On May 10, 1980, United States Secretary of the Treasury G. William Miller announces the approval of nearly $1.5 billion dollars in federal loan guarantees for the nearly bankrupt Chrysler Corporation. At the time, it was the largest rescue package ever granted by the U.S. government to an American corporation.
Founded as the Maxwell Motor Company Inc. in 1913, Chrysler grew into the Chrysler Corporation after 1925, when Walter P. Chrysler took over control of the company. Its purchase of Dodge Brothers in 1928 announced Chrysler’s arrival as a major force in the U.S. automotive industry. After decades of expansion, the company’s success came to a screeching halt after the 1973 oil crisis led to skyrocketing gas costs and new government standards for emissions. The combination of these factors caused problems for the Big Three of American automakers–Ford, General Motors and Chrysler–as the trend towards so-called “muscle cars” in the 1960s had led them to produce vehicles with powerful, gas-guzzling engines. (Chrysler’s famous Hemi engine, used in cars like the Dodge Charger and Challenger and the Plymouth RoadRunner, was one of the most prominent examples.)
In an attempt to produce lighter, more efficient vehicles, Chrysler bought shares in the Japanese motor company Mitsubishi, which began producing subcompact cars in America under the Chrysler name in 1970. By the end of the decade, however, Chrysler was in dire financial straits. Lee Iacocca, the former Ford executive who became the company’s president and chairman of the board in 1978, appealed for a federal loan, banking on the fact that the government wouldn’t allow the country’s No. 3 automaker to declare bankruptcy in an already depressed economy. His gamble paid off: In explaining the decision to grant the loans to Chrysler, Treasury Secretary Miller stated that the government “recognizes that there is a public interest in sustaining [its] jobs and maintaining a strong and competitive national automotive industry.”
The terms of the $1.5 billion in loans required Chrysler to raise another $2 billion on its own, which Iacocca did by streamlining operations and persuading union leaders to accept some layoffs and wage cuts, among other measures. His high-profile personal leadership, combined with a focus on more fuel-efficient vehicles, steered Chrysler to one of the most famous corporate comebacks in recent history: In 1984, a year after paying off its government loans ahead of schedule, the company posted record profits of some $2.4 billion. Twenty-five years later, however, plummeting sales and a deepening global financial crisis landed Chrysler in trouble again, and in early 2009 the company received another $4 billion in federal funds. Soon after, under pressure from President Barack Obama’s administration, Chrysler filed for federal bankruptcy protection and entered into a partnership with the Italian automaker Fiat.
The circles below represent the relative size of each U.S. government bailout of American corporations (and one city), calculated in 2008 dollars. They are in chronological order. | Related:Bailout Tracker: Tracking every dollar and every recipient »
|Industry/Corporation||Year||What Happened||Size in 2008 U.S. Dollars|
|●||Penn Central Railroad||1970||In May 1970, Penn Central Railroad, then on the verge of bankruptcy, appealed to the Federal Reserve for aid on the grounds that it provided crucial national defense transportation services. The Nixon administration and the Federal Reserve supported providing financial assistance to Penn Central, but Congress refused to adopt the measure. Penn Central declared bankruptcy on June 21, 1970, which freed the corporation from its commercial paper obligations. To counteract the devastating ripple effects to the money market, the Federal Reserve Board told commercial banks it would provide the reserves needed to allow them to meet the credit needs of their customers. (What happened after the bailout?)||$3.2 billion|
|●||Lockheed||1971||In August 1971, Congress passed the Emergency Loan Guarantee Act, which could provide funds to any major business enterprise in crisis. Lockheed was the first recipient. Its failure would have meant significant job loss in California, a loss to the GNP and an impact on national defense. (What happened after the bailout?)||$1.4 billion|
|●||Franklin National Bank||1974||In the first five months of 1974 the bank lost $63.6 million. The Federal Reserve stepped in with a loan of $1.75 billion. (What happened after the bailout?)||$7.8 billion|
|●||New York City||1975||During the 1970s, New York City became over-extended and entered a period of financial crisis. In 1975 President Ford signed the New York City Seasonal Financing Act, which released $2.3 billion in loans to the city. (What happened after the bailout?)||$9.4 billion|
|●||Chrysler||1980||In 1979 Chrysler suffered a loss of $1.1 billion. That year the corporation requested aid from the government. In 1980 the Chrysler Loan Guarantee Act was passed, which provided $1.5 billion in loans to rescue Chrysler from insolvency. In addition, the government's aid was to be matched by U.S. and foreign banks. (What happened after the bailout?)||$4.0 billion|
|●||Continental Illinois National Bank and Trust Company||1984||Then the nation's eighth largest bank, Continental Illinois had suffered significant losses after purchasing $1 billion in energy loans from the failed Penn Square Bank of Oklahoma. The FDIC and Federal Reserve devised a plan to rescue the bank that included replacing the bank's top executives. (What happened after the bailout?)||$9.5 billion|
|●||Savings & Loan||1989||After the widespread failure of savings and loan institutions, President George H. W. Bush signed and Congress enacted the Financial Institutions Reform Recovery and Enforcement Act in 1989. (What happened after the bailout?)||$293.3 billion|
