U.S. Support for Chrysler Financial
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- Media Type
- Document
- Media Date
- March 20, 2020
- Additional Information
- In 2008, due to the confluence of the financial crisis and years of structural decline, Chrysler was nearing bankruptcy. Chrysler’s related finance company, Chrysler Financial, was in dire straits. On January 2, the U.S. Treasury extended Chrysler a $4 billion bridge loan to give the company time to prepare a viable restructuring plan (See Nye 2019 Bridge Loans). Two weeks later, the Treasury arranged $1.5 billion in low-interest financing for Chrysler Financial to fund the securitization of new consumer car loans. Chrysler Financial drew down the entire $1.5 billion between January 16 and April 9, 2009. Although the loans bore a 5-year term, Chrysler Financial paid off the loans in July after accessing another government program, the Term Asset-Backed Securities Loan Facility. The $1.5 billion facility subjected Chrysler Financial to several management restrictions, most of which related to executive compensation. When Chrysler entered bankruptcy on April 30, GMAC (General Motors’ related auto finance company) took over most of Chrysler Financial’s business. Chrysler Financial continued to do business at a much smaller scale. Treasury expected Chrysler Financial to wind-down its business. In December 2010, TD Bank bought Chrysler Financial from Cerberus for $6.3 billion. Commentators do not have much to say on the impact of its aid for Chrysler Financial, although the $1.5 billion facility coincided with several months of increased sales
- Crisis
- Global Financial Crisis (2007-2009)
- Intervention
-
Emergency Liquidity-Specific Firm
Non-bank Restructuring
- Content Type
- Working Paper
- Publisher(s)
-
Yale University: School of Management: Yale Program on Financial Stability (YPFS)
- Author(s)/Creator(s)
-
Alexander Nye
- Language(s)
-
English
- Case Series
- 2020 YPFS Preliminary Discussion Drafts
- Related YPFS Publications
-
Restructuring Chrysler through Bankruptcy
- Country(ies) or Region(s)
-
United States