The guys from Cerberus, Chrysler’s majority owner, have been keeping a very low profile lately, and so has Chrysler Financial, major player in the company’s consumer and dealer lending. Now, however, CF is on the hot seat because of a story the Washington Post broke yesterday.
A condition for granting the Treasury Department’s $750 million loan was that executives sign waivers regarding their compensation, which some apparently refused to do. When Treasury gave Chrysler $1.5 billion in TARP funds back in January, conditions were less rigorous, and there were no limits set on executive pay,which is now one hot potato. Congress is still working out guidelines on the issue.
So in Chrysler’s defense, it appears the execs were being asked not only to sign away their rights to sue at a later time, but also to sign “without knowing what specific limits the Treasury might set.” Jgoods, PR counsel extraordinaire, would have recommended the company play up exactly that side of the story, that their folks were in effect being asked to sign a blank contract.
Treasury withdrew the offer, and so the company is getting hammered here and here—not only because their execs look like greedy pigs, but also because Chrysler went on to issue this ridiculous statement:
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.
They then went out and borrowed money from private banks, Citigroup and J.P. Morgan among them, and paid a higher interest rate than Treasury would have charged. So some draw the inescapable conclusion that they were obviously willing to pay more to avoid the government’s conditions.
Now comes a story today saying GM could get some $5 billion more from the federal government and Chrysler $500 million. The latter amount would also flow to include Chrysler Financial.
I think the government needs PR counsel, desperately.
What do you think of this avoidable mess? a) Chrysler just can’t win when public opinion is so stacked against them. b) Chrysler Financial is run by knaves and fools. c) Keep the government out of financing loans to automakers.