Chrysler Won't Pay Back U.S. Loans

By: Stephanie Condon
Topics: Automakers

(AP Graphics)

Taxpayers may never get back billions of dollars lent to Chrysler, according to various reports.

Testifying in bankruptcy court on Monday, one of the top financial advisers overseeing Chrysler's restructuring said the U.S. government may never get back its loans to the company.

"They're offering financing with a low likelihood of being repaid," said Robert Manzo, an executive director for Capstone Advisory Group LLC, according to the Associated Press.

Manzo's comments mirror the assumptions he listed in Chrysler's bankruptcy filings last week, CNN Money reports. As part of its Chapter 11 reorganization, Manzo wrote Chrysler expects the U.S. Treasury to forgive a $4 billion bridge loan the automaker received during the Bush administration, a $300 million fee on that loan, and the $3.2 billion in financing the Obama administration approved last week to help the company stay afloat while it is in bankruptcy.

The Obama administration confirmed to CNN on Tuesday that it does not expect Chrylser to repay the loans.

A portion of the bridge loan, however, may be recovered from the assets of Chrysler Financial, which is suspending its lending business as part of Chrysler's bankruptcy filing. Additionally, the Treasury has an 8 percent equity stake in the new Chrysler that the administration sees as compensation for the lost money.

The U.S. government is prepared to lend Chrysler an additional $4.7 billion after its restructuring under the presumption those funds will be paid back. The judge overseeing Chrysler's restructuring approved on Wednesday the first step in the process, which is the sale of assets to Italy's Fiat Group SpA.

Chrysler's sales fell 48 percent in April compared with the same month last year, according to Autodata Corp., although consumers may be listening to President Obama's plea to continue buying Chrysler cars. Since the company filed for bankruptcy last Thursday, the number of visitors shopping for Chrysler models on Edmunds.com increased 15 percent.

Stephanie Condon
Stephanie Condon is a political reporter for CBSNews.com.
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by roach9703 May 15, 2009 11:43 AM EDT: ... And so a foreign company FIAT gets a free pass from
UNCLE SUCKER? Gee. is Chrysler a Bank? It's nice to get 7.2 Billion for nothing.; Reply to this comment


by RichardHines May 9, 2009 10:26 PM EDT: to rippiedoff2009.

Don't blame Chrysler, this whole thing was orchestrated by our government. They just bought Chrysler and gave it to the UAW. In turn the UAW give these politicians money 25 million over the last 20 years, 99% to democrats and of course the biggest thing the UAW gave these crooked politicians was votes. I have worked in Chrysler Dealerships for over thirty years, and have driven chrysler vehicles since 1974. I'll never buy another one. I wish somebody would tally all the non-Chrysler products of Chrysler UAW workers.; Reply to this comment


by RippedOff2009 May 9, 2009 8:00 PM EDT: The autobailout was a disaster, poorly run companies should be allowed to fail and go away. This has been a huge money pit.

So if Chrysler owes us money and are now refusing to pay it back, the American taxpayer should simply never buy anything from Chrysler again. Period. I know I never will. I believe this is the biggest strategic PR mistake Chrysler could have made - to anger the American consumer. They will all but guarentee that this and any future bailout will fail because no one will buy anything from them and they will make no revenue.

If you lent someone money and they told you they weren't going to give it back would you ever lend them money again let alone do business with them?; Reply to this comment


by herodotus1 May 8, 2009 6:01 PM EDT: Hmmm... Sweden didn't bailout Volvo so that says something about their government. They are not crooked. I have been to Australia many times and everyone there seems to like their government for better! Anyone else have recommendation where I could move to?

It is seriously sad that I am considering moving to escape this farse and the 50% income taxes around the corner.; Reply to this comment


by weedapoopl May 7, 2009 5:24 PM EDT: Does anybody REALLY think Pelosi will suffer ANY political fallout for this?

If not, why not?

Why do we even have a government anymore when it's obvious the only function of government is to pillage the people and hand billions of dollars of our money to the ultra wealthy elite during the biggest economic crisis since the Depression????

If this doesn't make people so angry that they riot, then the people are so messed up.......; Reply to this comment


by weedapoopl May 7, 2009 5:21 PM EDT: That's P-E-L-O-S-I.

Remember that name.

You can thank her for all of this.; Reply to this comment


by notjunior May 7, 2009 11:02 AM EDT: So, now that Chrysler has proclaimed its direction and repaying the tax payer is not one of the stated options, let's freeze their assets and sell them off "to regain the borrowed money".; Reply to this comment


by sanseh May 7, 2009 6:47 AM EDT: Now since the government is in habit of creative ways printing notes and given it freely. Why does not the government run on printed notes and stop taxing the public. Now with this idea we should never have slow down, we can eliminate the IRS, and other unnecessary bureaucracies. In fact have a welfare scheme for all the lazy people who don't want to work for a living, who want to live large like these to big to fail companies. Now with printing notes we can solve America's all ILLs especially of lazy people who want to live large.. Now no more balance budget, and more we print the less is our ratio of debt to printed notes.

I hope my idea meets with public approval. Just nominate me for the next President of the United States.; Reply to this comment


by weedapoopl May 6, 2009 9:57 PM EDT: never asked for any bailout, and neither did any of my fellow employees. But WE are the ones who are going to get screwed out of our jobs because of this situation.
Posted by markm2868 at 6:32 PM : May 6, 2009

Welcome to the Obama nation.

That's P-E-L-O-S-I.

Remember that name.

You can thank her for all of this.

And when you're out of work like I am, you'll have ALL DAY to do it.

Over and over and over again.; Reply to this comment


by weedapoopl May 6, 2009 9:56 PM EDT: Remember in November during the elections and debates us little ole dumb bloggers screaming at the tip of our finger tips to be heard?
Posted by clancy49 at 2:49 PM : May 6, 2009

Remember the day AFTER Election Day was when Nancy Pelosi first stood at a podium and annouced that we must bail out the auto industry.

Remember that name. Pelosi.

P-E-L-O-S-I.

This was HER crusade to rob us blind.

Will Pelosi pay?

What do you think.; Reply to this comment