"CHANGE" - After the U.S. government has pitched in more than $12 billion in Chrysler it becomes Now fully Italian.

Fiat will have paid a total of $3.7 billion to acquire Chrysler, compared with the $36 billion Daimler-Chrysler paid for the company in 1998. 

"CHANGE" - After the U.S. government has pitched in more than $12 billion in Chrysler it becomes Now fully Italian.(OM).

At the beginning of 2014, Detroit may be bankrupt, but they’re cheering the five-year-old U.S. auto bailout in Italy. That’s because after being the beneficiary of billions in U.S. taxpayer largesse, Fiat, the leading Italian auto company, is going to buy its final stake in Chrysler from that other big bailout recipient, the United Auto Workers (UAW).

“Chrysler’s Now Fully an Italian Auto Company,” reads the Time magazine online headline. But wait a minute! Wasn’t the bailout supposed to be about saving the American auto industry?
As Mark Beatty and wrote in The Daily Caller in November 2012, after presidential candidate Mitt Romney made the controversial claim that Fiat would be expanding production of Chrysler’s Jeep in China (a claim that turned out to be correct),

The real outrage arising from the 2009 Chrysler bailout is not that its parent company, Fiat, is planning to build plants in China. It’s that the politicized bankruptcy process limited Chrysler’s growth potential by tying it to an Italian dinosaur in the midst of the European fiscal crisis. The Obama administration literally gave away ownership of one of the Big Three American auto manufacturers to an Italian car maker struggling with labor and productivity issues worse than those that drove Chrysler to near-liquidation.

As we noted in the piece, much of Chrysler’s profits from its overhauled line are going to prop up Fiat’s failing, money-losing Italian business, rather than to expanding production and jobs in the U.S. Moody’s had downgraded Fiat’s credit rating to “junk” even before the Obama administration arranged for it to acquire a Chrysler stake, and in Autumn 2012, Moody’s gave Fiat another downgrade that the Financial Times described as even “further into ‘junk’ territory.”

Around this time, Barron’s put it like this in a headline, “This time, Chrysler could bail out Fiat.” Actually, the Barron’s headline is slightly misleading in one respect — Fiat didn’t contribute much of anything to the Chrysler’s bailout.


In the 2009 deal overseen by the Obama administration’s auto task force, Fiat paid no money to acquire its initial 20 percent stake in Chrysler — only contributing some of its intellectual property, instead. Fiat would later pay $2.2 billion to raise its stake in the company to 58.5 percent.

Continuing the bailout shell game, Fiat will now pay fellow bailout recipient UAW $4.4 billion for its stake in Chrysler. All the while, the U.S. government has pitched in more than $12 billion in taxpayer infusions.
In “saving” the American auto industry, Obama gave an American company away. And he gave it away at the expense of pension funds and other secured creditors, which were given a much smaller stake in the new company than they would have been given under traditional bankruptcy proceedings. American manufacturing workers also lost out on the deal; many are now hostages to the woes of Fiat and the Italian economy.

According to Barron’s, “Chrysler’s resurgence has been so strong that it now provides a lifeline for Turin’s Fiat, which faces serious challenges in Western Europe.” Fiat and Chrysler CEO Sergio Marchionne told Barron’s: “The Fiat Group has a future because of Chrysler.” Similarly, Bloomberg reported that, “without Chrysler, the Italian automaker would have posted a first-quarter net loss” in 2012.
The divergence between Chrysler’s profits and Fiat’s European losses is striking. In late 2012, Chrysler reported that its third-quarter profit surged 80 percent to $381 million.

But ironically, Fiat’s Marchionne has made Chrysler profitable again not by producing more of Fiat’s mini-cars, as the Obama administration urged it to do, but rather by doubling down on Chrysler’s most “environmentally incorrect” light trucks and sport-utility vehicles, such as the Jeep Grand Cherokee and Dodge Durango. In reporting Chrysler’s profit surge, Bloomberg noted that these earnings were “boosted by demand” for Jeep Grand Cherokees, while Fiat has “delayed new models such as the Punto hatchback.”Hmmmm.....Another 'Obamination hits the history books!Read the full story here.

Auto Bailout Czar: We Did It All for the Unions.