|●||Airline Industry||2001||The terrorist attacks of September 11 crippled an already financially troubled industry. To bail out the airlines, President Bush signed into law the Air Transportation Safety and Stabilization Act, which compensated airlines for the mandatory grounding of aircraft after the attacks. The act released $5 billion in compensation and an additional $10 billion in loan guarantees or other federal credit instruments. (What happened after the bailout?)||$18.6 billion|
|●||Bear Stearns||2008||JP Morgan Chase and the federal government bailed out Bear Stearns when the financial giant neared collapse. JP Morgan purchased Bear Stearns for $236 million the Federal Reserve provided a $30 billion credit line to ensure the sale could move forward.||$30 billion|
|●||Fannie Mae / Freddie Mac||2008||On Sep. 7, 2008, Fannie and Freddie were essentially nationalized: placed under the conservatorship of the Federal Housing Finance Agency. Under the terms of the rescue, the Treasury has invested billions to cover the companies' losses. Initially, Treasury Secretary Hank Paulson put a ceiling of $100 billion for investments in each company. In February, Tim Geithner raised it to $200 billion. The money was authorized by the Housing and Economic Recovery Act of 2008.||$400 billion|
|●||American International Group (A.I.G.)||2008||On four separate occasions, the government has offered aid to AIG to keep it from collapsing, rising from an initial $85 billion credit line from the Federal Reserve to a combined $180 billion effort between the Treasury ($70 billion) and Fed ($110 billion). ($40 billion of the Treasury’s commitment is also included in the TARP total.)||$180 billion|
|●||Auto Industry||2008||In late September 2008, Congress approved a more than $630 billion spending bill, which included a measure for $25 billion in loans to the auto industry. These low-interest loans are intended to aid the industry in its push to build more fuel-efficient, environmentally-friendly vehicles. The Detroit 3 -- General Motors, Ford and Chrysler -- will be the primary beneficiaries.||$25 billion|
|●||Troubled Asset Relief Program||2008||In October 2008, Congress passed the Emergency Economic Stabilization Act, which authorized the Treasury Department to spend $700 billion to combat the financial crisis. Treasury has been doling out the money via an alphabet soup of different programs. Here’s our running tally of companies getting TARP funds.||$700 billion|
|●||Citigroup||2008||Citigroup received a $25 billion investment through the TARP in October and another $20 billion in November. (That $45 billion is also included in the TARP total.) Additional aid has come in the form of government guarantees to limit losses from a $301 billion pool of toxic assets. In addition to the Treasury's $5 billion commitment, the FDIC has committed $10 billion and the Federal Reserve up to about $220 billion.||$280 billion|
|●||Bank of America||2009||Bank of America has received $45 billion through the TARP, which includes $10 billion originally meant for Merrill Lynch. (That $45 billion is also included in the TARP total.) In addition, the government has made guarantees to limit losses from a $118 billion pool of troubled assets. In addition to the Treasury's $7.5 billion commitment, the FDIC has committed $2.5 billion and the Federal Reserve up to $87.2 billion.||$142.2 billion|
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Scott Klein is a deputy managing editor. He leads the teams at ProPublica that work at the intersection of journalism and technology.
Chrysler’s Complicated Parentage: Who Owns It Now?
The Chrysler brand has used many of its nine lives to date, but the longtime American brand, which has had many adopted and foreign parents, is still alive. For now.
The Chrysler brand is currently part of FCA US, which is owned by Fiat Chrysler Automobiles. FCA is a dual-headquartered company with the Fiat side of the business based in Turin, Italy, and the former Chrysler Corp. operations based in Auburn Hills, Michigan.
Chrysler dates back to 1925, founded by Walter Chrysler, and it is still referred to as part of the Big Three or Detroit Three, referring to General Motors, Ford, and Chrysler.
Chrysler has teetered many times on the edge of a financial cliff. It was on the verge of bankruptcy in the late 1970s and was saved by government loan guarantees worth $1.5 billion that bought time until the release of a surprising savior in secret development: the minivan.
In 1998, in a deal worth $36 billion, Chrysler was acquired by Daimler-Benz of Germany, and the so-called alliance or "merger of equals" was named DaimlerChrysler. It was not a good fit, as the two cultures never really merged—though Daimler-sourced platforms helped make vehicles like the Chrysler 300C, Dodge Charger and Challenger, and Jeep Grand Cherokee much better than their predecessors—and Daimler sold Chrysler in 2007 to Cerberus, a private equity firm in the U.S., for just $7.4 billion.
The financial crisis in 2008 proved devastating for Detroit automakers. Chrysler laid off thousands of white-collar workers, going so far as to unscrew lightbulbs in their empty offices and stopped plowing snow off the top deck of unused parking garages to save money.
Plant closures, shift eliminations, and model line rationalizations were all planned with the loss of thousands more blue-collar workers. Work on future products was mostly curtailed. The few remaining resources were diverted to development of the next-generation Chrysler 300 full-size sedan and the new Jeep Cherokee.
On April 30, 2009, Chrysler filed for bankruptcy. General Motors filed for bankruptcy June 1, and while the government deemed GM too big to fail and had a reorganization plan for the company to exit bankruptcy, government officials were divided as to whether to use government money to save the smaller Chrysler.
