only if we didn't have any expenditures! No food, rent, utilities, healthcare, education, etc. etc. etc.

Every dollar these 4,000 workers would make in their lifetime would go directly to paying back these loans.

Frightening...

[Tierra_y_Libertad]

4. Oh, that's OK, the suckers (that's us) will pick up the tab.

The P.T. Barnum School of High Finance strikes again.

[leveymg]

5. That was a heckuva deal for Cerberus that bought Chrysler in 2007 for $1.35B

Of course, they knew the Treasury was going to do a bail-out. Cerberus only had to put up $1.35 B to acquire the company from Daimler-Benz.

Guess who owns Cerberus? And, had a 51% stake in GMAC Capital? Madoff's primary feeder, Ezra Merkin.

As for Cerberus-Gabriel's actual cash investment, it was negligible. Cerberus took 81 percent control from Daimler-Chrysler in the deal. The payout was structured to minimize cash up-front for Cerberus: http://www.bloomberg.com/apps/news?pid=20601087&sid=aEsBUqQgWJ.4&refer=home

Of Cerberus's total contribution, $5 billion will flow into the industrial business of Chrysler, $1.05 billion into Chrysler's financial services business, while Daimler gets the balance. Daimler will end up paying $650 million in the transaction, including granting a loan of $400 million to Chrysler.

[CountAllVotes]

6. Cerberus & Dan Quayle!

GATES OF HELL

The new GMAC board of directors will have 13 members -- six appointed by the consortium, four by GM, and three independent members. GMAC will continue to be managed by its existing team led by Chairman Eric Feldstein.

The Cerberus consortium was advised by Citigroup on the deal, while advisers to GM and GMAC included Goldman Sachs and Morgan Stanley.

Cerberus made its name as a distressed asset buyer and has grown to become one of the largest hedge fund traders and buyout firms in the world. Fittingly, it took its name from the three-headed watchdog in Greek mythology that guards the gates of hell.

Former U.S. Vice President Dan Quayle chairs Cerberus Global Investments, a unit of the New York-based firm.

On Monday, GMAC's 8 percent bonds due in 2031 rose to 96.37 cents on the dollar, up from 94.75 cents on Friday, according to MarketAxess.

http://sg.biz.yahoo.com/060403/3/3ztk8.html

:dem:

[leveymg]

7. You don't know the half of it. See this:

Daily Kos: Larger CIA and DoD Privatization Scandal Emerging from ...leveymg's diary :: :: The scandal involving Cerberus' holding, ..... Some material compiled from a research thread at Democratic Underground.com, ...
http://www.dailykos.com/story/2007/3/10/21556/5045

When you're done with that, read this:

Chrysler’s Friends in High Places
By LOUISE STORY
Published: December 5, 2008 (NYT)

In early November, as America’s automakers grasped for a lifeline from Washington, the Treasury secretary, Henry M. Paulson Jr., placed a call to his predecessor, John W. Snow. The topic: Chrysler L.L.C.

Chrysler LLCChrysler is the smallest of the Big Three automakers, but it stands apart from its peers in another crucial respect. While General Motors and the Ford Motor Company are public corporations, Chrysler is controlled by one of the world’s richest and most secretive private investment companies.

That investment company is Mr. Snow’s employer, Cerberus Capital Management, which has used its wealth and deep connections in Washington to shape the debate over the foundering automakers to its advantage.

In recent weeks, Mr. Snow has personally lobbied Mr. Paulson and others for a federal rescue that would salvage Cerberus’s investments in Detroit. Cerberus has also deployed a corps of lobbyists and former government officials to secure a bailout and protect its interests.

Whether its efforts will work is unclear. But if they fail Cerberus and its partners could lose their daring bets on Detroit. Without a bailout Cerberus could lose about $2 billion and suffer a stinging blow to its reputation. With one it might eventually profit from its troubled deals.

Last year, Cerberus and about 100 co-investors bought 80.1 percent of Chrysler for $7.4 billion from the German carmaker Daimler. It also bought a controlling stake in GMAC, the finance arm of General Motors. Since then Chrysler has eliminated more than 30,000 jobs and struggled to keep itself afloat while its sales have plummeted. Cerberus is pressing to have Chrysler merge with G.M., but G.M. has said a tie-up is off the table. Chrysler is asking the government for $7 billion to get through the next few months.

Cerberus, named after the mythical three-headed dog that guards the gates of Hades, has a fierce reputation on Wall Street. Many bankers and investors are reluctant to talk openly about the company, which is renowned, even feared, for its hard-nosed deal-making.

