Review of Chrysler’s 1979 bailout: NPR Audio – Iacocca bowing to Carter (PHOTO) – Home

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Iacocca bows to Jimmy Carter after being bailed out by Washington.

Chrysler’s bailout in 1979 was $ 1.5 billion, which, adjusted for 3 decades of inflation, would equate to around $ 5 billion today. It’s nothing. GMAC held on it is the insolvent hand and Paulson, Geithner and Rattner coughed $ 18 billion in ’08 -’09, and for a broken down car lender Not less.

Source – Time Magazine

The Chrysler Rescue in 1979

Questions about whether a quick federal solution is fair and will be sufficient The Carter administration decided last week that now is the time to come to the aid of the country’s most besieged large corporation. After weeks of mounting pressure for a federal solution to Chrysler Corp.’s growing problems, Treasury Secretary G. William Miller has produced – and Jimmy Carter has approved – a government bailout. It was designed to prevent the country’s No.3 automaker (1978 sales: $ 13.6 billion) from falling into bankruptcy that could have put thousands of people out of work and rocked America’s financial markets.

Beamed Chrysler Chairman John Riccardo “We are extremely encouraged. This fits the bill.”

In his first public act to the Treasury, Miller laid out the ideological ground rules for federal aid and warned other struggling businesses not to expect similar aid. Such assistance, he said, “is neither desirable nor appropriate, being contrary to the principle of free enterprise”. But Chrysler was an unusual exception, he added, in which the administration “recognizes that there is a public interest in maintaining [its] jobs and the maintenance of a strong and competitive national automotive industry.

Despite Chrysler’s immediate enthusiasm, the Treasury package fell short of what the company was looking for. That doesn’t give Chrysler the billion-dollar cash aid that some analysts say is the minimum it needs to keep going until the end of next year.

This is the first time Chrysler can hope to make money from the new generation of compact front-wheel drive cars currently being developed by President Lee Lacocca, who will replace Riccardo as chief executive by the end of this year. .

The government rejected Chrysler’s argument that it would receive help in the form of federal tax refunds or immediate relief from the obligation to meet costly car safety, environmental and mileage standards. new. Miller said the first idea would amount to an “interest-free, unsecured cash advance on taxpayer funds.” Instead, he recommended government loan guarantees that will need to be approved by Congress and “will total considerably less than $ 1 billion.”

Aid to the Treasury was estimated to be between $ 500 million and $ 750 million over a limited period. With these guarantees, the company would be able to borrow from private bankers who would otherwise deny Chrysler as unacceptably high risk. In the event of a default, taxpayers would remain in possession of the bag, and the government would likely have to take Chrysler back and hope to sell its vital parts.

Wary of Congress’ reluctance to bail out Lockheed in 1971 and New York City in 1975 – lawmakers ultimately voted for both programs by small margins – the Carter administration laid down basic conditions that Chrysler will have to meet.

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NPR AUDIO – 1979 Chrysler Bailout

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