In the end, government loans totaling more than $10 billion were provided, and when Chrysler exited bankruptcy, it had a patchwork of owners including the U.S. and Canadian governments, the United Auto Workers pension fund, and Fiat S.p.A. which agreed to supply some of its powertrains and other tech, and also share its CEO, Sergio Marchionne.
In the subsequent years, Fiat gradually acquired shares from the other stakeholders while paying down the government loans. By 2014, Fiat had acquired 100% of Chrysler, which became a full subsidiary of the Italian automaker. A new entity, Fiat Chrysler Automobiles, was formed. The Chrysler subsidiary was renamed FCA US. Marchionne remained CEO of the cross-Atlantic empire with a long list of automotive brands, including Chrysler.
Ironically, Chrysler was not considered one of FCA's core brands and did not get the same level of attention or resources as Jeep or Ram. Once a full-line car brand, Chrysler is now represented by just two models: The aging 300C, whose platform was designed more than a quarter-century ago, and the Pacifica minivan.
The future of the Chrysler brand remains uncertain with yet another parenting change in the works. In December 2019, FCA signed a memorandum of understanding with PSA (to which Chrysler Corporation offloaded its unprofitable European operations in 1979) for the two automakers to merge, with a tentative timetable of late 2020 or mid-2021 for the deal to close.
The still-to-be-named automaker will be the fourth largest in the world, and the expectation is some brands will go away. Chrysler could be one of them.
Government gives Chrysler $1.5 billion loan - HISTORY
The Chrysler Corporation was founded on June 6th, 1925 by Walter P. Chrysler. The company originates from the Maxwell Motor Company, which Walter P. Chrysler had joined in the early 1920s. In 1928, Chrysler Corporation expanded with the purchase of Dodge and the creation of the DeSoto and Plymouth divisions. Chrysler aquired the American Motors Corporation and its Jeep brand in 1987.
The DeSoto brand was dropped in 1961 and the Plymouth brand in 2001.
After a merger with Daimler-Benz Corporation in 1998, the company was part of DaimlerChrysler until 2007.
In 2007, the American private equity company Cerberus aquired an 80.1 % majority stake of Chrysler LLC, leaving a 19.9 % stake to the German Daimler AG.
Advanced and revolutionary engineering helped to move the company into second position ahead of Ford for U.S. sales in the late 1930s, a position it held for over a decade until 1949. Strong sales generated by its entry-level Dodge and Plymouth brands helped Chrysler survive the years of the Depression. Plymouth was one of only a few makes that actually increased sales during this era.
Chrysler was the first company to introduce four-wheel hydraulic brakes (1924) and rubber engine mounts (1926). It was also one of the first to take a scientific approach on aerodynamics - using the industry&rsquos first windtunnel -, weight-distribution, and suspension geometry with the Inline-8 powered Airflow.
The company&rsquos famous Hemi V8 made its debut in 1951 with a displacement of 5.4-liters (331 cu-in.) and 180hp. In the &lsquo60s, the Hemi grew to 7.0-liters (426 cu-in.) and powered Dodge and Plymouth muscle cars like the Dodge Charger and Challenger, Plymouth Hemi 'Cuda and RoadRunner. Despite only 11,000 engines produced for road use, the Hemi fuelled the muscle car wars of the &lsquo60s and became a major automotive icon.
The third generation Hemi V8 was released in 2002, when it was initially used for the Dodge Ram. Since then, the 5.7-liter V8 has been introduced on several performance cars in the Chrysler stable like the Chrysler 300C, Dodge Charger, Dodge Magnum, and Dodge Challenger.
In the 1960s, Chrysler was the first of the Big Three to introduce unibody, a construction technique offering improved rigidity, handling, and crash safety that is now standard on most passenger vehicles.
The 1970s proved a difficult time for Chrysler. The 1973 oil crisis and new government emissions standards presented a major challenge for American manufacturers with their large, powerful, and gas-guzzling vehicles. In need of smaller, more efficient vehicles, Chrysler acquired a 15% stake in Mitsubishi Motors in 1971 and began selling rebadged Mitsubishi models in the United States soon after. Nonetheless, high manufacturing costs due to dated factories and an uninspiring model lineup brought the company in financial trouble. In 1979, the Chrysler Corporation petitioned the U.S. government for $1.5 billion in loan guarantees to avoid bankruptcy.
With new CEO Lee Iacocca in charge, the manufacturing facilities were modernized and new models based on the K-car platform were well-received. Thanks to this new-found profitability, the loans could be repaid by the early &lsquo80s. Innovative vehicles like the modern Minivan helped the company thrive throughout the 1990s.
After the merger with Daimler-Benz in 1998, the company came into trouble again. After a cost-cutting program under new CEO Dieter Zetsche, Chrysler eventually returned to profitability for a short time. In 2007, the DaimlerChrysler sold an 80.1 % stake of the Chrysler Group to the American private equity firm Cerberus for $7.4 billion.
The announcement comes after months of conjecture that Chrysler, which is assembling one of its car lines at A.M.C.'s Kenosha, Wis., plant, would make an offer for the company, which endured heavy losses for years, causing a drain on Renault.
Chrysler and American Motors have a long history of cooperation, and the ties between the two have grown closer in recent years. All Jeeps and other A.M.C. four-wheel-drive vehicles use gearboxes made by a Chrysler division, and last year the two companies agreed to assemble some of Chrysler's older rear-wheel-drive cars in the Kenosha plant.
