# Chrysler cost Canada $2.6 billion



## james4beach (Nov 15, 2012)

The government has written off a $2.6 billion loan given to Chrysler in 2009 under the Harper govt. According to the article, this was among the largest taxpayer-funded bailouts ever made. https://www.cbc.ca/news/politics/ch...-edc-bailout-taxpayer-wudrick-milke-1.4871648

This also shows that earlier media releases, such as this one from Chrysler cheering that they've repaid most of the loan, can be misleading. It turns out that was repayment of _another_ loan, but the original loan remained non performing. The article points out that bailout disclosure has been very poor.


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## sags (May 15, 2010)

It was $1.1 billion plus interest since 2009. It was a good deal for taxpayers considering the jobs created and the taxes paid over the past 9 years.

I remember people recommending the government let the auto manufacturers go bankrupt. What a mistake that would have been.


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## Just a Guy (Mar 27, 2012)

Funny, had Harper written off the debt, people would be screaming about corporate welfare but, because Trudeau wrote it off, it’s just considered welfare and thus a good thing. 

Looks like the liberals just found another way to do wealth transfer.

I wonder what will happen when the people with the wealth feet tired of supporting those without.


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## andrewf (Mar 1, 2010)

Just a Guy said:


> Funny, had Harper written off the debt, people would be screaming about corporate welfare but, because Trudeau wrote it off, it’s just considered welfare and thus a good thing.
> 
> Looks like the liberals just found another way to do wealth transfer.
> 
> I wonder what will happen when the people with the wealth feet tired of supporting those without.


Wasn't the welfare in giving a loan with little prospect of being repaid? Writing off is just acknowledging reality.


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## Koogie (Dec 15, 2014)

“A billion here, a billion there, and pretty soon you’re talking real money.”


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## AltaRed (Jun 8, 2009)

andrewf said:


> Wasn't the welfare in giving a loan with little prospect of being repaid? Writing off is just acknowledging reality.


Indeed. The old Chrysler to which the loan was made no longer exists. Fiat Chrysler is what rose from the ashes when Fiat came in to buy the assets but not (all) the debt. What probably is not reported/said is that had Canada not stepped in like the USA did, Chrysler Canada would have ceased to exist and all production would have gone south and the jobs with it... not that the FCA, from a North American perspective, is really any more than the Ram truck and Jeep lines.... and maybe the minivan. Everything else is pretty much non-existent. This loan stuff has to stop some day.


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## Eder (Feb 16, 2011)

Pratt & Whitney has garnered $3.3 billion from Industry Canada since 1970

Bombardier’s corporate welfare began, at least federally, in 1966 when it received its first disbursement of $35 million from the federal department, Industry Canada. In the decades since, various Bombardier iterations received over $1.1 billion. 

Damn.


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## Just a Guy (Mar 27, 2012)

Bombardier and the liberal handouts have gone hand in handout every term they had. Conservatives tended not to do it and cut the funding. Yet the conservatives are always blamed for corporate welfare.


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## sags (May 15, 2010)

double post


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## sags (May 15, 2010)

The GM plants pay $1 billion a year in taxes to different levels of government. 

Bailouts can be very good for government revenues.


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## peterk (May 16, 2010)

sags said:


> The GM plants pay $1 billion a year in taxes to different levels of government.
> 
> Bailouts can be very good for government revenues.


For sure, that's not the point though, is it? Why can't they be compelled to repay the loan now that they're swimming in cash?


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## AltaRed (Jun 8, 2009)

peterk said:


> For sure, that's not the point though, is it? Why can't they be compelled to repay the loan now that they're swimming in cash?


IF you are referring to Chrysler, that corporation no longer exists. The loan was not granted to the successor entity FCA. Convenient, eh?


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## lonewolf :) (Sep 13, 2016)

sags said:


> It was $1.1 billion plus interest since 2009. It was a good deal for taxpayers considering the jobs created and the taxes paid over the past 9 years.
> 
> I remember people recommending the government let the auto manufacturers go bankrupt. What a mistake that would have been.


 The economy is like everything else & has x amount of energy period. Energy can not be created or destroyed. If the government creates a job in one area they take a job away from the private sector. Best to use that which is in limited supply wisely i.e., the private sector does not waist energy @ the same rate as government.


