U.S. Government Getting Out of the Car Business

On May 24th, Chrysler paid back the last of its loans to the U.S. Treasury, a full six years earlier than they had to.

But the the government still held a stake in the company, owning 98,461 shares.  On June 2 the Treasury Department announced that it reached an agreement to sell to Fiat Treasury’s 6 percent fully diluted equity interest in Chrysler Group LLC and Treasury’s interest in an agreement with the UAW retiree trust.  After the completion of this transaction, Treasury will have fully exited its TARP investment in Chrysler Group LLC.

“As Treasury exits its investment in Chrysler, it’s clear that President Obama’s decision to stand behind and restructure this company was the right one,” said Treasury Secretary Tim Geithner. “Today, America’s automakers are mounting one of the most improbable turnarounds in recent history – creating new jobs and making new investments in communities across our country.”

Treasury committed a total of $12.5 billion to Chrysler under TARP’s Automotive Industry Financing Program (AIFP). Following the closing of today’s transaction, Chrysler will have returned more than $11.2 billion of that amount to taxpayers through principal repayments, interest, and cancelled commitments.  Treasury is unlikely to fully recover the difference of $1.3 billion. Treasury has the right to recover proceeds from the disposition of the liquidation trust associated with the bankruptcy of Old Chrysler, but does not expect a material recovery from those assets.

But even if the U.S. Government does not make back it’s entire investment directly, our country does now have a stable auto industry that has been consistently adding jobs – more than 115,00o jobs since June 2009.