Renault, with financial problems of its own, had indicated a willingness in recent months to discuss a sale of A.M.C., but such talks were apparently disrupted by the assassination of Georges Besse, the head of Renault, in Paris last November.
Bennett E. Bidwell, vice chairman of Chrysler, said today that 'ɺny opportunity we had to do anything came to a grinding halt when Georges Besse was murdered.'' Mr. Besse's replacement, Raymond Levy, only recently resumed the discussions, Mr. Bidwell said. ''The deal came together this weekend, and we signed it this morning,'' he added.
The United Automobile Workers called the merger 'ɺ good match that potentially points the way to a more secure future for workers at both companies.'' The union, which had been in negotiations over work rule concessions at the Kenosha plant, said it would break off the talks for 30 days to allow the situation to clarify.
Chrysler will give Renault $200 million in 10-year notes bearing 8 percent interest and other payments ranging from zero to $350 million based on A.M.C.'s future performance. In addition, Chrysler will assume $767 million of A.M.C.'s debt and will pay $35 million for a half interest in the American Motors Financial Corporation.
Chrysler will also offer Chrysler stock valued at $4 for each American Motors share in public hands. Chrysler officials estimated that would be worth $522 million.
American Motors stock closed at $4.25 a share, up 75 cents, in today's trading on the New York Stock Exchange. The premium above the $4 offering price suggested to some analysts that Chrysler was in the market aggressively buying up stock, perhaps to give it a clear-cut majority when combined with the 46 percent Renault stake.
Chrysler officials said they plan to complete the takeover in June.
Analysts said Chrysler does not need all the plants A.M.C. operates, and they suggested that at least one of its four assembly plants would be sold or closed.
Chrysler and American Motors have been discussing producing Chrysler's subcompact Omni and Horizon models at Kenosha, which has been underutilized because of the collapse in demand for A.M.C's own subcompact car, the Alliance. However, those talks have been held up by Chrysler's insistence that it has to cut labor costs if it is to make such low-priced models profitably.
Mr. Bidwell said today that the company would probably have to decide whether to make the cars at Kenosha before taking over American Motors. The Belvidere, Ill., plant was shut recently for conversion to production of a higher-profit car.
Chrysler has tried to keep its costs under control since escaping from the specter of bankruptcy. But two of A.M.C.'s assembly plants - the Kenosha facility and the Jeep plant in Toledo - date from the turn of the century and have a history of high costs and poor labor relations.
The Standard & Poor's Corporation said that it was studying Chrysler's credit standing and that a downgrade in ratings was likely as a result of the implications of the A.M.C. acquisition. Including unfunded pension obligations and legal contingencies, largely as a result of rollover accidents in Jeeps, Chrysler is paying a total of $2 billion for American Motors, the rating company said.
Mr. Iacocca said Chrysler would continue to distribute Renault cars in North America through the A.M.C. dealer network and would work with the French company to develop new products.
American Motors recently introduced a compact sedan from Renault, the Medallion. It has also planned to introduce a mid-size car, the Premier. Company officials had said this broader product line would give it better prospects for profitability. OTHER MERGER PLANS SWEEP ECONOMY
USAir and Piedmont airlines agreed to merge.
Resorts International ac cepted an offer from Donald Trump, and Caesers World re- ceived a takeover bid.
Harper & Row received a takeover bid out of the blue.
Supermarkets General, owner of Pathmark, also re ceived an unsolicited offer.
First Boston plans to buy Allegheny International, which makes Sunbeam appliances.
The Bailout Record
In polite society, it is necessary to declare at regular intervals that whenever the government assumes control of a private corporation, it invariably makes things worse. Writing in the March 31 New York Times about the White House’s intervention in the ailing U.S. auto industry (“For U.S. and Carmakers, Many Potential Pitfalls“), David Sanger noted, “In the past, the United States government had briefly nationalized steel makers and tried to run the railroads, with little success.” But Sanger’s own piece made clear that we never got to find out how President Harry Truman’s 1952 seizure of the steel mills might have played out (he was trying to block a strike that he thought would hurt the U.S. war effort in Korea) because the courts ruled it unconstitutional. At the very least, Truman’s action delayed the strike by two months, a period longer than the strike itself, which ended after 53 days. Ten years later, President John F. Kennedy successfully flexed his executive muscle to block an inflationary price increase by U.S. Steel.
Sanger didn’t elaborate his railroad example, but in the March/April issue of the Washington Monthly, Phillip Longman points out that in 1976, the Ford administration took over the bankrupt Penn Central and five other railroads and turned them into the Consolidated Rail Corp. (more popularly known as Conrail), whose profitability under government ownership became an embarrassment to market fundamentalists in the Reagan administration. Eventually, the Gipper sold the thing for a mortifyingly high $1.65 billion. According to Longman, President Woodrow Wilson’s nationalization of the U.S. rail system during World War I took an industry that was a “financial and physical shambles” and restored it to health. The government’s creation of Amtrak in 1970 is a less happy story, both financially and as a model for passenger-rail service. But if Amtrak were to go out of business, it seems doubtful, outside the northeast corridor, that the unsubsidized private sector would replace Amtrak’s passenger service.
