Fiat Purchases Remaining Stake in Chrysler from U.S. Treasury
Once the sale is complete, the U.S. Treasury says it will have “fully exited its TARP investment in Chrysler Group LLC.” TARP (Troubled Asset Relief Program) is a program where the U.S. government purchases troubled assets and equity from banks and other financial institutions to improve their balance sheets and help the institutions avoid financial losses.
Treasury Secretary Tim Geithner says in a written statement, “As Treasury exits its investment in Chrysler, it’s clear that President Obama’s decision to stand behind and restructure this company was the right one. Today, America’s automakers are mounting one of the most improbable turnarounds in recent history – creating new jobs and making new investments in communities across our country.”
Although the sale to Fiat marks the end of the 2009 government bailout, U.S. taxpayers will still lose about $1.4 billion on the money given to Chrysler during its bankruptcy restructuring, CNNMoney reports.
Chrysler received a total of $12.5 billion, which included $8.5 billion from the Obama administration, The Detroit News reports. Taxpayers are coming up short because the government recovered only about $10.6 billion. It could take several months for the stock to transfer to Fiat.
The U.S. government said as part of the sale, Fiat would also receive a transfer of the government’s option rights to purchase the UAW's shares in Chrysler, the Detroit Free Press reports.
Chrysler Group LLC reported a 10 percent increase in U.S. sales in May compared to May 2010. Its Jeep brand was up 55 percent, while Ram trucks saw a 13 percent increase. The automaker has introduced redesigned lineups recently across its brands and unveiled its “Imported from Detroit” advertising slogan during the Super Bowl this year to revamp its image.
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