By Paul Ingrassia
The opinions expressed are his own.
History repeated itself this week, more or less. Back in 1983 Chrysler, recovering from virtual bankruptcy three years earlier, paid off $1.2 billion in government-guaranteed loans seven years before they were due. On Tuesday Chrysler, recovering from actual bankruptcy in 2009, repaid $7.6 billion in loans made directly by the U.S. government six years before the due date. Chrysler refinanced its debt with private money.
Who would have thought two years ago that Chrysler would survive longer than, say, Charlie Sheen on the airwaves or Osama bin Laden on the lam? American and Canadian taxpayers might not ever recover their full investment in Chrysler because the value of the stock that they bought in the company, and still own, remains uncertain. But the bailouts of Chrysler and General Motors helped prevent the Great Recession from becoming Great Depression II, and stand as President Barack Obama’s only outright domestic-policy success to date.
The auto bailout also could serve as a template for addressing the budget deficit and entitlement reform, the current pressing issues in Washington. In rescuing Chrysler and GM, the Obama administration spread pain among workers, dealers, managers, shareholders, bondholders and the taxpayers. It was shared sacrifice, not entirely voluntary, but it worked.
The question for Chrysler now is whether history will continue to repeat itself. Months after the 1983 loan repayment, the company launched its revolutionary new minivan, prompting Car and Driver magazine to stray from its mission of reviewing cars and recommend buying the company’s stock. That turned out to be better investment advice than most people got from their brokers.
The minivan’s success sent Chrysler’s stock soaring more than 20-fold, highlighting a recovery under Lee Iacocca that became one of the most compelling corporate comebacks in history. Can Sergio Marchionne, the CEO of both Chrysler and Fiat, which now owns 46% of Chrysler, turn the company’s current survival saga into anything approaching that degree of success?