Do government bailouts typically succeed or fail? ProPublica, the nonprofit news agency, reviewed the history in September. Its findings suggest that, at least during the past three decades, the results have been fairly encouraging. (Note: Not all the numbers that appear below come from the ProPublica report. Where they don’t, I’ve provided links to the source.)
1971: The Nixon administration guaranteed $250 million in loans to the Lockheed Aircraft Corp. The government ended up netting the equivalent in 2008 dollars of $112 million in loan fees.
1974: The Nixon, Ford, and Carter administrations spent the equivalent of $7.8 billion in 2008 dollars to bail out Franklin National Bank, the 20 th -largest bank in the country, eventually selling off its assets for the equivalent of $5.1 billion in 2008 dollars.
1980: The Carter administration provided Chrysler with $1.5 billion in loan guarantees. Chrysler finished paying off the loans in 1983. The U.S government netted the equivalent in 2008 dollars of $660 million.
1984: The Reagan administration assumed an 80 percent share of Continental Illinois National Bank and Trust Co. This remains the “most significant bank failure resolution in the history of the Federal Deposit Insurance Corporation,” according to an official FDIC history. In 1991 the government sold off Continental Illinois at a loss to the FDIC of $1.1 billion. This was the bailout that bequeathed the catchphrase “too big too fail.”
1989: The first Bush administration bailed out the savings-and-loan industry at a cost to the taxpayer equivalent to $220 billion in 2008 dollars.
2001: After 9/11, the second Bush administration lent the airline industry $10 billion and gave it $5 billion outright. A stock warrant provision in the deal netted Treasury somewhere between $140 million and $330 million.
There’s no reason to believe any of these transactions took a bad situation and made it worse. The evidence suggests that the government tends to lose money when it bails out banks and to gain money when it bails out other sorts of companies. Conceivably, though, the public (as opposed to the taxpayer) loses more money when a big bank fails than when another sort of company fails because the person in question might have money deposited or invested directly in that bank or because the bank’s collapse might bring down the entire economy. What this record doesn’t indicate is that the government has no clue how to manage a troubled asset. Might the Obama administration still screw up in trying to save the auto industry? Sure. But don’t assume history wills it so.
Chrysler won't repay bailout money
NEW YORK (CNNMoney.com) -- Chrysler LLC will not repay U.S. taxpayers more than $7 billion in bailout money it received earlier this year and as part of its bankruptcy filing.
This revelation was buried within Chrysler's bankruptcy filings last week and confirmed by the Obama administration Tuesday. The filings included a list of business assumptions from one of the company's key financial advisors in the bankruptcy case.
Some of the main assumptions listed by Robert Manzo of Capstone Advisory Group were that the Treasury would forgive a $4 billion bridge loan given to Chrysler in the closing days of the Bush administration, a $300 million fee on that loan, and the $3.2 billion in financing approved last week by the Obama administration to fund Chrysler's operations during bankruptcy.
An Obama administration official confirmed Tuesday that Chrysler won't be repaying the loans, though a portion of the bridge loan may be recovered by Treasury from the assets of Chrysler Financial, the former credit arm of the automaker which is essentially going out of business as part of the reorganization.
"The reality now is that the face value [of the $4 billion bridge loan] will be written off in the bankruptcy process," said the official, who added that the 8% equity stake that Treasury will be receiving as part of the company's reorganization is meant to compensate taxpayers for the lost money.
"While we do not expect a recovery of these funds, we are comfortable that in the totality of the arrangement, the Treasury and the American taxpayer are being fairly compensated," said the official.
The company filed for bankruptcy Thursday as part of a deal with the federal government, unions, some lenders and Italian automaker Fiat to keep the company from being shut down.
The Canadian government also agreed to kick in about $900 million in bankruptcy financing. According to the filings, Chrysler's advisor assumes that this loan will be forgiven as well.
The Obama administration official said that other money being made available to Chrysler, such as the $4.7 billion that will go to the company as it exits bankruptcy, will be a loan that the government expects to be paid back. In addition, that loan will be secured by company assets, unlike the previous loans to Chrysler.
According to the filing, the company's financial advisor also foresees the need for an additional $1.5 billion loan from the Treasury Department by June 30, 2010.
Lori McTavish, a spokeswoman for Chrysler, said some of the assumptions made by the company have changed since its bankruptcy filing on April 30. But she could not say specifically if the company still hoped for the additional federal loan in 2010.
"The content of the document needs to speak for itself. We are simply not in a position to comment," she said.
Bob Corker, R-Tenn., who took the lead among Senate Republicans in challenging the auto bailout last December, said he was disappointed but not surprised that Chrysler would not be paying back the money.
"I've known for sometime that with the capital structure of the company and the situation it was in, we would not be paid back," he said. "There were several secured lenders ahead of us, and they're not getting most of their money."
Major banks and hedge funds that loaned Chrysler $6.9 billion were offered only $2.25 billion to settle those loans by Treasury. While major banks accepted the offer, hedge funds rejected it, forcing the company into bankruptcy.
Typically lenders who loan bankrupt companies funds to operate during reorganization go to the front of the line on getting the money they are owed repaid. But Corker said Chrysler's dire financial situation left it no chance to even pay back the bankruptcy financing.
