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Chrysler Repays Bailout  
User currently offlineKen777 From United States of America, joined Mar 2004, 8223 posts, RR: 8
Posted (3 years 3 months 6 days 12 hours ago) and read 1415 times:

News out today is that CHrysler has repaid its bailout loans.

[quote]
DETROIT — Chrysler said Tuesday that it had paid back $7.6 billion in loans from the American and Canadian governments, marking another significant step in the revival of the company, the smallest of the Detroit automakers.

Chrysler said it made payments of $5.9 billion to the United States Treasury and $1.7 billion to Export Development Canada in a series of transactions completed Tuesday morning. The payments retired outstanding loans and covered interest on the debt.
[/quote0

http://www.nytimes.com/2011/05/25/business/25chrysler.html

My bet is that one reason for moving from public to private debt is related to interest rates. Chrysler now can get a better rate from private sources.

This is the second time that the Company has received government help in one form or another and both times the help has been repaid. Now every dollar in taxes from wages, salaries, revenues, etc. that Chrysler pays is simply gravy IMHO. A clear demonstration that such efforts by the government are wise.

21 replies: All unread, jump to last
 
User currently offlineNIKV69 From , joined Dec 1969, posts, RR:
Reply 1, posted (3 years 3 months 6 days 12 hours ago) and read 1394 times:

Quoting Ken777 (Thread starter):
My bet is that one reason for moving from public to private debt is related to interest rates. Chrysler now can get a better rate from private sources.

Of course it is, as well as a way to try to shed the stigma of Government motors and improve their image. They still owe the money just not to the government.

Quoting Ken777 (Thread starter):
This is the second time that the Company has received government help in one form or another and both times the help has been repaid.

It's still borring from Harry to pay Paul. They didn't pay their bailout they just got someone from the private sector to loan them the money at a better rate. Good move but they haven't repaid the bailout yet.


User currently offlinemt99 From United States of America, joined May 1999, 6576 posts, RR: 6
Reply 2, posted (3 years 3 months 6 days 12 hours ago) and read 1382 times:
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Quoting NIKV69 (Reply 1):
It's still borring from Harry to pay Paul. They didn't pay their bailout they just got someone from the private sector to loan them the money at a better rate. Good move but they haven't repaid the bailout yet.

Sure - but now there is no risk to tax payers.

Its like paying your AMEX with your VISA. AMEX doesn't care - it got paid, its VISA's problem now.



Step into my office, baby
User currently offlineCargolex From United States of America, joined Apr 2010, 1262 posts, RR: 8
Reply 3, posted (3 years 3 months 6 days 12 hours ago) and read 1377 times:

Quote:
They didn't pay their bailout they just got someone from the private sector to loan them the money at a better rate. Good move but they haven't repaid the bailout yet.

Yes, they have in fact repaid the bailout.

The money issued by the Government has now been repaid to the Government. Now, Chrysler still has tons of debt - but that debt is now owned by private corporations and the funds it has borrowed to pay off the Government are "investments" the same as any other private investment. The private sector, in the form of partner and part-owner Fiat as well as a consortium of financial institutions, have decided that they can put their money into Chrysler and get it back with profit. The terms of that new private debt are FAR less onerous for Chrysler and probably easier to pay back despite the short term pain of having to borrow extra money to pay back the bailout money now. Plus, there's the PR angle.

Google issued $3bn in debt just last week, as did several other companies in relatively high profile debt issuances. A company borrowing against it's value is not a bailout.

The liabilities of Chrysler are now the private sector investor's problem, not the Government's, hence, bailout repaid.

[Edited 2011-05-24 11:25:51]

User currently offlineLAXintl From United States of America, joined May 2000, 25137 posts, RR: 46
Reply 4, posted (3 years 3 months 6 days 12 hours ago) and read 1377 times:

Good deal.

Fiat CEO Sergio Marchionne had been quite critical of the goevrnment loans the terms involved. Getting out from under them had been one of his stated goals since last year.



From the desert to the sea, to all of Southern California
User currently offlinePPVRA From Brazil, joined Nov 2004, 8958 posts, RR: 40
Reply 5, posted (3 years 3 months 6 days 12 hours ago) and read 1371 times:

Quoting mt99 (Reply 2):
Sure - but now there is no risk to tax payers.

There was, and the terms of that loan never reflected the risks associated with it. That is the real bailout and that will never be paid back.

