Chrysler Unit Loses Bailout 'Cause Execs Won't Take Pay Cut

[Lemur]

File under pathetic (http://www.nytimes.com/2009/04/21/business/21chrysler.html):


Chrysler’s lending arm will not get an additional $750 million loan from the federal government after some executives declined to go along with its restrictions on pay, a person with direct knowledge of the matter said Monday.

This person, who spoke on condition of anonymity because talks on the matter are private, said the Treasury Department withdrew its offer to further aid Chrysler Financial because some of its 25 top executives would not agree to compensation waivers.

Admittedly, this is from an unnamed source, but if proved true ... sheesh. These idiots need to face up to the fact that they are not managing a legitimate business, and they are no longer operating under the same rules that a product-making, profit-turning business does. Once you go begging to Uncle Sam to take millions (or billions) of taxpayer dollars, you aren't free to do as you please anymore.

I'm sorry. I don't really have a point to make. I just wanted to share this. If it isn't the essence of Gah nothing is.

-edit-

Two extra thoughts: Chrysler Financial has already received $1.5 billion with no strings attached. But now that there are executive compensation limits? Oh, I guess they don't need it anymore.

And if this is representative of the leadership in that division, I'm deeply glad we're not going to be subsidizing them. More. Than we already have.

[drone]

Two extra thoughts: Chrysler Financial has already received $1.5 billion with no strings attached. But now that there are executive compensation limits? Oh, I guess they don't need it anymore.

And if this is representative of the leadership in that division, I'm deeply glad we're not going to be subsidizing them. More. Than we already have.

Technically, I suppose we are still subsidizing them. They turned down the $750 million from the government, and instead got loans from banks to cover their losses. Banks such as JP Morgan and Citigroup. ~;)

Since Cerberus MotorsTM is a private company, I suppose they can do what they want. They never should have gotten any TARP loans in the first place, but that's just me.

[Alexander the Pretty Good]

Why aren't the government employee unions going to bat for these guys? ~;)

/we should still execute every criminal who voted to bail out these people

[Don Corleone]

Not that I disagree with the tone of your post Lemur, I think I've made my views on the matter clear. Run your company on your money, pay your execs what you want to. Run it on my dime, pay them what I say is fair.

But where is all the outrage for executive salaries for financial companies? Why haven't Edward Liddy (AIG CEO) or Kenneth Lewis (BOA CEO) been fired on a Sunday night by Timothy Geithner? Why haven't their analysts and brokers been asked to surrender pensions, insurance guarantees and wages?

In short, I'm having a hard time understanding why the auto industry is getting skewered by the administration. They've gotten about 55 billion, not quite 5% of what the financial services industry has gotten. Haven't seen them act that much more irresponsible (assuming that's possible) with public money.

[Alexander the Pretty Good]

They probably didn't contribute enough to the campaign.

[Lemur]

ATPG, are you kidding? With all of that union money? C'mon, this is a classic example of stiffing your base, not pandering to it.

Don, yeah, I see exactly what you're saying. Frankly the whole bailout scheme alternates between scaring the **** out of me and enraging me. I'm not clever with money—never have been. All I know is that you cash big checks and write smaller checks and then everything is okay. Save your info and dump it in your accountant's lap come January, and he makes the bad people stay away.

So I don't have the financial acumen to understand high finance. But I get the impression that most super-bright money people don't really understand what's going on either. You asked me in another thread whether I thought President 44 had made errors, and this is one of them. I'm deeply worried that the Keynsian analysis is wrong, dead wrong. But I don't have the financial background to express my fears or to make a good case for them.

Of course the treatment of the big bank execs was ridiculous. This whole bailout process has been opaque and inscrutable. I am a very worried lemur.

[Xiahou]

Well at least all the money we threw at the banks made a difference, right? I mean, it unfroze the credit market, right? :sweatdrop:

No, it seems that lending has actually fallen (http://www.smartbrief.com/news/nareit/storyDetails.jsp?issueid=F03A4CE1-4EC1-4289-8FB4-42DAD6A6E47D&copyid=2719994B-8F4F-480C-82D0-3B9B4105BE3F&brief=NAREIT&sb_code=rss&&campaign=rss) since the TARP funds were handed out. Money well spent.
Lending is down at the 21 biggest banks to receive money under the Troubled Asset Relief Program, the Treasury Department said Wednesday. Commercial and consumer lending fell 2.2% according to the monthly report, signaling that credit markets remain frozen despite government rescue programs. The lone exception was home loans, with consumers moving to refinance as rates neared record lows. Wall Street Journal, The (04/16)

[Lemur]

Yeah, stuff like this makes me very, very worried. Also, I did computer work at an investment bank in NYC for some years, and I dealt with IB employees every day. "Amoral" wouldn't begin to cover the mindset.