He said the fact that Chrysler isn't paying what is owed should be a warning that the $15.4 billion loaned to General Motors by Treasury since December, as well as any bankruptcy financing it might need, is also at risk.
Founder of the Chrysler Corporation and American industrial magnate, Walter P. Chrysler, started out as a machinist’s apprentice, to eventually become the General Motors vice president of operations in 1919 and owner of his own company in 1925. In 1920 he undertook the restructuring of the Willys Overland and Maxwell auto companies. Chrysler then produced the Chrysler Six car, which set an industry standard in 1924. The Maxwell company was restructured by 1925 and renamed the Chrysler Corporation. The company went on to produce the Chrysler Four, Series 58, which drew more than one million people to the showrooms in the first four days. Even though the company endured many financially troubled years, it managed to pull through them with thoughtful financing and careful production cuts. The Chrysler Corporation also plays a major roll in military defense by producing many of the Army's tanks and missiles, as well as other non-auto production. The corporation is now part of the Daimler-Chrysler Auto Group. Walter Chrysler Walter P. Chrysler was destined at an early age to become a major player in the automobile industry. He was a man so fascinated with the automobile that he bought one, a Locomobile Phaeton, then precede to disassemble and reassemble the vehicle before he even learned to drive it. With that in mind, it isn't surprising that he became one of the "Godfathers" in the race for superior automotive technology. When Chrysler was 17, he began a feverishly motivated career in the railroad industry as a machinist's apprentice. After earning his master mechanic's papers in 1899, nine years later Chrysler became the youngest man (33) ever to hold the position of superintendent of Motive Power for the Chicago Great Western Railway. A few years later, Chrysler again became enthralled by the automobile industry and quickly become the manager of Buick Motor Car Company in Flint, Michigan. When General Motors (GM) incorporated Buick as its first automotive division in 1916, Chrysler was promoted to division president. By 1919, he was the Vice President of General Motors, retiring financially independent a year later — at the age of 45. Chrylser Corporation is formed In 1921, with only a year of retirement under his belt, Walter Chrysler entered the field again, being named chairman of the dwindling Maxwell Motor Car Company, Inc. It didn't take long for Chrysler to get Maxwell back on its feet. He formed a management committee and restructured the company with the development of the Chrysler Six*. Maxwell Motor Car set an industry sales record by January 1924 — sales of the Chrysler Six reached 32,000 units. The Chrysler Corporation was incorporated in Delaware on June 6th, 1925, as a successor to Maxwell Motor Cars. Chrysler was now president of his newly formed car company. By 1929, Chrysler had gained momentum, becoming one of the "Big Three" leading automotive manufacturers. The company endured the Great Depression of the ཚs through cost-cutting measures — never cutting back on research and development. When World War II got underway, Chrysler would show the world how much "research and development" the company had really done. World War II When the nation became "up-in-arms" with another war, Chrysler put forth most of its resources towards the production of military defense vehicles, as well other projects. The company's mass-manufacture of the 32-ton Sherman M4 tank helped the Allies gain momentum against the unrelenting Axis powers. Chrysler developed and produced some 18,000 tanks. By war's end, the company had also supplied the Allies with around 500,000 Dodge trucks, and more than $3.4 billion worth of military equipment. Following the Allied victory, civilian cars and trucks were in high demand. Between 1947 and 1950, Chrysler endeavored to meet public demand by building an additional 11 plants. The Korean War and space technology In 1950, when hostilities erupted in Korea, Chrysler again stepped up to the plate to supply the U.S. military with various munitions and equipment, including tanks, military trucks and air raid sirens. On November 3, 1950, Chrysler Corporation appointed K.T. Keller as its new board chairman. The company then found itself in the "race for space," signing a contract with the U.S. Army to build Jupiter Space Exploration Missiles. In 1952, Chrysler played a major role one of America's first successful space flights, which carried two chimps 350 miles above the Earth. During the 1950s, Chrysler not only stayed involved in government contracts, but also kept the general public's attention by developing and improving such innovations as the "Hemi" V-8 engine, and four-wheel, self-energizing hydraulic disc brakes. Troubled times for the corporation The mid-1970s were difficult times for Chrysler Corporation. Severe inflation, gasoline shortages, high interest rates, political insecurities, and consumer uncertainty forced Chrysler into a financial downward spiral. Also, American consumers were demanding smaller, more fuel-efficient cars, and the Japanese were the first to respond. The company needed help, and fast. Its first attempt at recovery involved restructuring from the inside. That entailed finding new management. Lee A. Iacocca was hired as chairman in October 1975. Having 32 years of management experience with Ford Motor Company, Iacocca attempted to meet the challenge of rebuilding Chrysler's desperate operations. Iacocca reduced costs, restructured management and recruited new executives to deal with its serious financial problems. With all of those measures accomplished, it just wasn't enough to tow the company out of the hole. Chrysler was forced to ask for help from the federal government in the form of loan guarantees. On January 7th, 1980, President Jimmy Carter signed the Chrysler Corporation Loan Guarantee Act into law. The new act provided Chrysler $1.5 billion in federal loan guarantees that helped to reverse Chrysler Corporation's fortunes. Back in the saddle In 1983, with help from the federal government, and with the production of the newly developed minivan, Chrysler once again gained public interest. The Dodge Caravan and Plymouth Voyager became Chrysler's most popular vehicles, and the company was well on its way back to economic health. To this day, despite ravenous domestic and international minivan competition, Chrysler has succeeded in dominating the U.S. minivan market. In 1991, Lee Iacocca dedicated the Chrysler Technology Center, a 3.5 million square-foot mega-structure, to be the company's primary auto development and engineering site. By 1992, Chrysler had introduced or improved upon some of the highest-quality vehicles, even by today's standards. Such vehicles as the Jeep Grand Cherokee, Dodge Viper, Dodge Stratus, and Dodge Intrepid helped Chrysler to succeed. A mighty merger In 1998, the German automaker Daimler-Benz and Chrysler merged — the largest of its kind in history — in a $38 billion stock deal that was a high-profile example of the world economy's globalization. As of 1999, its 440,000 employees built everything from cars and trucks to Airbuses, trains and ocean liner engines.