Auto Bailout Czar: We Did It All for the Unions.(NLPCS).The Detroit Free Press reports that the House committee holding hearings on the auto bailout process wants clarification from former head of President Obama's Auto Task Force, Ron Bloom, regarding testimony he gave about a statement he allegedly made at a 2009 celebratory dinner. According to a news article written at the time and fellow ex-car czar, Steve Rattner, Bloom stated that he "did this all for the unions." Bloom denied making the statement while under oath. The congressional panel isn't buying it and has written a letter to Bloom requesting that he amend his testimony.
Given Bloom's union background and the UAW favoritism displayed throughout the General Motors and Chrysler bailout process, the admission that the bailouts were done to benefit the unions should not come as a surprise. For many of us, that has been obvious for quite some time. Bloom was once the special assistant to the president of the United Steelworkers Union where he negotiated on behalf of unions. The fact that Obama chose a car czar that had union loyalties is very telling. The so-called "sacrifices" made by the UAW during the auto bailout process pale in comparison to those made by other classes of creditors, including GM bondholders who were shut out of negotiations for the most part. Accident victims and asbestos victims had their claims subordinated to the politically powerful UAW as well, and taxpayers are footing the bill. I have yet to see where the UAW has sacrificed much. Reduced wages for new UAW members only apply after laid off senior members with full pay are rehired Part of Bloom's defense of comments like the one about him doing it all for the unions is that he made the statements jokingly. Bloom's strange sense of humor may get some laughs from those that have benefited from the unprecedented government actions. Maybe the UAW, bankruptcy attorneys and investment bankers are yucking it up, but taxpayers and other classes that were discriminated against are not laughing. The American people deserve to know the truth about how the bailouts benefited cronies of the Obama administration like the UAW as others paid the price.Read the full story here.

"Doing Just Fine" - Auto Bailout Was Really Just a UAW Bailout.

"Doing Just Fine" - Auto Bailout Was Really Just a UAW Bailout.(Heritage).By Amy Payne.President Obama told the United Auto Workers (UAW) in February not to listen to critics of the auto bailout who said union members “made out like bandits—that saving the auto industry was just about paying back the unions.” “Really?” Obama said. “I mean, even by the standards of this town [Washington], that’s a load of you-know-what.”
New research from Heritage labor economist James Sherk proves that it was, in fact, a load of truth.
The Treasury Department estimates that taxpayers will lose $23 billion on the auto bailout. Sherk and co-author Todd Zywicki find that none of these losses came from saving jobs, but instead went to prop up the compensation of some of the most highly paid workers inAmerica. They write:

We estimate that the Administration redistributed $26.5 billion more to the UAW than it would have received had it been treated as it usually would in bankruptcy proceedings. Taxpayers lost between $20 billion and $23 billion on the auto programs. Thus, the entire loss to the taxpayers from the auto bailout comes from the funds diverted to the UAW.

The Obama campaign is touting the bailout in Michigan this week, crowing about saved-or-created jobs. What the bailout actually saved was the UAW’s heavily padded compensation packages; what it created was a massive taxpayer loss.
The UAW was a significant factor in the automakers’ decline: It had raised Detroit’s labor costs 50 percent to 80 percent above other automakers, such as Toyotaand Nissan. In 2006, General Motors paid its unionized workers $70.51 an hour in wages and benefits. Chrysler paid $75.86 an hour. Added to mistakes by management, these labor costs were a major reason the automakers went bankrupt.
However, through the bailout, the Obama Administration insulated the UAW from most of the sacrifices unions usually make in a bankruptcy—at taxpayer expense.Even Stephen Rattner, President Obama’s “car czar,” has admitted that “We should have asked the UAW to do a bit more. We did not ask any UAW member to take a cut in their pay.”
As a result, even after the reorganization, GM still has higher labor costs ($56 an hour) than any of its foreign-based competitors.
The average American worker—whose taxes paid for the bailout—earns $30.15 an hour in wages and benefits. Few Americans have the ability, as UAW workers do, to retire in their mid-50s before they can collect Social Security. Fewer still receive retirement health benefits in addition to Medicare, as UAW workers do. Yet their tax dollars went to subsidize UAW pay and benefits.
Had the government treated the UAW in the manner required by bankruptcy law, taxpayers would have broken even. The program would have amounted to bankruptcy financing instead of an outright bailout. The Administration could have kept the automakers running without losing a dime.Instead, more than $26 billion went out the door and into the UAW’s pockets. Let’s put that in perspective: The amount of the subsidy given directly to the UAW was bigger than the budget of the entire State Department. It was bigger than allU.S. foreign aid spending. It was 50 percent more than NASA’s budget.The Administration did not bail out GM and Chrysler. It bailed out the United Auto Workers.Read the full story here.