Amazing that a government that talks about too much risk taking in the financial markets has no qualms about swallowing this type of risk.



"If goods do not cross borders, soldiers will" - Frederic Bastiat
User currently offlineNIKV69 From , joined Dec 1969, posts, RR:
Reply 6, posted (3 years 3 months 6 days 12 hours ago) and read 1363 times:

Quoting mt99 (Reply 2):
Its like paying your AMEX with your VISA

Exactly.


User currently offlinemt99 From United States of America, joined May 1999, 6576 posts, RR: 6
Reply 7, posted (3 years 3 months 6 days 12 hours ago) and read 1352 times:
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Quoting PPVRA (Reply 5):
There was, and the terms of that loan never reflected the risks associated with it. That is the real bailout and that will never be paid back.

Amazing that a government that talks about too much risk taking in the financial markets has no qualms about swallowing this type of risk.

"Under its current debt structure, Chrysler is paying between 7% and 14% interest on U.S. loans and as high as 20% interest on some of its Canadian loans."

http://money.cnn.com/2011/05/24/autos/chrysler_debt/?cnn=yes

Ill bite-- what percentage rate would have covered those risks that where not reflected? You must know right?

Quoting NIKV69 (Reply 6):
Quoting mt99 (Reply 2):
Its like paying your AMEX with your VISA

Exactly.

So, who cares about what happens to Chrysler now? Its out of the tax payers hands. That's what should matter.

[Edited 2011-05-24 11:31:38]


Step into my office, baby
User currently offlinebj87 From Netherlands, joined Jun 2009, 448 posts, RR: 0
Reply 8, posted (3 years 3 months 6 days 12 hours ago) and read 1345 times:

Quoting Ken777 (Thread starter):
News out today is that CHrysler has repaid its bailout loans.

Good news, it is always better for a company to have no financial ties to a government.

Quoting Ken777 (Thread starter):
This is the second time that the Company has received government help in one form or another and both times the help has been repaid. Now every dollar in taxes from wages, salaries, revenues, etc. that Chrysler pays is simply gravy IMHO. A clear demonstration that such efforts by the government are wise.

I agree, even though it goes against the free market economy ideals of the strong and competetive wiil survive it is sometimes necessary. Now they are 100% back in the free economic financial market. Let's hope they survive.

Quoting NIKV69 (Reply 1):
Quoting Ken777 (Thread starter):
My bet is that one reason for moving from public to private debt is related to interest rates. Chrysler now can get a better rate from private sources.

Of course it is, as well as a way to try to shed the stigma of Government motors and improve their image. They still owe the money just not to the government.

So basically they just re-mortgaged the place.


User currently offline474218 From United States of America, joined Oct 2005, 6340 posts, RR: 9
Reply 9, posted (3 years 3 months 6 days 11 hours ago) and read 1318 times:

Quoting NIKV69 (Reply 1):
They still owe the money just not to the government.
Quoting NIKV69 (Reply 1):
It's still borring from Harry to pay Paul.
Quoting mt99 (Reply 2):
Its like paying your AMEX with your VISA. AMEX doesn't care - it got paid, its VISA's problem now.
Quoting Cargolex (Reply 3):
The liabilities of Chrysler are now the private sector investor's problem, not the Government's, hence, bailout repaid.
Quoting mt99 (Reply 7):
So, who cares about what happens to Chrysler now? Its out of the tax payers hands. That's what should matter.
Quoting bj87 (Reply 8):
So basically they just re-mortgaged the place.


You all have missed the main point: Chrysler's financial situation has improved in the last two years, to a point where they can now borrow from the private sector.


User currently offlineCargolex From United States of America, joined Apr 2010, 1262 posts, RR: 8
Reply 10, posted (3 years 3 months 6 days 11 hours ago) and read 1310 times:

Quote:
You all have missed the main point: Chrysler's financial situation has improved in the last two years, to a point where they can now borrow from the private sector.

I think that was my point.

But I'd go further and say that it's different from just shuffling money from one account into another. By taking the Government out of the equation, they've further improved their financial situation and profile. Because investors had enough confidence to give them the money they needed to get rid of the Government debt, that in and of itself raises the confidence of potential investors. When you pay your AMEX with your VISA, your liabilities are basically the same from one debt to the other. In this case, changing the type of debt and who owns it changes the profile of the entire enterprise.


