No Recovery Expected On Government Loans To Chrysler

Clusterstock has been darkly intimating all day long that the taxpayer is getting royally hosed in the Chrysler bankruptcy. Late this afternoon they published a link to a CNN story confirming just that.

Chrysler LLC will not repay U.S. taxpayers more than $7 billion in bailout money it received earlier this year and as part of its bankruptcy filing.

This revelation was buried within Chrysler’s bankruptcy filings last week and confirmed by the Obama administration Tuesday. The filings included a list of business assumptions from one of the company’s key financial advisors in the bankruptcy case.

Some of the main assumptions listed by Robert Manzo of Capstone Advisory Group were that the Treasury would forgive a $4 billion bridge loan given to Chrysler in the closing days of the Bush administration, a $300 million fee on that loan, and the $3.2 billion in financing approved last week by the Obama administration to fund Chrysler’s operations during bankruptcy.

An Obama administration official confirmed Tuesday that Chrysler won’t be repaying the loans, though a portion of the bridge loan may be recovered by Treasury from the assets of Chrysler Financial, the former credit arm of the automaker which is essentially going out of business as part of the reorganization.

Fear not though, fellow citizens, the government has negotiated a deal that will get us 8% of the equity in the new Chrysler/Fiat or whatever. No wonder these guys have to scream and threaten to sic the press on the parties with whom they’re trying to cut a deal. They couldn’t negotiate their way out of a cardboard box.

The really sad part is that they either think they got a good deal or believe they can convince all of us that they did. Here’s their logic:

“While we do not expect a recovery of these funds, we are comfortable that in the totality of the arrangement, the Treasury and the American taxpayer are being fairly compensated,” said the official.

Don’t you wish you had a bridge or two to peddle right now?

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