Today, Daimler-Chrysler Corporation has the lowest production cost, highest profit-per-vehicle in all of the car and truck manufacturing industry. It is the world's fourth-largest automaker.
*America's first medium-priced, high-styled automobile.
Weill Cornell Medicine Launches $1.5 Billion We’re Changing Medicine Campaign with More Than $750 Million in Gifts
Weill Cornell Medicine launched its $1.5 billion We’re Changing Medicine campaign on Thursday, June 17, 2021. From left: Robert S. Harrison, Cornell University Board of Trustees chairman, Martha E. Pollack, Cornell University president, Jeffrey Feil, campaign co-chair and Weill Cornell Medicine Board Fellow, Jessica M. Bibliowicz, chairman of Weill Cornell Medicine’s Board of Fellows, Sanford I. Weill, campaign co-chair and Board of Fellows chairman emeritus, Joan Weill, Dr. Augustine M.K. Choi, dean of Weill Cornell Medicine, and Dr. Steven J. Corwin, president and CEO of NewYork-Presbyterian. Credit: Studio Brooke.
NEW YORK (June 17, 2021) — Building on a legacy of groundbreaking advances in medicine and science, Weill Cornell Medicine today launched an ambitious $1.5 billion campaign—with more than $750 million already raised—that will harness emerging biomedical innovations to bring exemplary care to patients and create enduring change in medicine.
The We’re Changing Medicine campaign is the largest in Weill Cornell Medicine’s history and its first campaign in decades to advance and synergize all three institutional missions: to care, discover and teach. Exemplifying the Cornell University mission of doing the greatest good, the new campaign will instill this essential value in the next generation of physicians and scientists, who will shape an innovative and equitable future of medicine.
Powering the We’re Changing Medicine campaign is $215 million in foundational gifts from several of the institution’s most longstanding benefactors. In 2019, during the campaign’s quiet phase, a lead gift from The Starr Foundation, chaired by Weill Cornell Medicine Board of Fellows member Maurice R. Greenberg, in partnership with gifts from The Weill Family Foundation, created by Joan and Sanford I. Weill, campaign co-chair and Board of Fellows chairman emeritus, and other generous donors that together totaled $160 million, established a game-changing scholarship program that provides debt-free education to medical students in financial need.
A $55 million gift in 2020 from Board of Fellows Vice Chair and campaign Co-Chair Jeffrey Feil and the Feil family will support the construction of a new student residence hall four blocks from the institution’s main campus, which will further enhance Weill Cornell Medicine’s student experience.
A Campaign to Change Medicine
The We’re Changing Medicine campaign will reimagine the basic science landscape invest in bench-to-bedside research discoveries, including a precision health enterprise that focuses on personalized disease prevention and treatment and support a diverse and gifted student body.
“Innovation has always been a driving force for our institution, setting new standards for clinical care, research and education that have made a lasting impact for patients around the globe,” said Weill Cornell Medicine Board of Fellows Chairman Jessica M. Bibliowicz. “We are profoundly grateful to our incredible donors for sharing and supporting our health care ideals, because philanthropy is the engine by which we can realize transformational change. Together we are changing medicine.”
“The COVID-19 pandemic has demonstrated just how important medicine is to protect and enhance the health of our patients,” said Dr. Augustine M.K. Choi, the Stephen and Suzanne Weiss Dean of Weill Cornell Medicine and provost for medical affairs of Cornell University. “Our accomplished physicians and scientists are committed to treating the whole patient for their whole lifespan, applying cutting-edge science and a personalized and evidence-based approach to prevent and treat disease. Because of our generous donors, Weill Cornell Medicine is uniquely positioned to meet today’s health care challenges and change medicine—because we can and must.”
“Enhancing the health care patients receive is one of the most tangible ways we can effect change in society,” said Cornell University Board of Trustees Chairman Robert S. Harrison. “This auspicious milestone will embolden Weill Cornell Medicine’s distinguished doctors, researchers and trainees to continue their vital mission to change medicine.”
“Throughout its illustrious history, Cornell has championed radical ideas and pioneering approaches that can make the biggest impact for the largest number of people,” said Martha E. Pollack, president of Cornell University. “Weill Cornell Medicine exemplifies our mission to develop solutions that meet tomorrow’s most pressing challenges, and the We’re Changing Medicine campaign will ensure long-lasting advances in science and medicine.”
