ANNOUNCEMENT 31 Mar 2018

In March 2018, Canada wrote off a loan that was extended to automaker Chrysler during the 2009 financial crisis.   

NUMBER OF INTERVENTIONS

1

  • 1 harmful
  • 0 neutral
  • 0 liberalising

SOURCE

Government of Canada, Receiver General, “Public Accounts of Canada 2018-Volume III” page 132. Available at: https://www.tpsgc-pwgsc.gc.ca/recgen/cpc-pac/2018/pdf/2018-vol3-eng.pdf

CBC News, Politics, “Liberal government writes off $1.1B US loan to Chrysler, plus interest, docs show”. Available at: https://www.cbc.ca/news/politics/chrysler-auto-loan-canada-account-write-off-edc-bailout-taxpayer-wudrick-milke-1.4871648

Driving.ca, Auto-News, “Canadian government writes off $2.6-billion bailout for Chrysler”. Available at: https://driving.ca/auto-news/news/canadian-government-writes-off-2-6-billion-bailout-for-chrysler

Inception date: 31 Mar 2018 | Removal date: open ended

Capital injection and equity stakes (including bailouts)

In a budget document (2018 Public Accounts of Canada) tabled in Parliament on October 19, 2018, the Government of Canada wrote off a loan for automaker Chrysler valued at CAD 2.6 billion (USD 1.99 billion). According to the budget document the write-off is made from the accounts of Export Development Canada (EDC), Canada’s Export Credit Agency. The official document didn’t include any information about the beneficiary firm, the date that the loan was provided, or the reasons for the write-off. However, many news reports stated that the write-off occurred in March 2018, and it was a non-performing loan extended to Chrysler during the 2009 financial crisis to keep the company afloat.

According to a news report from CBS News: Concerning the 2018 Public Accounts of Canada, “CBC News has confirmed the money was lent on March 30, 2009, to Chrysler LLC by the federal government – a non-performing loan that grew with interest over the following nine years. The loan was made by the Harper government, in co-operation with the Ontario government.” The news report also included a quote from John Babcock of Global Affairs Canada, the department responsible from EDC: "After exhausting all potential avenues for recovery, a $1.125 billion US principal plus accrued interest write-off in respect of 'Old Chrysler' occurred in March."

Chrysler Group was severely affected by the 2009 financial crisis and eventually was split into two: “Old Chrysler” and “New Chrysler”. Old Chrysler went into bankruptcy. New Chrysler on the other hand was bought out by Italian automotive manufacturer Fiat, leading to the creation of the Fiat Chrysler Automobiles (FCA) holding company in 2014.

 

AFFECTED SECTORS