Chrysler Repays Its Government Bailout Loans
Meanwhile, Democrats rush to take credit for the news
.On Tuesday afternoon Chrysler is expected to announce that it's repaid the U.S. and Canadian governments $7.5 billion in bailout loans. Good for Chrysler! Although actually, Chrysler hasn't gotten rid of the debt--it just owes the money to institutional investors now, instead of the government. The debt-swap will save Chrysler more than $300 million a year in interest expense. And perhaps as importantly, it's a nice PR coup for the automaker, which gets to hold a press conference at its Sterling Heights assembly line and say that it's gotten out from under the bailout.
What's Chrysler's next move? Well, it has to carry some water for Fiat, the Italian car company. Fiat and Chrysler have the same CEO--Sergio Marchionne, pictured above--and Fiat has been managing Chrysler since 2009. Its stake in Chrysler rose from 20 percent to 30 percent last month, and it's expected to go up to 46 percent today. Fiat's got its eye on a 51 percent stake in Chrysler by the end of the year. First, though, as Reuters explains it, Chrysler needs to come up with "a vehicle that gets 40 miles per gallon on a Fiat platform -- a development expected in the fourth quarter."
Even so, most people seem to regard today's news as a victory for Chrysler--and for Democrats, since it makes the automaker bailouts seem like a smart call in retrospect. (It's a line of argument we've heard before, when GM posted huge first-quarter profits this year.) Jeremy Anwyl of the auto site Edmunds.com said that "Chrysler's ability to rebound and repay the loans renders the 'bailout' a remarkable achievement."
The Democratic National Committee has released a new video pegged to the Chrysler payback, which reminds everyone that Newt Gingrich opposed the bailout and Mitt Romney wanted to "let Detroit go bankrupt." And Treasury Secretary Timothy Geithner said Chrysler's repayment "is an important step in the turnaround of this company and the resurgence of the auto industry ... 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."