“Weill Cornell Medicine’s world-class physicians, scientists and students are making tremendous strides every day to ensure that patients around the globe receive the best medical care,” said Board Fellow Sandy Weill. “Leveraging our strengths and sharing our talents with the world, we’re changing medicine for the better, but there is always more work to do. By further investing in what makes us special, we can realize our new vision of health care. I am so excited about what we can—and must—accomplish together with this new campaign.”
Changing Medicine Through Innovation
The COVID-19 pandemic has served as a profound testament to the ways in which medicine can transform lives, how scientific breakthroughs can have powerful clinical implications, and how health care disparities can disproportionally affect vulnerable populations. With an unrivaled culture of cross-disciplinary collaboration, Weill Cornell Medicine has long championed innovative solutions to the most intractable health issues facing society. Underscoring its commitment to compassionately care for the whole patient for their whole life, Weill Cornell Medicine is intensifying its investments in its world-class institutes and laboratories to create brand-new facilities and updated biomedical research space at its Belfer Research Building and main campus buildings along the east side of 1300 York Ave. These research enhancements will empower Weill Cornell Medicine’s scientists to accelerate their efforts to create life-saving treatments and cures.
Through the We’re Changing Medicine campaign, Weill Cornell Medicine is investing in cutting-edge technology and new biomedical approaches—from genomics and data science to artificial intelligence and machine learning—that illuminate the precise origins of disease and the most optimal ways to personalize treatments. Harnessing advanced research techniques that explore the human genome, as well as observations about how demographics, social influences and lifestyle choices influence well-being, Weill Cornell Medicine will create a robust precision health enterprise that will holistically evaluate the individual factors that underlie disease development. By understanding the drivers of disease, Weill Cornell Medicine physicians and scientists, including those based in the Meyer Cancer Center, and the Englander Institute for Precision Medicine, will be able to discern each person’s individual health risk, create personalized prevention strategies and help avert the occurrence of severe disease. Further investments in regenerative medicine and cellular therapeutics will rapidly accelerate the discovery of new treatments and therapies, enabling patients to benefit from the latest medicines should they need intervention. Data generated from precision health approaches will enable investigators to spot patterns and trends—and potentially uncover the answers to the most vexing health care questions.
Weill Cornell Medicine’s reputation for clinical excellence is rooted in a longstanding commitment to providing comprehensive, holistic care throughout an entire lifespan, beginning with the youngest of patients. In collaboration with the Drukier Institute for Children’s Health, Weill Cornell Medicine is expanding its children’s research efforts to drive new discoveries that will set the stage for a healthy life.
The We’re Changing Medicine campaign will also enable the institution to enrich its focus on women’s health and infectious diseases, as well as diseases and disorders that affect the heart, brain and metabolic system, ensuring the translation of the latest research insights into next-generation treatments and therapies that can transform the health of patients around the world.
Changing Medicine Through Empowerment
Ensuring a healthier, more innovative future of health care is entwined with cultivating the next generation of exceptionally talented physicians and scientists. The institution’s expanded scholarship program, established in 2019 through the generous support of the Weill Family Foundation, The Starr Foundation, the Robert Dow family and a myriad of other donors, exemplifies Weill Cornell Medicine’s commitment to changing medicine by empowering future physicians and scientists to pursue their career aspirations unencumbered by the burden of repaying educational debt. To encourage equity in health care, the program defrays the institution’s cost of attendance for all medical students who qualify for financial aid, replacing student loans with scholarships that cover tuition, housing and other living expenses. Offering debt-free medical education has fostered a more diverse student body: Applications for Weill Cornell Medical College’s Class of 2024 from students underrepresented in medicine rose to 29 percent, compared with 20 percent the previous year. To ensure this program continues in perpetuity, the institution will need to raise another $40 million to fully fund its scholarship endowment.
“Since its founding in 1955, The Starr Foundation has donated hundreds of millions of dollars to scholarship funds around the world, but our grant to Weill Cornell is the largest in our history,” said Board Fellow Greenberg, chairman of The Starr Foundation. “We are pleased to help Weill Cornell students who otherwise would graduate from medical school with significant debt.”
Weill Cornell Medicine’s commitment to enhancing the student experience is equally reflected in the construction of a $264 million dynamic new residence hall near Weill Cornell Medicine’s main campus. Generously supported by a $55 million gift from Board of Fellows Vice Chair and campaign Co-Chair Feil and the Feil family, the proposed 148,000-square-foot residence hall, with expected occupancy in 2025, will nearly double the institution’s residential living space. It will feature spacious apartments and modern amenities that will support students’ physical and emotional well-being. The Feil family is a steadfast champion of Weill Cornell Medicine’s education mission, generously establishing the Feil Family Student Center in 2017 with a $12.5 million gift, as well as providing significant support for student scholarship and many other facets of the Weill Cornell Medicine mission.
“As medical and graduate students pursue their biomedical training, it is critical to provide them with a nurturing living and learning environment,” Board Vice Chair Feil said. “We are thrilled to support this new residence hall, which will encourage a culture of innovation, collegiality and collaboration to inspire our future leaders to keep changing medicine.”