During the recession, both of these U.S. automakers and two auto financing companies, Chrysler Financial and GMAC, received federal financial assistance from the Bush and Obama Administrations. Reasoning that Chrysler was not financially strong enough to be an independent company, the Obama Administration reached an agreement with Fiat to take over the management of New Chrysler in a bankruptcy reorganization; Fiat also received a 20% equity ownership stake in the new company. In May 2011, the loans directly owed by New Chrysler were repaid; in July 2011, Fiat purchased the U.S. government's remaining interests in the company, thereby ending direct government involvement with New Chrysler. At that time, $24.8 billion in assistance was provided to the four companies, the first of what would eventually total nearly $80 billion in assistance through the Troubled Asset Relief Program (TARP). The authorities within TARP were very broad, and when Congress did not pass specific auto industry loan legislation, the Bush Administration turned to TARP for funding, arguing that to not provide any assistance to Old Chrysler (and Old GM) would make the recession much worse. After it received the federal loan guarantee, Old Chrysler revamped its operations and developed several new vehicle lines, including the minivan. In testimony in the Senate, Old Chrysler Chairman and CEO Robert Nardelli explained the reasons the company sought federal aid in December 2008:
We are here because of the financial crisis that started in 2007 and accelerated at the end of the second quarter of 2008. Chrysler's Restructuring Through Bankruptcy

When it made the initial TARP loans to Chrysler, the Bush Administration required Old Chrysler to submit a viability plan in February 2009 as a precondition for further federal assistance. During April 2009, Old Chrysler worked with its stakeholders to devise a restructuring plan that would meet the requirements of the Auto Task Force and avert bankruptcy. While the company reached tentative agreements with most stakeholders, a group of creditors would not agree to the proposal. Old Chrysler could only avoid bankruptcy if all of its creditors approved the settlement, so the disagreement prompted a filing in bankruptcy court on April 30. The largest equity owner in New Chrysler in 2009 was the United Auto Workers' health care retirement trust, known as a VEBA (Voluntary Employee Beneficiary Association). The bankruptcy court decision outlined steps that Fiat could take to raise its equity stake in New Chrysler by meeting three performance benchmarks, including production at a U.S. plant of both a new fuel efficient engine and a new vehicle with fuel efficiency of at least 40 miles per gallon. Fiat took additional steps in 2011 to buy additional equity in New Chrysler. This transaction was completed on July 21, 2011. In return for this $10.9 billion, the government is received a total of approximately $9.6 billion:
$5.5 billion in loan repayments; $1.9 billion in recoupment from the bankruptcy process of Old Chrysler; $1.66 billion in interest and other fees; and $560 million paid by Fiat for the U.S. government's New Chrysler common equity and rights. This $1.3 billion figure, however, does not fully include a number of other cost factors that one might include, such as the cost to the government to borrow the funds which it then provided to Chrysler, a premium to compensate the government for the riskiness of the loans, and the cost to the government in managing the assistance given.
The recent recession and accompanying credit crisis posed severe challenges for all automakers, but especially for General Motors and Chrysler. Executives of both companies testified before congressional committees in the fall of 2008 requesting federal bridge loans. Legislation that would have provided such financial assistance passed the House of Representatives but did not pass the Senate. In lieu of that assistance, the Bush Administration turned to the Troubled Asset Relief Program (TARP), a $700 billion program that was enacted in October 2008 to shore up the financial system and prevent spillover to the broader economy.
The Bush Administration used TARP to provide both automakers and two auto financing companies with nearly $25 billion in loans, and told the automakers to submit viability plans if they were to seek additional aid. Chrysler submitted such a plan in February 2009, outlining how it planned to restructure its operations, including a strategic alliance with Fiat. Some questions were raised as to whether Chrysler could survive as a free-standing company, even with government assistance, because of its relatively small size. The Obama Administration rejected Chrysler's initial viability plan as insufficient and gave the company 30 days to develop a new plan in an effort to avert bankruptcy. Working with the Administration's Auto Task Force, Chrysler developed a restructuring plan that included a revised labor agreement, cost reductions from dealers and suppliers, reductions in creditor claims, and limitations on executive compensation.
Despite agreement with most stakeholders, all creditors did not agree to the restructuring, prompting Chrysler to file for bankruptcy in April 2009. With much of the restructuring plan in place, however, the bankruptcy court was able to quickly approve the proposals, including a creditor agreement. Many of the assets of Old Chrysler were sold to a new legal entity, Chrysler Group LLC, whose largest equity owner was the United Auto Workers' retiree medical trust fund, owning 67.7%. Fiat took a management role in the new company and a 20% equity stake, which was deemed central to the survival of New Chrysler.
Under new Fiat management, New Chrysler revamped its fleet of automobiles and light trucks, and has been profitable in 2011 and 2012. Its commercial and financial success accelerated its plans for repaying federal assistance. In May 2011, New Chrysler repaid a $5.9 billion debt to the U.S. government that was not fully due until 2017. On July 21, 2011, Fiat purchased the U.S. government's common equity interests and options in New Chrysler for $560 million. In addition, the ownership of New Chrysler significantly changed as Fiat met a series of performance benchmarks that allowed it to raise its equity stake to 58.5% at the end of 2011.
Of the $10.9 billion that was loaned to Chrysler through TARP, not all of it has been, or will be, recouped by the U.S. Treasury. Following the transaction that closed on July 21, 2011, the U.S. government has no remaining financial interest in New Chrysler. While $9.6 billion of the assistance given to the company has been recouped, an approximate $1.3 billion shortfall remains. New Chrysler has no legal responsibility to make up this shortfall.