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July 21, 2011 Autos Insider | U.S. completes Chrysler exit; Fiat now majority owner | The Detroit News

U.S. completes Chrysler exit; Fiat now majority owner



Washington- It's official: The U.S. Treasury has completed the sale of its stake in Chrysler Group LLC to Fiat SpA.

In early June, the Italian automaker Fiat agreed to acquire the U.S. Treasury's stake in Chrysler for $560 million, ending the Obama administration's involvement with the Auburn Hills automaker.

The deal finally passed all regulatory hurdles and the transaction was completed early today, a person briefed on the matter said. An official announcement is expected later today.

The White House and Chrysler didn't immediately comment.

The move finally gives the Italian automaker a 52 percent majority stake in Chrysler.

The U.S. exit ends a 30-month involvement of two administrations in saving the company from collapse, beginning with the Bush administration's decision to bail out Chrysler with $4 billion in December 2008.

"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 in a statement in June.

In documents signed on June 2, Fiat agreed to pay $500 million for the U.S. government's 6 percent equity stake in Chrysler.

It is also paying $75 million for an option the Treasury held to acquire most of the rest of the company. Of that, $15 million will go to the Canadian government, which still holds a small equity stake.

The deal means taxpayers will see a $1.3 billion loss on the bailout. Chrysler received $12.5 billion in total, including $8.5 billion advanced by the Obama administration. The government had previously recovered about $10.6 billion.

In June, President Barack Obama praised the company's repayment of its outstanding $5.9 billion in U.S. government loans and interest.

The decision to save Chrysler has become a cornerstone of Obama's 2012 re-election effort, with the White House arguing jobs saved outweigh taxpayer losses.
 

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Canada’s federal and Ontario governments sell remaining stake in Chrysler to Fiat for $140M

Thursday, July 21, 12:55 PM

TORONTO — The Canadian federal and Ontario governments have sold their remaining stakes in automaker Chrysler to its parent company Fiat for $140 million.

The money is the final repayment of Canadian government loans that were given to the automaker two years ago as part of a $1.7 billion bailout to help the Detroit company survive the North American auto sector’s worst downturn ever.

The two Canadian governments received about a 1.7 percent stake in Chrysler when they initially made the loans.

Federal Finance Minister Jim Flaherty said Thursday that the sale marks an important step in the turnaround of the U.S.-based car maker.

 

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U.S. lost $14B on auto bailout... Excellent!


July 22, 2011


Yes, the U.S. government will lose money on the auto industry bailout. But, in return, we saved jobs and got an auto industry that's finally ready to compete.

NEW YORK --Including the $1.3 billion loss on its Chrysler investment, announced Thursday, the United States government has lost about $14 billion on the auto industry bail-out. All in all, it was a bargain.

That $14 billion figure is far less than than the $40 billion bath the Congressional Budget Office expected U.S. taxpayers to take in the total auto industry bailout.

Saying the U.S. taxpayer "lost money" is probably the wrong perspective, considering that spending no money at all likely would have meant a financial catastrophe for millions of Americans far in excess of a mere $14 billion.

Had GM and Chrysler collapsed, it would have cost the federal government about $28.6 billion in lost tax revenues and assistance to the unemployed in just the first two years alone, according to the Michigan-based Center for Automotive Research. In other words, doing nothing could have cost more than twice as much the bailout.

By the way, that $28.6 billion figure doesn't include the business taxes the federal government would have lost but can now expect from two large, profitable automakers and their suppliers. It also doesn't include any lost state and local tax revenue.

At any rate, the federal government didn't become involved in lending money to Chrysler, General Motors and others in the auto industry in order to make a profit. Had that been the goal, the Treasury Dept. should have bought Google stock, instead.

No, the government stepped in to secure a pillar of American industry that was in the process of disintegrating. In the year leading up to the Chrysler and General Motors' bankruptcies, the auto industry lost 400,000 jobs. Since the bailout, about 113,000 of those jobs have been recovered, according to the Treasury Department.

 
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