Chrysler Financial executives refused loans to avoid compensation caps

[Hannah Bell]

By Jerry White
24 April 2009

Top executives at Chrysler Financial turned away a government loan because they did not want to abide by new federal limits on pay, according to findings by a federal watchdog agency reported by the Washington Post.

Earlier this month, the Obama administration offered a $750 million loan to Chrysler Financial, which is a major lender to Chrysler dealerships and customers. In rejecting the loan, the company’s owners—private equity firm Cerberus Capital Management—opted to borrow from a group of private banks, including JPMorgan Chase and Citigroup, which charged more for the money than the government would have, the Post reported. This added to the financial burden carried by the Detroit automaker, which is reportedly preparing to file for bankruptcy as early as next week.

...Cerberus, whose chairman is former Bush Treasury Secretary John W. Snow, put together the multibillion-dollar deal, involving the investment arm of Abu Dhabi as well as hedge funds such as York Capital. Like most private equity firms, it used very little capital of its own and immediately loaded the company with crippling amounts of debt...Cerberus is now looking for help from the Obama administration to merge Chrysler Financial and GMAC in hopes that it can still salvage a profit from its takeover.

http://www.wsws.org/articles/2009/apr2009/side-a24.shtml

[Massacure]

1. Why would a bank lend to a company that is going to declare bankruptcy?

[aquart]

2. Malfeasance? Greed before shareholders?

Can they be personally sued and their assets attached?

[HowHasItComeToThis]

3. HOW I LOVE REPUBLICANS

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