The United States Treasury Department has announced that Chrysler Financial will wind down its operation by the end of 2011. The former Chrysler financing arm has been struggling since Chrysler filed for bankruptcy on April 30.
Once the preferred lending firm for Chrysler, Chrysler Financial was kicked to the curb earlier this year after President Obama’s auto task forced put GMAC in charge of Chrysler’s lending operations. Chrysler Financial retained a small portion of its auto business, but was forced to rely heavily on its other business operations – such has dealer insurance — for income.
However, the news comes as quite a shock as Chrysler Financial reportedly repaid its $1.5 billion government loan in July. The fact that the U.S. Treasury is announcing the firm’s demise indicates that Chrysler Financial is still on the hook for its tax payer-funded bailout loans. It remains to be seen just how much of that loan Chrysler Financial has actually repaid.
Because of its impending liquidation, pay czar Kenneth Feinberg has also signed off on higher-than-normal compensation packages for Chrysler Financial employees. “Its success in the wind-down of operations and repayment of lenders and investors is largely dependent upon maintaining critical talent,” Feinberg said in a letter approving Chrysler Financial’s pay structure. “The risk of employee departures must be minimized because Chrysler Financial has publicly stated that it intends to wind down its operations and will have difficulty attracting new employees.”
Chrysler’s Financial’s top employee will take home $1.5 million this year. Chrysler’s other top 20 employees will take home between $176,000 and $1.4 million in 2009. Despite those rather eye-popping numbers, overall top-employee salaries will be down 30 percent this year.
Chrysler Financial – fully owned by Cerberus Capital Management – employs 2,640 people.
10/23, 12:52 PM
posted by:
Dingleberry Divas of Dallas
Next Chrysler?
10/23, 12:54 PM
posted by:
Smegley Wanxalot
So now to sell a Chrysler they will need to make the manufacturers rebate about 25k on a 29k car because no one but chrysler financial will loan any money to buy a chrysler.
10/23, 1:05 PM
posted by:
armstealer
Smeg- Read the article. Read any news. Chrysler hasn’t been lending money for Chrysler auto sales for a while now.
10/23, 1:06 PM
posted by:
armstealer
*that should read Chrysler *Financial* hasn’t been lending money for Chrysler auto sales.
10/23, 1:17 PM
posted by:
johnnycanuck
Chrysler is run by the Italians now. Sophia’s boy, Vinny… he’ll take care of any loans. He’s good at making sure people pay up.
10/23, 1:40 PM
posted by:
chryslercurse
Or you can use my guy Bobby Bacala
10/23, 2:19 PM
posted by:
Smegley Wanxalot
Armstealer, do you really mean to imply that Chrysler will not need a 25k rebate on a 29k Sebring to move the metal?
10/23, 2:26 PM
posted by:
leftwingagenda
no, he means you didn’t read the article…chrysler financial isn’t doing the lending for chrysler, and hasn’t been since GMAC was put in that role a while ago…
10/23, 2:59 PM
posted by:
idrinorbarsaku
Chrysler is just one step closer to closing it’s doors….thank god!
10/23, 3:10 PM
posted by:
johnnycanuck
idrin, you’re way off. This is very much peripheral to the business of building cars. Let’s talk in a year or two when Marchionne’s plan has had a real chance to take effect. I mentioned the other day how he was shocked by how little had been done at Chrysler the two years preceding Fiat’s arrival. It’s going to take some time to right the ship.
10/23, 3:18 PM
posted by:
JakeK66
Let’s be honest here – Chrysler has GOOD PRODUCTS in several areas – Minivans/Trucks and some SUVs. They just need GOOD cars to go along with those other parts and they can do that through Fiat. Give it some time, they’ll be fine.
I though GMAC took over Chrysler Financial anyway? They both are owned by Cerebus…
10/23, 3:30 PM
posted by:
Smegley Wanxalot
So what LWA is saying is that neither he nor armstealer has any sense of humour whatsoever. No news there, I suppose.
10/23, 3:33 PM
posted by:
teahead
Pretty obvious when Cerberus bought both GMAC AND CHrysler Financial…which one do you think they’d keep?
Stupid posters on this site.
10/23, 4:09 PM
posted by:
leftwingagenda
so what you’re saying, smeg, is that you refuse to admit you read the article wrong and tried to cover up your mistake at first by making a joke about sebrings sucking, and then again by saying i have no sense of humor…it’d be easier for you if you just said “oh, i missed that” and moved on instead of trying to antagonize armstealer…i don’t care whether you’re right or wrong, in the end, but your passive aggressive responses are amusing…(and yes, i can do this all day as long as you keep giving me ammo)…
teahead, gmac isn’t majority owned by cerberus anymore: “Cerberus, with about $24 billion in assets, reduced its ownership in GMAC to a minority stake from 51 percent in December when it converted the financing arm into a bank holding company. As part of GMAC’s agreement to become a bank in exchange for $6 billion in federal assistance, Cerberus’s voting control is being cut to less than 15 percent.”
http://www.bloomberg.com/apps/news?pid=20601110&sid=a81Bm8hJPEhg
10/23, 6:03 PM
posted by:
idrinorbarsaku
johnny,
By all means, go ahead and hold your breath for them…though, I gotta tell you, I don’t know of anyone who has held their breath for that long and survived!
10/23, 6:04 PM
posted by:
idrinorbarsaku
We can give them all the time in the world, but the longer they take, the worse their image will look! You can’t deny it!
10/23, 6:43 PM
posted by:
Smegley Wanxalot
LWA, my first statement was a joke. Goosestep away and get a clue along with a sense of humour
10/23, 10:32 PM
posted by:
85ZingoGTR
As I said before, lets just wait on FIAT to phase out the Chrysler name and just sell the cars in the states as FIATs.
10/25, 2:42 PM
posted by:
F50
They could only up to a 35%(or 50) stake on Chrysler, they can’t buy it all up and close it(Like how Chrysler did to AMC). Well, thats what I think.
10/26, 11:09 AM
posted by:
ajm11
For some reason I can not see Fiat phasing out the Chrysler name plate in the states. From what I can recall, Fiat has never had a good reputation in North America since it pulled out of the market in the late 70’s early 80’s. Fiat merged with Chrysler to get back into North America, not rename the company after it comes here.