User currently offlineKen777 From United States of America, joined Mar 2004, 8223 posts, RR: 8
Reply 11, posted (3 years 3 months 6 days 11 hours ago) and read 1291 times:

Quoting NIKV69 (Reply 1):
Good move but they haven't repaid the bailout yet.

They repaid the bailout loans.

And yes, they paid it with negotiated loans from the private sector.

But, besides Apple with their $60+Billion in cash and no debt outside of short term liabilities (like monthly utility payments) can you name a major corporation that dies not have debt? Hint: Don't name Google.

Quoting Cargolex (Reply 3):
Google issued $3bn in debt just last week, as did several other companies in relatively high profile debt issuances. A company borrowing against it's value is not a bailout.

Nope, it's leveraging. One would think that Google had the cash and didn't need a $3 Bn increase in debt.

Quoting PPVRA (Reply 5):
That is the real bailout and that will never be paid back.

Actually, like the previous government support of Chrysler, every dollar paid into the Treasury through a long list of taxes will be a continual, long term pay back. Chrysler is an ongoing company now with a potential for more long term government revenues, which was one of the goals of the bailout.

Quoting bj87 (Reply 8):
I agree, even though it goes against the free market economy ideals of the strong and competetive wiil survive it is sometimes necessary.

That ideal is good, but needs to meet certain standards (monopolist abuse is one area for regulation and laws) and there also needs to be an understanding of changing needs because of economic conditions. The Great Recession was a very rough time for a lot of companies and Millions of Americans. If we had let the "free market economy" function without government intervention we would probably be in a full depression today.


User currently offlineRevelation From United States of America, joined Feb 2005, 12445 posts, RR: 25
Reply 12, posted (3 years 3 months 6 days 9 hours ago) and read 1242 times:

Quoting NIKV69 (Reply 1):
Of course it is, as well as a way to try to shed the stigma of Government motors

Stigma is in the eye of the beholder.

Quoting NIKV69 (Reply 1):
They didn't pay their bailout they just got someone from the private sector to loan them the money at a better rate.

Thus repaying their bailout.

Chrysler isn't the only company with a buttload of debt (think AA for instance).

At least now it's not the government who is holding the paper.

You are coming across quite like a whiner.

I thought you conservatives wanted less government involvement in industry, now you have it.

Were you waiting for Chrysler to fail so you could say "I told you so"?

Not to worry, you may yet get your chance with GM.

Is Chrysler stigmatized forever in your eyes, since they've taken government bailouts (twice)?

Quoting LAXintl (Reply 4):
Fiat CEO Sergio Marchionne had been quite critical of the goevrnment loans the terms involved.

That's what happens when NO ONE ELSE will lend you money.

This isn't the bad old days of Italy keeping Al Italia et al afloat for prestige.

Quoting Cargolex (Reply 10):
When you pay your AMEX with your VISA, your liabilities are basically the same from one debt to the other.

But in this case, VISA (private sector) is charging less interest and more generous repayment terms than AMEX (government).



Inspiration, move me brightly!
User currently offlinemt99 From United States of America, joined May 1999, 6576 posts, RR: 6
Reply 13, posted (3 years 3 months 6 days 9 hours ago) and read 1233 times:
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Quoting Cargolex (Reply 10):
When you pay your AMEX with your VISA, your liabilities are basically the same from one debt to the other. I

They are not - because the interest is lower..



Step into my office, baby
User currently offlineNorthwest727 From United States of America, joined Jul 2005, 491 posts, RR: 0
Reply 14, posted (3 years 3 months 6 days 9 hours ago) and read 1224 times:

Quoting Ken777 (Reply 11):
Quoting Cargolex (Reply 3):
Google issued $3bn in debt just last week, as did several other companies in relatively high profile debt issuances. A company borrowing against it's value is not a bailout.

Nope, it's leveraging. One would think that Google had the cash and didn't need a $3 Bn increase in debt.

Apparently, many companies are doing this right now, because the feds are expected to increase the interest rates soon. Simply put, the end of cheap money, so everyone is hurrying up an getting it before its over.


User currently offlineCargolex From United States of America, joined Apr 2010, 1262 posts, RR: 8
Reply 15, posted (3 years 3 months 6 days 8 hours ago) and read 1207 times:

Quote:
But in this case, VISA (private sector) is charging less interest and more generous repayment terms than AMEX (government).

That's exactly what I'm saying. It isn't just taking on debt to pay debt, there are fundamental changes to the debt. Probably not articulating myself well.


