Chrysler Pays Back TARP Loans

The U.S. Department of the Treasury announced yesterday that Chrysler Group LLC has repaid its outstanding Troubled Asset Relief Program (TARP) loans. Chrysler’s repayment comes six years before the scheduled maturity of those loans in 2017.

As part of today’s announcement, Chrysler Group LLC repaid $5.1 billion in TARP loans and terminated its ability to draw a remaining $2.1 billion TARP loan commitment. In total, Treasury has received $1.5 billion in interest and fees from Chrysler Group LLC, including $865 million associated with today’s transaction.

“Chrysler’s early repayment of its outstanding TARP loans is an important step in the turnaround of this company and the resurgence of the auto industry,” said Treasury Secretary Tim Geithner. “Because President Obama made the tough decision to stand behind and restructure the auto industry, America’s automakers are growing stronger, making new investments, and creating new jobs today throughout our nation’s industrial heartland.”

But before we celebrate too much, keep in mind that, according to the Treasury Department press release, while the Treasury continues to hold a 6.6 percent common equity stake in Chrysler, they are unlikely to fully recover its remaining outstanding investment of $1.9 billion in Chrysler.

Still, even by conservative estimates, providing this support and preventing the abrupt liquidation of GM and Chrysler probably saved more than 1 million American jobs, and the industry has continued to add some very much needed jobs to the economy.   Since June, 2009, the auto  industry has added more than 115,000 jobs – their strongest period of job growth in more than a decade.