The consumer finance assistance is similar to a
$6 billion package provided to GMAC LLC
on Dec. 31 to boost that lender's operations. The support for the
consumer lending operations adds to the $17.4 billion in Treasury assistance
committed to General Motors Corp. and Chrysler LLC last month. GM was slated to receive $13.4 billion
and Chrysler $4 billion. All of the funds are coming from the $700 Troubled
Asset Relief Program Congress created in October to rescue the financial system.
The five year loan for Chrysler Financial will pay the Treasury an interest at
a rate of one month LIBOR + 100 basis points for the first year and one month
LIBOR + 150 basis points for years two to five. Treasury's loan will be secured
by a senior secured interest in a pool of newly originated consumer automotive
loans, and Chrysler Holding will serve as a guarantor.
Under the agreement, Chrysler Financial must be in compliance with the executive compensation and
corporate governance requirements of the TARP program. Chrysler Financial will
issue warrants to Treasury in the form of additional notes in an amount equal
to 5% of the total size of the loan. The additional notes will vest 20% on the
closing date and 20% on each subsequent anniversary. - Bill McConnell
Comments
The Treasury Department announced Friday it will lend
$1.5 billion to Chrysler Financial to help finance new auto loans. The loan is
part of a broader effort to shore up the struggling U.S. auto industry in becoming financially viable.
Bill McCole…..Retail Risk Manager. when he”s not drunk it happens now and then stiil cant tell a paper from junk not soo god for cf
— Posted by sam