Chrysler reneging on $4 Billion in TARP Loans

The TARP loans given to Chrysler and GM were never intended to be loans, despite what lawmakers and auto executives would have you believe. It was always the government’s intention to give this money to the automakers – knowing all along that they would never see the money again. The only reason the government masqueraded these gifts as loans is to keep public outcry to a minimum.

On that note, Old Carco, LLC ( Chrysler’s “bad” half ) has $3.7 billion in unsecured debt to the US Treasury. Since Old Carco has no assets or money, this money is gone, never to be paid back. Chrysler hasn’t officially come out and said so yet, but it’s clear at this point. While Chrysler figures out how to attempt to pay off all secured debts, the unsecured debts sit and linger. It’s only a matter of time until the announcement comes.

Published on December 16, 2009 in Chrysler

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