Chrysler Quotes
Chrysler had gotten into cash flow difficulty and could not borrow enough money to keep open until they could pay their bills. Their credit was not good enough for most lenders. Iacocca approached the Federal Government and asked for a Federal loan guarantee of about $1 billion. Some members of Congress and public critics were outraged that a private company might get a Government bail out in the form of a loan guarantee. Extremists of both parties did not want to set such a precedent of using Federal money to assist private corporations. Iacocca was quite defensive about asking for what seemed to be a precedent setting request. However, he then found out that it would set no precedent at all. Chrysler got the loan, paid all its creditors, paid back the loan with interest, and the company did not go under, but did well for a while.
Contrast this statment with Charles Wilson's regarding General Motors and the country.
He had already decided to save General Motors which was much larger and more critical to the national economy. The normal capitalistic broken down and there were no private firms that were willing to invest, control and continue the companies at any price. There were 1 million immediate jobs at stake with GM plus the collapse of the American Auto Industry including dealers and suppliers. With Chrysler, there were only 300,000 immediate jobs at stake. Ironically, one of the major reasons for trying to save both companies was the fact that Summers team had discovered that the companies were very badly managed. If the bailout could be leveraged to force radical management change and reform, the chances of success would have been much greater than if the companies had been well managed but were still losing money rapidly. The policy decision was brilliantly successful. The reformed auto companies quickly became profitable, and the taxpayer loans were paid back early with interest to and profits to the taxpayers. All those jobs and an iconic American industry not only were preserved but became very profitable and strong and in the final analysis, it did not cost the taxpayers even one dollar. Ford was in less trouble, but if the other two companies failed, the Ford suppliers would mostly fail, and Ford also would have gone down.
While Murphy may have believe this, his company would profit immensely of Chrysler would fail. 28 years later it was General Motors that required the bailout that was much larger than the Chrysler one. The GM executives had gotten over their philosophical objections.