[drone]

Well at least all the money we threw at the banks made a difference, right? I mean, it unfroze the credit market, right? :sweatdrop:

No, it seems that lending has actually fallen (http://www.smartbrief.com/news/nareit/storyDetails.jsp?issueid=F03A4CE1-4EC1-4289-8FB4-42DAD6A6E47D&copyid=2719994B-8F4F-480C-82D0-3B9B4105BE3F&brief=NAREIT&sb_code=rss&&campaign=rss) since the TARP funds were handed out. Money well spent.

Banks did basically the same thing people did with their stimulus checks, they lowered their exposure. Instead of loaning the money, banks built up their depleted capital. Instead of people spending, they paid off debt. The stagnant economy remains.

[Don Corleone]

Banks did basically the same thing people did with their stimulus checks, they lowered their exposure. Instead of loaning the money, banks built up their depleted capital. Instead of people spending, they paid off debt. The stagnant economy remains.

Right. At the end of the day, the only stimulus that would have worked would have been for Congress to have issued it in gift certificates. I think I mentioned this before... yelling at the banks when nobody loosened their lend requirements is :daisy: into the wind... the banks CAN'T lend money out until they get minimum reserves in their vaults without violating Federal Reserve rules and jeopradizing their very existence. Losing money on defaulted loans is one thing... lending it out when you know you don't have the cash is a guaranteed way to join Wamu, swimming with the fishes.

[CountArach]

Time for a maximum wage anyone?













No? I'll keep trying then..

[Louis VI the Fat]

File under pathetic (http://www.nytimes.com/2009/04/21/business/21chrysler.html):Pathetic indeed. How can some people be so out of touch.


Then again, maybe the execs deserve their excessive pay. I mean, it must be pretty stressful work for them to further cut the payments to hard-working, actual tax-paying, blue collar America:

G.M. has an additional month to cut its debt and to reach a deal with the United Automobile Workers to cut labor costs and show that it has a plan to become viable.

[Vladimir]

Why is an organization who's deep in debt trying to tell someone how to run their business?

Lemur, stop being so foolish. This is about control. Who heard Treasury's lame excuse for not accepting full loan repayments? It has nothing to do with the lending markets and everything to do with the amount of influence he has over the company. The administration believes they know the economy out to be run and since they're doing it for our own good, they can use whatever tactics they want. How is this different from the unethical practices which led to the sub-prime mortgage crisis?

Can anyone say the government is acting ethically here? Look at the requirements the government placed on TARP recipients after they received funding. It's the same as when the federal government blackmailed the states to get them to raise the drinking age. "If you don't raise the age to 21, we'll take away your highway funding."

Yet there are still people who can't comprehend why states and companies refuse federal money. I echo Louis' concern, but it's directed toward a different group.

[Vuk]

Why is an organization who's deep in debt trying to tell someone how to run their business?

Lemur, stop being so foolish. This is about control. Who heard Treasury's lame excuse for not accepting full loan repayments? It has nothing to do with the lending markets and everything to do with the amount of influence he has over the company. The administration believes they know the economy out to be run and since they're doing it for our own good, they can use whatever tactics they want. How is this different from the unethical practices which led to the sub-prime mortgage crisis?

Can anyone say the government is acting ethically here? Look at the requirements the government placed on TARP recipients after they received funding. It's the same as when the federal government blackmailed the states to get them to raise the drinking age. "If you don't raise the age to 21, we'll take away your highway funding."

Yet there are still people who can't comprehend why states and companies refuse federal money. I echo Louis' concern, but it's directed toward a different group.

I agree, no matter how rotten the execs are, the federal government cannot use this 'bailout' money to bribe everyone into doing what it wants. Power games like this is why it is dangerous to give the federal government more power than it was supposed to have.

[Hosakawa Tito]

Hah, the execs know that Chrysler is going bankrupt whether the company receives anymore welfare or not . They're just ensuring they get that last big payday before the company is no more. I got's mine, thanks suckers.~:wave:

[Vladimir]

I agree, no matter how rotten the execs are, the federal government cannot use this 'bailout' money to bribe everyone into doing what it wants. Power games like this is why it is dangerous to give the federal government more power than it was supposed to have.

Very true.

