U.S. concludes Chrysler rescue with sale to Fiat
By Peter Whoriskey,
The Treasury Department announced on Thursday that it has closed on the sale of its stake in Chrysler, bringing to an end the government’s multi-billion rescue of the Detroit automaker.
In all, the government has recovered $11.2 billion of the $12.5 billion it committed to the Chrysler rescue, the Treasury said, or about 90 percent of the money.
“This is a major accomplishment and further evidence of the success of the administration’s actions to assist the U.S. auto industry, which helped save a million jobs during the worst economic crisis since the Great Depression,” Assistant Secretary for Financial Stability Tim Massad said in a statement.
With the United States automobile industry on the verge of collapse in 2008 and 2009, the Bush and Obama administrations pumped billions of dollars into saving Chrysler.
Critics have questioned whether Chrysler or any other automaker deserved government support, and some in the Obama administration questioned whether Chrysler was worth saving, having been depleted by mismanagement before the rescue.
The company repaid the U.S. loans in May. In the sale on Thursday, Fiat, the Italian automaker, paid $500 million for the government’s six percent stake in the company. Details of the agreement had been released last month, but Thursday marked the government’s official exit.
With the sale, Fiat owns 53.5 percent of Chrysler, and a retirement trust on behalf of the United Auto Workers owns 46.5 percent.
While the sale ends the government’s involvement in Chrysler, the U.S. has yet to be repaid for its investments in other aspects of the auto industry rescue.
The government continues to own 32 percent of General Motors. It has so far recovered $23 billion out of the $50 billion it committed to that company. It also owns about 74 percent of the finance company formerly known as GMAC, now Ally Financial, as well as $5.9 billion in preferred stock.
The Obama administration has sought to draw political support for the rescue of the company.
“No, we aren’t out of the woods yet,” Obama said at a Chrysler plant in Indiana last year. “It took a lot of years to get us into this mess. It will take longer than anybody would like to get us out. But I want everybody to be absolutely clear, we are moving in the right direction.”
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