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Old 04-16-2009, 06:39 PM   #1
XDCX
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Default Chrysler Financial will not receive more TARP Funds

In a surprising development, The Detroit News is reporting that Chrysler Financial will not be receiving additional TARP Funds from the Treasury.

This is in stark contrast to the assurances Mr. Press provided just last week at the New York Auto Show when he commented that he was confident CF would receive additional loans.

The $1.5 Billion that CF received in January is almost exhausted and official's from the President's Task Force have been meeting with CF officials in an effort to loan additional funds. Those discussions ended this week when both parties could not agree to terms.

Here's a link to the news report: http://detnews.com/article/20090416/...ral+loan+money
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Old 04-16-2009, 07:15 PM   #2
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It is always nice to end the day on a positive note....
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Old 04-16-2009, 07:29 PM   #3
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It is always nice to end the day on a positive note....
Sorry about that, I wish there was better news to report.

I've been thinking about this news since I created the first post and I think it means one of two things:
  • The Chrysler/Fiat deal is dead and Chrysler's headed to liquidation
  • The Treasury's playing "hardball" with Cerberus and they're turning the thumbscrews
While I acknowledge that I tend to be the eternal optimist, I really think it means the Treasury is putting pressure on Cerberus.

Cerberus want to retain possession of CF so they can salvage something out of their investment in Chrysler. By withholding TARP Funds the Treasury can strengthen their leverage over Cerberus and demand concessions needed to get the Chrysler/Fiat deal done.
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Old 04-17-2009, 10:00 AM   #4
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Default I guess she didn't listen to the Press/Landry Conference Call?

Here's CF's response to the fact they're not going to be getting any additional TARP Funds: "Chrysler Financial has determined that it has adequate private capital funding to cover the short-term needs of our dealers and customers and as such, no additional TARP funding is necessary at this time," spokeswoman Amber Gowen said Thursday."

Was Amber not listening to the most recent Dealer Conference Call?

When Press was reviewing the "good news" he cited that CF had sufficient liquidity to make it to the end of the month. CF thought they'd be out of money at the end of March so the fact they were able to stretch it to the end of April was considered "good news."

The arrogance of the CF statement coupled with the fact that it has no basis in reality makes me think that Cerberus is behind it.
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Old 04-17-2009, 10:31 AM   #5
dafuzz1956
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NOW JUST WAIT A SECOND GANG, THE PRES IS OUT OF COUNTRY THERE MAY STILL BE A CHANCE.
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Old 04-17-2009, 11:00 AM   #6
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http://www.bloomberg.com/apps/news?p...transportation.

Terms of the approved loan are labeled "onerous".
The Prez has "em by the short hairs.
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Old 04-17-2009, 11:33 AM   #7
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http://www.bloomberg.com/apps/news?p...transportation.

Terms of the approved loan are labeled "onerous".
The Prez has "em by the short hairs.
Thanks for the link - that was an interesting article.

Concerning the "onerous" terms, this has be Cerberus posturing. They're trying to "spin" this news in the most favorable light. To the extent that CF doesn't have any money left to lend, how "onerous" could the terms possibly be?

Concerning Edmunds.com, this is the same group that reported Chrysler increased their incentives with the EP Program. To suggest that CF is going to be able to get funds from the private capital markets is laughable. The ABS market is still tight and I'm sure that Chrysler's viewed as one of the riskiest investments.

On the good news front, I still think this is just part of the negotiation process. Chrysler dealers figured how to sell cars without CF in the past, they'll figure it out again if they need to.
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Old 04-20-2009, 02:36 PM   #8
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Default Did CF deny more TARP Funds because of Salary Caps?

A news report in the Washington Post indicates the reason Chrysler Financial rejected additional TARP Funds is due to a clause in the agreement which would have capped the pay of CF's top 25 executives.

Here's a link to the news report: http://www.washingtonpost.com/wp-dyn...042002156.html

Chrysler Financial denies that their executives refused to accept new limits on their compensation.

I wonder which version of the story is correct? I sure hope CF's top executives wouldn't let their own agenda trump that of their dealers and retail customers.
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Old 04-20-2009, 03:16 PM   #9
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WOW! that is very sobering. what the part that suggests they just refused the money because sales are so far down that they don't need any money to lend
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Old 04-20-2009, 05:14 PM   #10
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what the part that suggests they just refused the money because sales are so far down that they don't need any money to lend
Great point. When I first read the article I thought that comment was attributed to a CF representative. When I re-read the article I noticed that it came from a "senior industry official with knowledge of the matter."

I'm starting to come to the conclusion that one of the reasons there are so many incorrect reports about our industry is the fact the press has to rely on some pretty poor sources. It's clear to all of us that CF is almost out of money - to suggest that they don't need more capital because car sales are low is simply wrong.
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Old 04-21-2009, 04:51 AM   #11
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Default http://www.bloomberg.com/news/industries/transportation.html

Who is one to beleive?
http://www.bloomberg.com/news/indust...portation.html

Last edited by dodgequality; 04-21-2009 at 04:55 AM.
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Old 04-21-2009, 10:19 AM   #12
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Originally Posted by dodgequality View Post
It is hard to know who to believe.

To their credit, the Washington Post has run an updated version of their story which names a Treasury Department official who indicates the compensation caps were a "deal breaker."

Chrysler Financial's "spin" appears to be that the documents were vague and the top 25 executives didn't want to sign them until it was certain what the limitations were.

Here's a link to the updated Washington Post article: http://www.washingtonpost.com/wp-dyn...v=rss_business
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