Back in 2009, when the automotive industry was in crisis, the Canadian government gave $1.1 billion to Chrysler to help the company stay afloat, an outstanding amount which, with interest, has nearly doubled. Except that now, according to the CBC, it’s been quietly written off. Fiat Chrysler made $4.3 billion in profits last year.
The story is a built convoluted, but it doesn’t speak well for government transparency in Canada.
From the CBC:
The write-off, among the largest ever for a taxpayer-funded bailout, is buried in a volume of the 2018 Public Accounts of Canada, tabled in Parliament on Friday.
The reference contains no explanation for the write-off, identifying neither the business that received the loan nor the sector of the economy.
But 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.
“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,” said John Babcock of Global Affairs Canada, the department responsible.
“This amount is reflected in the Public Accounts.”
In total, the CBC reports, the Canadian government spent about $13.7 billion on the auto bailout, $3.7 billion of which were loans that were never repaid. The U.S., meanwhile, spent $85 billion during the bailout, with a loss of around $9 billion, it was later revealed. Given that perspective, writing off this loan doesn’t seem that unexpected, but it’s remarkable that we’re still dealing with the aftereffects of the auto industry bailout, ten years on.
Also: It’s worth nothing that the crisis was primarily caused by shifts in consumer taste, as gas became very pricey and smaller, more fuel-efficient cars—which have lower profit margins than SUVs and pickup trucks—became more in demand. That caught the North American automotive industry flat-footed, as it had shifted so many resources to what the industry thought was an insatiable demand for gas-guzzling trucks and SUVs.