Chrysler Rejects U.S. Aid?

Chrysler Financial executives rejected a new $750 million loan from the Treasury Department after the company was unable to obtain waivers from top executives agreeing to strict pay limits, according to a government report to be released today.

The report from the Treasury Department's Special Inspector General overseeing the $700 billion TARP, also confirms the government plans to give General Motors Corp. up to $5 billion in short-term assistance and $500 million to Chrysler LLC.

And it reveals that Treasury plans to offer as much as $1.25 billion to underwrite Chrysler and GM vehicle warranties if either automaker files for bankruptcy.

On April 7 the government asked Chrysler Financial, as a condition of getting an additional $750 million, "to obtain waivers from the top 25 Chrysler Financial executives that would have waived legal claims against Treasury and Chrysler Financial resulting from the recent changes in executive compensation requirements for TARP recipients."

The government claims Chrysler was unable to obtain waivers from all 25 executives, therefore the request for additional funding was denied."

Chrysler Financial, however, said Monday that negotiations with the government never got to the point that executives were asked to sign compensation waivers.

According to Chrysler Financial they have determined that it has adequate private capital funding to cover the short-term needs their dealers and customers and that no additional TARP funding is necessary for the time being.

It sounds like Chrysler is trying to learn a lesson from Ford and not take bailout money. However June 1st is coming quickly and Chrysler needs to speak Italian and cut a deal with Fiat. According to the Obama administration Chrysler isn't viable as a standalone company and vows not to provide it with any more aid after April 30 if it doesn't complete the tie-up with Fiat.

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