Sen. Bingaman: Taxpayers should own Chrysler, not Fiat
The American taxpayers already loaned Chrysler $4 billion. The Auburn Hills automaker has their hand out for $3 billion more and what do the taxpayers get? A full page ad thanking them and a bunch of IOUs. Meanwhile Fiat picks up a third of Chrysler from Cerberus for little more than blue sky and a business plan. Political and economic ideologies aside, it doesn't seem fair.
Sen. Jeff Bingaman, D-NM, agrees.
During the confirmation hearings for President Obama's nominee for Secretary of the Treasury, Timothy Geithner, Sen. Bingaman asked him about Fiat's acquisition of 35% of Chrysler for no cash while the government has already loaned Chrysler $4 billion and is being asked for another $3 billion. Bingaman raised a question many people have asked about the automaker loans, "It's hard to explain why the American taxpayer shouldn't own Chrysler." He has a point. I'm certainly not in favor of nationalizing businesses, but if the equity value of Chrysler is so low that they can trade away a third of it for a strategic partnership and no cash, the taxpayers should be getting something more than just an IOU. At least when Daimler bought Chrysler, they didn't ask US taxpayers to finance the deal.
On paper, it makes sense for all parties involved. Chrysler gets new product and stays in business. Cerberus offloads 35% of a headache. Fiat gets access to the US market.
Fiat will back out of the deal if the additional $3 billion isn't forthcoming, and if Fiat isn't anteing up any cash, somebody's got to pay for adapting the Fiat platforms etc for the US and retooling the plants. That's where Uncle Sugar comes in. Cerberus, Chrysler and Fiat are hoping that the business sense of the deal is compelling enough to obscure what is happening here - that US taxpayers are financing the deal. From Sen. Bingaman's comments that hope might have been misplaced.
Sen. Jeff Bingaman, D-NM, agrees.
During the confirmation hearings for President Obama's nominee for Secretary of the Treasury, Timothy Geithner, Sen. Bingaman asked him about Fiat's acquisition of 35% of Chrysler for no cash while the government has already loaned Chrysler $4 billion and is being asked for another $3 billion. Bingaman raised a question many people have asked about the automaker loans, "It's hard to explain why the American taxpayer shouldn't own Chrysler." He has a point. I'm certainly not in favor of nationalizing businesses, but if the equity value of Chrysler is so low that they can trade away a third of it for a strategic partnership and no cash, the taxpayers should be getting something more than just an IOU. At least when Daimler bought Chrysler, they didn't ask US taxpayers to finance the deal.
On paper, it makes sense for all parties involved. Chrysler gets new product and stays in business. Cerberus offloads 35% of a headache. Fiat gets access to the US market.
Fiat will back out of the deal if the additional $3 billion isn't forthcoming, and if Fiat isn't anteing up any cash, somebody's got to pay for adapting the Fiat platforms etc for the US and retooling the plants. That's where Uncle Sugar comes in. Cerberus, Chrysler and Fiat are hoping that the business sense of the deal is compelling enough to obscure what is happening here - that US taxpayers are financing the deal. From Sen. Bingaman's comments that hope might have been misplaced.
Labels: Cerberus, Chrysler, Fiat, Loans, Sen. Jeff Bingaman
posted by Ronnie Schreiber at 2:13 AM 
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