But Cerberus is also pursuing its interests aggressively in Washington, where some lawmakers have questioned why the government should assist the privately owned Chrysler. In addition to Mr. Snow, the firm’s chairman, Cerberus’s Washington hands include Dan Quayle, the former vice president, and Billy J. Cooper, who has worked as partner at the lobbying firm Patton Boggs.

The firm has also hired Arnold I. Havens, a former general counsel of the Treasury Department; John B. Breaux, a former senator from Louisiana; David Hobbs, former assistant to President Bush for legislative affairs; and Christopher A. Smith, former chief of staff in the Treasury. So far this year, Cerberus has spent nearly $2 million on lobbying, while Chrysler has spent $5 million, according to Senate records. Ford has spent more than $5 million and G.M. $10 million.

SNIP

Mr. Snow and Mr. Feinberg declined to comment for this article. Cerberus does not have much of its own money riding on Chrysler and GMAC. The two investments amount to about 7 percent of its assets under management, and this past July Cerberus and its co-investors lent $2 billion to Chrysler. But its reputation is at stake, and it is eager to keep Chrysler and GMAC out of bankruptcy.

“They made a very big bet on a sector that had a lot of risk in it,” said David Bullock, managing director at Advent Capital Management. Advent, a hedge fund that owns GMAC bonds, wrote a letter this fall encouraging GMAC to become a bank holding company, which would enable it to tap federal money.

SNIP

[CountAllVotes]

9. my god

the greed and lies and fraud, ad infinitum never seem to end!

Thank you for the link/info.!!

CountAllVotes

:kick:

[Occam Bandage]

8. Heh. Had they demanded it, the complaint would have been,

"Obama puts UAW on the hook to pay back management's failures."

[oldnslo]

10. Delaying the inevitable, Chrysler gets to continue sucking our

blood to build crap vehicles that don't sell, ergo they are bankrupt from poor sales. The beat goes on.

[lefthandedlefty]

12. Why not just give new cars to taxpayers

I would like a new Challenger

[Telly Savalas]

13. It's a LOAN not a BAILOUT.

[spoony]

14. Small price for forcing a company into bankruptcy and merger n/t

[SemiCharmedQuark]

15. I have seen people on here angry that we didn't give Chevrolet more money

And now people are angry that we gave them too much. People were angry that we were letting the company die. Now people are angry that we are keeping them in business. People were angry that the UAW was getting screwed, no they're angry that the UAW is having *some* of its contracts honored.

[JVS]

16. Perhaps they adhere to that old idea that if something is worth doing, it's worth doing right.

:shrug:

[SemiCharmedQuark]

17. Let's ask the OP.

[JerseygirlCT]

19. Well, I think it only makes sense

that if we have contributed sum X to help them survive, there ought to be a payoff at the other end. Perhaps that time is not here yet. But shareholders, etc. (and another car company!) should not be profitting from taxpayer money.

[SemiCharmedQuark]

20. There was an interesting thread RE: Shareholders and credit default swaps...

About how they were trying to force bankruptcy because it would make them money.

[JerseygirlCT]

21. Oh brother

I don't doubt it for a second.

Hey, as far as I'm concerned, those shareholders took a chance. You win some, you lose some. Now there are plenty of people among those shareholders who might not have even known they were so invested - then they've got a beef with whoever (whatever) invested for them in that way.

But the US Gov't sets a bad precedence when big dollars are doled out like that and then, all is forgiven - let's make sure an Italian car company and the shareholders are taken care of...

I guess I wonder when it was that the rest of us got to make a decision to gamble on this company - and what the potential payback was supposed to be?

[robinlynne]

25. I think if the money were really going to the workers people would not be so angry.

If you read down the thread you see it is a hedgefund getting the money.

[SemiCharmedQuark]

18. Do you think that Chrysler should be saved? Or is it being done in the wrong way?

[Mike 03]

22. This is one of the loans I really despised. This one and GM were hopeless from the start. NT

[Stinky The Clown]

23. I'm probably less upset by this than most everyone else

At least some of this goes to the union. The unions have been taking it up the ass since this shitstorm hit.

This a paltry 8 billion.

Yes .... paltry by comparison to, let's say, just the BONUSES paid out by AIG, let alone the money we've been flinging at Wall Street. In that league, 8 billion is chump change.

[TheMachineWins]

28. Darn, giving Cerberus the hedge fund billions seemed so smart too

NOT!