Chrysler Financial to Cut 350 Jobs

From the Wall Street Journal:

Chrysler Financial, once the financial arm of the new Chrysler Group LLC, will dismiss roughly 350 employees, or 9% of its work force.

More than 100 of the layoffs are effective Tuesday and will come primarily out of the company's sales teams. Another 240 will come at the end of August, when a customer call center in Kansas City, Mo., will be closed, the company confirmed.

Chrysler Financial, which effectively ran out of money to lend this spring, cut 2% of its workforce earlier this year and is in the process of winding down its operations.

In an online broadcast to employees Tuesday, top executives at the company told employees to expect even more layoffs in the future, said people familiar with the matter.

Chrysler Financial is effectively in liquidation at this point, as GMAC LLC takes over most of CFC's credit operations.

Click here for the formal announcement from Chrysler Financial.

Tags: chrysler, credit-crisis

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Comment by Larry Yang on July 1, 2009 at 12:44pm: Chrysler Finance just brought an TALF eligible auto ABS deal to market today. It is their first in 2009.

Seems that the main business for Chrysler Financial going forward will be servicing the existing 45 B auto loan portfolio which gradually pays off.

Comment by JJ Hornblass on July 1, 2009 at 12:59pm: Agreed.

What kind of demand was there for the deal, Larry? Pricing?

Comment by Larry Yang on July 1, 2009 at 3:26pm: Not sure about the demand as we are not involved. DB is the lead dealer. Based on the pricing guidance, the spread for two-year bond is 170 bps, 30 bps wider than that BoA deal.

Comment by JJ Hornblass on July 1, 2009 at 3:36pm: OK, thanks.

Comment by Chuck Carboni on July 15, 2009 at 10:30am: Chrysler Financial Repays Its $1.5 Bln TARP Loan
Dow Jones

DETROIT (Dow Jones) -- Chrysler Financial said Tuesday it reimbursed the federal government $1.5 billion, becoming the first auto-sector company to pay off the loans provided by the U.S. Department of Treasury.
The former primary lending arm of Chrysler LLC received the loan on Jan. 16 through the Treasury Department's Troubled Asset Relief Program. The money was plowed into new consumer incentive programs and used to fund 85,000 consumer loans for the purchase of Chrysler cars and pickup trucks. Chrysler Financial had five years to pay off the loan.
The reimbursement still offers little insight into the future of Chrysler Financial, which was replaced by GMAC LLC as the primary lending unit for Chrysler in May as part of the auto maker's bankruptcy reorganization process. Chrysler Financial continues to write some loans and work with dealers. Last month, it dropped its application to become an industrial bank, which would have given it access to more liquidity.
The company is looking to extend $24 billion in short-term financing, which was raised last summer through a group of 22 banks including Citigroup Inc. (C), JPMorgan Chase & Co. (JPM) and Royal Bank of Scotland PLC (RBS). The financing matures on July 31.
The other auto-related companies that have received federal aid include $50 billion paid to General Motors Corp. (GM); $34 billion given to Chrysler and $12.5 billion awarded to GMAC LLC.
Last week, Chrysler Financial secured $1.26 billion through a consumer loan-backed loan deal under the Federal Reserve's Term Asset-Backed Securities Loan Facility, or TALF program. The Federal Reserve introduced the program in March to boost the securitization market, which had ground to a virtual halt during the height of the credit crunch. Investors get loans at attractive rates through TALF to buy the newly created deals sold by companies.
Issuance of asset-backed securities has exceeded $40 billion so far in the second quarter, according to data provider Dealogic. The bulk of the issues have been financed using the Federal Reserve loans.
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