I hope I don't sound too harsh in my response. The ENTIRE situation de gaulles me.

[rasoforos]

Hmm...

Subsidised businesses, command economy, unshakable insiders and heavy protection. Oh comrade Lenin will be so happy of the U.S.S.A today :yes:

Chrysler was struggling to make ends meet even during the 'fat cows' era and I do not see that they will be able to turn things round now that times are tough. Having said that, I still believe that it is too big to fail at the moment (due to the potential widespread systemic shock) but when the recession is over I do not see it having a lot of future. It is indeed the weakest link.

Let us take the time to reflect how proud the Americans were about their Car Industries producing large inefficient behemoths, thus totally ignoring the principles of competition. Anyone wanna bet that when this recession is over they will do the same?

[HoreTore]

Do you people think that diamond-stubbed swimming pools are free, or what? :inquisitive:

How else can they afford another solid gold Humvee?

[Crazed Rabbit]

Time for a maximum wage anyone?

No? I'll keep trying then..

No - not now and not ever.

Why do so few on the left understand incentives in the economy? :wall:

CR

[HoreTore]

No - not now and not ever.

Why do so few on the left understand incentives in the economy? :wall:

CR

Why are everyone on the right greedy bastards? :wall:

[rvg]

Why are everyone on the right greedy bastards? :wall:

Because the world runs on greed.

[Vladimir]

Because the world runs on greed.

Because most leftists don't know what the word means. Wanting more than you need is greedy.

[Ironside]

Because the world runs on greed.

Thus corruption was granted as the epitome of human civilization and humanity rejoiced, ushering into a new era of unabridged wealth and prosperity.

Or are you one of those pesky people on the left who doesn't understand that the incentives in economics is all about greed, the more of it the better? :inquisitive:

[Louis VI the Fat]

Why do so few on the left understand incentives in the economy? :wall:

CRI'll understand if you explain to me why a wage increase for the top is an 'economic incentive' and a wage increase at the bottom the 'undermining of economic incentives'? :smash:

[Samurai Waki]

Why do both sides of the fence refuse to admit that this entire ordeal is one massive cluster-!@#$, and then actually work on a plan to get this thing under control?

The Right needs to stop believing that doling out money without any safeguards is going to solve the situation, the left needs to stop believing that enabling financial safeguards while also strong arming Corporate leadership will force these already filthy rich men to suddenly change tactics.

If the ship is sinking, isn't it a better idea to save the crew and passengers than to bicker on how to fix the ship?

[Kralizec]

I'll understand if you explain to me why a wage increase for the top is an 'economic incentive' and a wage increase at the bottom the 'undermining of economic incentives'? :smash:

A lot of people wouldn't bother to study years for a degree if they could earn the same salary anyway when fresh out of high school.

I'd gladly run Chrysler for 1/10 of what the current guys get paid, but it would be moronic to accept me or indeed anyone who'd actually settle for that money. I do agree with most on the left that CEO's are vastly overpaid, but a wage cap A) isn't going to work B) unless a company is getting taxpayer money, it's none of my business

[HoreTore]

A lot of people wouldn't bother to study years for a degree if they could earn the same salary anyway when fresh out of high school.

If the answer is in China, you're in Antarctica.

[Crazed Rabbit]

I'll understand if you explain to me why a wage increase for the top is an 'economic incentive' and a wage increase at the bottom the 'undermining of economic incentives'? :smash:

Um, who said a wage increase for the poor 'undermined incentives'?


The Right needs to stop believing that doling out money without any safeguards is going to solve the situation,

Um, I think most of the right leaning posters here are against giving out any money to these stupid companies.

Personally, I think this story is good; the govt stops trying to dictate company policy, and it also stops giving them money.

CR

[Kralizec]

If the answer is in China, you're in Antarctica.

It's true, not for every student but certainly for a lot. Going to college means you'll be living of very little money for 4-6 years at least, and once you're graduated you've probably built up quite a debt anyway. If the pay difference between unschooled labour and jobs wich require university degrees was marginal many people would think twice.

[HoreTore]

It's true, not for every student but certainly for a lot. Going to college means you'll be living of very little money for 4-6 years at least, and once you're graduated you've probably built up quite a debt anyway. If the pay difference between unschooled labour and jobs wich require university degrees was marginal many people would think twice.

For starters, that had nothing to do with Louis' question at all....

Hence, the answer being in China, and you being stuck in Antarctica ~;)

[Kralizec]

I'm sorry, I got the impression that he asked how increased wages at the bottom could undermine economic incentives :book: