WASHINGTON, July 2011 (AFP) â€“ The U.S. Treasury announced Thursday that it had exited its bailout of Chrysler but would not likely recover $1.3 billion of the funds used to keep the automaker alive in the economic crisis.
The Treasury said it had received $560 million in proceeds from the sale of its remaining stake in Chrysler to Italian automaker Fiat.
With this transaction, â€œTreasury has fully exited its investment in Chrysler Group under the Troubled Asset Relief Program,â€ the department said in a statement.
Fiat paid $500 million for the governmentâ€™s remaining six percent stake and $60 million for rights, in the consummation of a deal first announced in early June.
The Treasury said it had received more than $11.2 billion in payments of principal, interest and fees from Chrysler, all related to loans from the TARP, which was originally designed to rescue troubled financial institutions.
Chrysler and General Motors, the biggest U.S. automaker, required government rescues and underwent bankruptcy reorganizations to survive a severe slump in U.S. auto sales during the 2008-2009 financial crisis.
Both firms emerged from bankruptcy in June 2009. Fiat has been steering Chrysler since then, gradually increasing its share of the number-three U.S. automaker.
The purchase of the U.S. Treasuryâ€™s final stake increased its stake to 52 percent, and it plans to raise that to as much as 70 percent by buying the stakes held by Canadian authorities and the United Auto Workers union.
The repayment came at least six years earlier than expected, Tim Massad, assistant Treasury secretary for financial stability, said in the statement.
â€œThis is a major accomplishment and further evidence of the success of the administrationâ€™s actions to assist the U.S. auto industry, which helped save a million jobs during the worst economic crisis since the Great Depression.â€
US taxpayers will still be on the hook for some of what was loaned to Chrysler before it underwent bankruptcy reorganization.
â€œTreasury is unlikely to fully recover the difference of $1.3 billion owed by Old Chrysler,â€ the department said. â–