US Government Will Lose All $8 Billion It's Given To Chrysler

The fact that Chrysler is going through Chapter 11 bankruptcy is in itself a form of bailout, since the government is providing the financing for the bankrupt company. Without Uncle Sam, no private investor would throw fresh cash into it, and it’d be a liquidation case. Game over.

But don’t think that you, as the taxpayer, are getting any kind of senior position here.

In yesterday’s initial court hearing — which included the colourful revelation that the hedge fund holdouts had received death threats — it was revealed that the financing is being offered interest free and that the government doesn’t expect to get any of it back. That’s $4 Billion in loans made in January and another $4 billion in DIP.

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