ABC News' Bianna Golodryga, Jay Shaylor, Charlie Herman, and Matthew Jaffe report: The Treasury Department turned down Chrysler Financial's request for additional government funds because company executives refused to sign waivers for legal claims relating to changes in executive compensation restrictions, a government watchdog has revealed.
"As Treasury reported to us, Chrsyler Financial sought additional funding," Neil Barofsky, Special Inspector General for the Troubled Asset Relief Program, told ABC News Monday. "They had basically used up the $1.5 billion that was lent to them…and came back and asked for more money."
"Treasury asked as a condition that the top 25 executives sign waivers reflecting the new executive compensation restrictions that were in the stimulus package. And Chrysler Financial executives refused to sign the waivers. So Treasury, in response, declined their request for additional funding."
On Tuesday morning, Barofsky's office will release a quarterly report on the $700 billion TARP.
A Treasury spokesperson says the Auto Task Force continues to carefully monitor "financing situations for both GM and Chrysler."
"Unlocking credit and helping consumers get access to affordable auto loans is an important component of our efforts to stabilize the financial system," a spokesperson for Treasury told ABC News in a written statement. "As part of that effort, the Auto Task Force continues to monitor closely the financing situations for both GM and Chrysler. This is an issue that Chrysler and its stakeholders will need to address as part of this process and any potential deal."
"Chrysler Financial has determined that it has adequate private capital funding to cover the short-term needs of our dealers and customers and as such, no additional TARP funding is necessary at this time," a Chrysler Financial official said. "As such, executives have not been presented with any new demands with regard to executive compensation. As a TARP recipient, the Company remains in full compliance with current executive compensation requirements."
- Bianna Golodryga, Jay Shaylor, Charlie Herman, and Matthew Jaffe