Yesterday, Chrysler Financial became the first financial institution to repay all the TARP loans it borrowed from the U.S. Treasury.
While Chrysler Financial repaid its government TARP loans, the company merely swapped its debt for other, lower-cost government loans. Chrysler Financial took a $1.5 billion loan from the TARP program, and used a new $1.26 billion loan from the Term Asset-Backed Securities Loan Facility (TALF) to pay off the loan.
“The original TARP loan contained provisions that increased Chrysler Financial’s costs over time, providing motivation for the company to pay off the loan as quickly as possible,” said Chrysler Financial in a statement.
Chrysler Financial originally took the TARP loans in January in an effort to free up loans and leasing to help Chrysler stay afloat. Chrysler Financial reports that the TARP funds were used to fund more than 85,000 consumer loans for vehicle sales.
Unlike other TARP recipients, Chrysler Financial never mixed the TARP funds with its balance sheet or operating cash. The funds were kept in a separate, special purpose account.
Source: The Detroit News