One of our loyal callers asked about the bailout of the Chrysler Corporation. A little Internet research reveals some interesting facts about just how the Carter administration handled this crisis facing what was then the #3 auto maker.
Chrysler reduced costs, restructured its management and recruited new executives to deal with its serious financial problems. Despite these measures, external factors continued to limit Chrysler's ability to finance its programs fully. Chrysler was forced to seek assistance from the federal government in the form of loan guarantees. NO ACTUAL MONEY WAS EVER LOANED to Chrysler Corporation by the United States federal government... but many people are under the impression that they did. What the United States government did do, was "Guarantee" the repayment of the loans... should Chrysler Corporation fail. The United States government would eventually end up 350 Million Dollars richer for their help.In late December 1979, the U.S. Congress passed the Chrysler Corporation Loan Guarantee Act, which President Carter signed into law on January 7, 1980. The act provided Chrysler $1.5 billion in federal loan guarantees.Concessions from UAW-represented workers, white-collar employees, suppliers, creditors and lenders kept Chrysler operating despite record losses of $1 .7 billion in 1980. Chrysler cut inventories by $1 billion, reduced white-collar staff by 50 percent and cut its break-even point by 50 percent in its drastic efforts to manage finances.Through the travail, Chrysler doubled its corporate average miles-per-gallon (C.A.F.E.) and in 1978, introduced the first domestically produced front-wheel drive small cars -- the Dodge Omni and Plymouth Horizon. Chrysler was also the first American company to convert its fleet to front-wheel drive. Chrysler was on its way to recovery.
Sounds good. But check this out: http://www.heritage.org/research/regulation/bg276.cfm
Clearly the Chrysler bailout and the subsequent "repayment" wasn't all it was represented to be.
One should keep in mind that the same year this car company was screaming for federal aid their executives landed a huge pentagon contract (1979) to build the M1 tank and then promptly sold the Chrysler defense division for a massive payday. I suspect this made it possible for the company to make good on it's payback promise but at the expense of taxpayers once again. http://www.tankopoly.com/M1_Abrams_Tank_Variants.htm
So, the government backed the loans and the government handed Chrysler a plum to help make sure those loans were repaid.
So the question the caller asked was "If Chrysler paid back the loans, where did the money go?"
The answer is probably that the government never handed the automaker a dime in terms of the loan guarantees but spent plenty to develop the M1 Abrams tank program.
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