U.S. Lawmaker: Bailout Shouldn't Help Foreign Carmakers

Chrysler LLC should be required to return billions of dollars in government loans if Italian carmaker Fiat takes a majority stake in the company, a New Jersey senator said Thursday. Sen. Bob Menendez, a Democrat from New Jersey, urged President Barack Obama to prevent the auto industry bailout from being used to help foreign automakers. The Bush administration provided Chrysler with $4 billion in federal loans earlier this month to help the company reorganize and the Auburn Hills, Michigan-based automaker is seeking another $3 billion. Chrysler's finance arm received $1.5 billion in government loans last week. Chrysler announced Tuesday a nonbinding agreement with Fiat in which the Turin, Italy-based carmaker would take a 35 percent stake in Chrysler in exchange for access to a lineup of more fuel-efficient cars. Officials have said the Chrysler-Fiat deal, which is subject to regulatory approvals, could be expanded in the future to give Fiat a majority stake in Chrysler. Read more. In a related article, Chrysler LLC and Fiat SpA both showed signs Thursday that their financial plight is mounting, just days after they announced an alliance that would give the Italian auto maker a 35% stake in Chrysler. In Milan, Fiat posted a 71% plunge in fourth-quarter earnings, a drop in sales and a jump in debt. The company has been in discussions with banks about borrowing as much as €5 billion ($6.46 billion) because of the downturn in its business, said people familiar with the matter. Meanwhile, Chrysler disclosed to dealers major and costly customer incentives aimed at clearing out a glut of unsold vehicles, in some cases at a loss. Read more. (Subscription required.)