User currently offlineFlighty From United States of America, joined Apr 2007, 8486 posts, RR: 2
Reply 16, posted (3 years 3 months 6 days 8 hours ago) and read 1190 times:

They didn't really repay everything. The US government injected about $80 billion into GM and Chrysler. Or so I thought. GM just recently announced "bailout repaid in full" and was roundly criticized for the misleading announcement.

For the record, I really like Chrysler and I am glad they are still around. Just being a stickler about the money. Old habit.

[Edited 2011-05-24 15:12:38]

User currently offlineJBirdAV8r From United States of America, joined Jun 2001, 4489 posts, RR: 21
Reply 17, posted (3 years 3 months 6 days 4 hours ago) and read 1125 times:

Quoting Ken777 (Thread starter):
A clear demonstration that such efforts by the government are wise.

Hey, I think it's great that it worked and all, but I stay away from such blanket statements. It's not always wise, and I don't think it's all that clear that it was the singular best option.



I got my head checked--by a jumbo jet
User currently offline474218 From United States of America, joined Oct 2005, 6340 posts, RR: 9
Reply 18, posted (3 years 3 months 6 days 4 hours ago) and read 1109 times:

Quoting Flighty (Reply 16):
They didn't really repay everything. The US government injected about $80 billion into GM and Chrysler. Or so I thought. GM just recently announced "bailout repaid in full" and was roundly criticized for the misleading announcement.


GM paid back the actual money the government loaned them, around $6B. But the government bought over 60% of equity in GM for $49B which has not be paid back.


User currently offlineWarRI1 From United States of America, joined Sep 2007, 8872 posts, RR: 10
Reply 19, posted (3 years 3 months 6 days 4 hours ago) and read 1104 times:

Quoting Ken777 (Thread starter):
A clear demonstration that such efforts by the government are wise.

I agree, it has worked for Chrysler, the government program worked, hard to swallow for some, but they will have to live with that fact. A success, and the government is out of it with all our money intact.



It is better to die on your feet, than live on your knees.
User currently onlineSuperfly From Thailand, joined May 2000, 39852 posts, RR: 74
Reply 20, posted (3 years 3 months 6 days 4 hours ago) and read 1102 times:

So will Chrysler finally produce the Imperial concept from 2007?

http://upload.wikimedia.org/wikipedia/commons/thumb/b/b5/Imperial_Concept_in_%2707.jpg/800px-Imperial_Concept_in_%2707.jpg



Bring back the Concorde
User currently offlinedxing From , joined Dec 1969, posts, RR:
Reply 21, posted (3 years 3 months 6 days 2 hours ago) and read 1076 times:

Quoting Ken777 (Thread starter):
This is the second time that the Company has received government help in one form or another and both times the help has been repaid.

I guess that depends on how you define "repaid".

http://www.businessspectator.com.au/...da-loan-H6THC?opendocument&src=rss

Chrysler has not completely ended its government involvement.

The US Treasury still holds a 6.6 per cent common equity stake in Chrysler that Ron Bloom, the Obama administration's point man for auto restructuring, said the government wants to dispose of "as soon as practical." He also said the government did not expect to fully recover its remaining outstanding investment of $US1.9 billion in the automaker.


Not only that, Chrysler will no longer be a U.S. owned automaker later this year as Fiat will most likely achieve their goal of attaining 51% control of the company. I guess you have to question the UAW's faith in Chrysler, from the same story linked above:

Mr Marchionne reiterated that before Chrysler makes an IPO, discussions need to take place with the healthcare trust affiliated with the United Auto Workers union, which wants to cash out of its 45.7 per cent stake in Chrysler.

That has really got to stick in the craw of the former Chrysler bond holders that got the shaft when the original bankruptcy deal awarded the majority share to the Union when ordinarily the Union unsecured debt would have fallen behind the bond holders in the pecking order. More payoffs to the White Houses best friends. And some complain about corporations gettinng sweet heart deals? This takes the cake.


Quoting mt99 (Reply 7):
So, who cares about what happens to Chrysler now? Its out of the tax payers hands. That's what should matter.

Then why did we care 2 years ago? If they fail now are we going to go back and loan them more money?



Quoting 474218 (Reply 18):
GM paid back the actual money the government loaned them, around $6B

By using another tarp fund to do it with.

[Edited 2011-05-24 21:46:00]

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