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## peterk (May 16, 2010)

AltaRed said:


> IF you are referring to Chrysler, that corporation no longer exists. The loan was not granted to the successor entity FCA. Convenient, eh?


Convenient is an understatement.

You guys can say matter of factly that this was a normal financial action occurring. Bankruptcy, write off debt, re-org under new entity. Done. Nothing more to do.

The missing piece is that the government is not a bank, it's the government. The typical citizen sees the various actions of the government and recognizes that it is all powerful - to compel you to pay anything, to restrict any action, to evict you from your own property...Yet apparently this time, "all potential avenues for recovery" were exhausted. That's a laughable assertion.


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## sags (May 15, 2010)

peterk said:


> Convenient is an understatement.
> 
> You guys can say matter of factly that this was a normal financial action occurring. Bankruptcy, write off debt, re-org under new entity. Done. Nothing more to do.
> 
> The missing piece is that the government is not a bank, it's the government. The typical citizen sees the various actions of the government and recognizes that it is all powerful - to compel you to pay anything, to restrict any action, to evict you from your own property...Yet apparently this time, "all potential avenues for recovery" were exhausted. That's a laughable assertion.


It actually is a little more complicated than a simple bailout or bankruptcy.

Initially, the government said they weren't going to bail out the auto makers, but apparently they didn't know about the Ontario Pension Guarantee.

The financial issue surrounded pension shortfalls, and it was pointed out that if the auto makers went bankrupt, the government would have to fund the first $1000 of any retirees.

That would mean thousands of retirees collecting $1000 a month each from the government for life. 

The auto makers had paid premiums for decades as required to belong to the plan and the fund didn't have the money.

So the government changed their mind and initiated a buyout and a lot of the money went to shore up their pension plans.

The auto makers had to agree they would relinquish membership in the fund and release all liabilities of the fund. For GM the government received shares.

The Harper government sold the shares to make it look like they balanced the budget before the election, which was shortsighted in my opinion.

It ends up the government writes off $1.2 billion of their loan plus the accumulated interest, but as pointed out already the auto makers provide billions in revenue to the government every year.

I don't know why people would say the bailout was a bad deal. The detractors of bailouts for companies who can recover and thrive were wrong then and now.

Governments at every level provide financial assistance to attract and keep business. If you don't play the game you sit on the sidelines and watch.


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## AltaRed (Jun 8, 2009)

I do recall some of those details. The lesson here is to either require fully funded pension plans at all times by legislation, or better yet, get rid of DB plans altogether prospectively. Underfunded corporate pension liabilities have been the bane (haunting) of the taxpayer for far too long. The public service needs to be next (getting rid of DB pension plans that is on a prospective basis).

Certain businesses might be worth fighting for pitting provinces against provinces, states against provinces, etc. Others are not. Obviously depends on complicated economics. I think FCA will eventually abandon Canada altogether from a manufacturing (or at least assembly) perspective. They are just too fragile to survive among the big players with much of their product dated in technology.


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## lonewolf :) (Sep 13, 2016)

Wage & price controls resulted in the huge pensions. Since wages could not be raised to get the best employees benefits were used.


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## lonewolf :) (Sep 13, 2016)

AltaRed said:


> I do recall some of those details. The lesson here is to either require fully funded pension plans at all times by legislation, or better yet, get rid of DB plans altogether prospectively. Underfunded corporate pension liabilities have been the bane (haunting) of the taxpayer for far too long. The public service needs to be next (getting rid of DB pension plans that is on a prospective basis).


 It was not that long ago the trend was to take over a company just so the buyer could get their hands on the pension money with no care of running the company


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## twa2w (Mar 5, 2016)

Eder said:


> Pratt & Whitney has garnered $3.3 billion from Industry Canada since 1970
> 
> Bombardier’s corporate welfare began, at least federally, in 1966 when it received its first disbursement of $35 million from the federal department, Industry Canada. In the decades since, various Bombardier iterations received over $1.1 billion.
> 
> Damn.


The bbd money is only that from Industry Canada. Total federal and provincial monies under various guises and departments total closer to 5 billion over the years.


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