The name of the game for elite corporations these days is how to get your hands on free money or TARP. As indicated in the article below, a bit of light has been shed on the most unusual Chrysler-Fiat combination and it appears both sides prefer to have the light dimmed, very dimmed.

Also, a few nice quotes out of Geithner's grilling earlier this morning:

Sen. Charles Grassley of Iowa, the senior Republican on the panel, noted that as Treasury secretary, Geithner would be in charge of the Internal Revenue Service and should therefore come under especially tight scrutiny on the issue of paying his personal taxes.

He suggested the danger of "sweeping the under the rug" Geithner's tax problems in a rush to get him confirmed.

Republican Jim Bunning of Kentucky told Geithner his failure to pay the taxes fully until just before his selection by Obama was announced was "hard to explain to my constituents who pay these taxes on a regular basis."

Regards - VHF

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Chutzpah, thy name is Chrysler

Rolfe Winkler

January 21, 2009 – 10:26 am

Two days ago, Chrysler worked out a venture with Italy’s Fiat SpA to make itself “viable” and thus worthy of the second, $3 billion tranche of government loans offered last month. It’s an odd deal. WSJ (emphasis mine):

"On Tuesday, Chrysler and Italy’s Fiat confirmed they had reached an agreement on an alliance that would give Fiat a 35% stake in the American company. Fiat would not put any cash into Chrysler but would provide technology and vehicles that Chrysler could build and sell in the U.S.

But the deal becomes binding only if Chrysler gets $3 billion more in financial help from Washington, said the people familiar with the terms of the agreement.

A Fiat spokesman declined to comment on the matter. Chrysler spokeswoman Shawn Morgan wouldn’t comment on Fiat’s demand, but said Chrysler believes the $3 billion in loans are necessary for its viability."

Faced with bankruptcy, Chrysler stakeholders resort to gimmicks rather than make hard choices necessary to save the company. Like working out a deal to drastically reduce employee benefits. But the unions would probably rather let Chrysler go than get rid of their benefits. Even if Chrysler goes under, taxpayers (via PBGC) would become directly responsible for those benefits.

Last month Chrysler got $4 billion of taxpayer loans and the promise of $3 billion more should the automaker devise a realistic plan to remain “viable” prior to February 17th. (Add to that the $1.5 billion Treasury loaned to Chrysler Finance last week.)

And according to the article, if Fiat meets certain operational goals within 12 months, it would have an option to buy an additional 20% of Chrysler for a mere $25 million.

Cerberus, the private equity shop that owns 80.1% of Chrysler, has been unwilling to contribute additional capital of its own. Why would they give away the business to Fiat for so little cash? I imagine because it would also get them out from under Chrysler’s mammoth liabilities, which the new majority owners would become responsible for.