The US Treasury Department said on Monday it would lose US$1.6 billion on a loan made to Chrysler early last year.
Taxpayer losses from bailing out Chrysler and General Motors (GM) are expected to rise as high as US$34 billion, congressional auditors have said.
Treasury said on Monday that Chrysler repaid US$1.9 billion of a US$4 billion loan, which was extended before the company filed for Chapter 11. The government hopes to get another US$500 million from the company that emerged from bankruptcy, Chrysler Group LLC.
Treasury officials said the government had no plans to boost its stake in the new Chrysler to cover those losses. It also acknowledged another US$1.9 billion in potential losses from a separate loan that had been made to the company that went through bankruptcy proceedings. It indicated slim hopes of recouping much if anything from that separate US$1.9 billion loan.
The original US$4 billion loan was made in January last year, when the George W. Bush administration was scrambling to rescue Chrysler, GM and their auto financing arms.
The Congressional Budget Office estimated in March that the government’s US$85 billion bailout of the automakers would cost taxpayers US$34 billion.
Much of it will depend on how much the government recovers from its eventual sale of nearly 61 percent of GM and about 10 percent of Chrysler.
GM has said it could conduct a public stock offering later this year. Chrysler officials have said a public stock offering is not likely before next year.
The Treasury Department made the announcement about the loss from Chrysler on a day when GM reported its first quarterly profit in nearly three years. That moved GM closer to a stock offering that would repay at least part of the US$43 billion it owes the government.
Chrysler Holding is the parent company of the old Chrysler. It is owned by private equity firm Cerberus Capital Management. Cerberus bought Chrysler from Daimler AG in 2007.
Chrysler came close to running out of money at the end of 2008, so the US government stepped in, authorizing US$15.5 billion in aid and appointing Fiat SpA to run the new Chrysler after it emerged from bankruptcy protection. The old Chrysler’s assets, along with its finance arm, became Chrysler Holding.
Treasury said it has received repayments of US$3.9 billion to date, including the US$1.9 billion repayment and a US$1.5 billion loan paid off by Chrysler Financial. Chrysler also assumed US$500 million of Old Chrysler’s debt, reducing the debt to the government.
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