Letter: The cost of Chrysler's bailout
The claim that there is plenty of transparency would be correct. Chrysler's bailout is a great example. The CEO of Chrysler/Fiat stated they have repaid "every penny that had been loaned less than two years ago." And the administration is taking a victory lap. Why then is the taxpayer standing to lose $7 billion to $10.5 billion? What transpired?
First the U.S. loaned $13 billion to Chrysler and demanded they find a buyer: Fiat of Italy. The government then forgave $4 billion of that loan. They also confiscated all claims of the bondholders. Say goodbye to property rights. Then the Obama administration gave over $4 billion in stock to the UAW to fund their defunct health care fund, plus paid 9 percent interest, bringing today's total to over $5 billion.
In order for Fiat to buy controlling interest, the government insisted they pay back $3.5 billion -- sounds reasonable. Fiat, however, could not find financing anywhere on this planet. Enter the Obama administration's Energy Secretary, who agreed to a green energy loan. Did I mention Fiat is a foreign company? This allowed Fiat to buy our shares for $500 million.
Have you followed this shell game? That's a loss of 85 percent on our shares ($3.5 billion to half a billion dollars). Ask how many jobs were saved and at what cost? Let's assume the Chrysler bailout saved all of the jobs. It cost $184,210 to $276,300 per job; $7 to 10.5 billion ($4 billion forgiven, $3 billion stock lost and potentially $3.5 billion from green loans) divided by 38,000 U.S. jobs.
What was gained by this bailout? Chrysler did not start to restructure due to the bailout. They started that process through bankruptcy -- an option available without the need of taxpayer involvement. But we all lost even more due to the uncertainty it created. The original bondholders took a risk but never foresaw the confiscating of property, their security interests.
Confidence in the market is essential. This was not a bailout costing billions, but rather a contributor to trillions lost in our transparent economy. I now understand "transparency." If something is transparent, it is only partially opaque, perhaps hard to see.