Treasury Announces Agreement to Exit Remaining Stake in Chrysler Group LLC

WASHINGTON – Today, the U.S. Department of the Treasury announced that it reached an agreement to sell to Fiat Treasury’s 6 percent fully diluted equity interest in Chrysler Group LLC and Treasury’s interest in an agreement with the UAW retiree trust.  After the completion of this transaction, Treasury will have fully exited its TARP investment in Chrysler Group LLC.

The expected total proceeds to Treasury from this transaction are $560 million. Fiat agreed to pay Treasury $500 million for Treasury’s 98,461 shares of Chrysler. Treasury also held the right to proceeds above a certain threshold received by the UAW retiree trust from the trust’s sale of Chrysler equity, as well as a right to purchase all of the shares retained by the UAW retiree trust for a certain threshold amount – which Fiat will purchase for $75 million. Treasury will receive 80 percent of the proceeds ($60 million) from that $75 million, while the Government of Canada will receive 20 percent of the proceeds ($15 million).

“As Treasury exits its investment in Chrysler, it’s clear that President Obama’s decision to stand behind and restructure this company was the right one,” said Treasury Secretary Tim Geithner. “Today, America’s automakers are mounting one of the most improbable turnarounds in recent history – creating new jobs and making new investments in communities across our country.” 

Fiat held a call option to purchase Treasury’s interest in Chrysler.  This option was exercisable for the twelve months following the repayment of the Treasury loan provided to Chrysler Group LLC. On May 24, 2011, Chrysler Group LLC repaid $5.1 billion in TARP loans and terminated its ability to draw a remaining $2.1 billion TARP loan commitment. On May 27, 2011, Fiat notified Treasury of Fiat’s irrevocable commitment to exercise its option to purchase Treasury’s 6 percent fully diluted equity interest in Chrysler. Pursuant to the Call Option Agreement, the price for the 6 percent fully diluted equity interest in Chrysler was determined based on negotiation between Fiat and Treasury.

Treasury committed a total of $12.5 billion to Chrysler under TARP’s Automotive Industry Financing Program (AIFP). Following the closing of today’s transaction, Chrysler will have returned more than $11.2 billion of that amount to taxpayers through principal repayments, interest, and cancelled commitments.  Treasury is unlikely to fully recover the difference of $1.3 billion. Treasury has the right to recover proceeds from the disposition of the liquidation trust associated with the bankruptcy of Old Chrysler, but does not expect a material recovery from those assets.

Lazard served as Treasury's exclusive financial advisor on today’s transaction. The closing of this transaction is subject to customary regulatory approvals.

Federal Reserve Annual Report to Congress

Report on operations of the Board during the year. Provides minutes of Federal Open Market Committee meetings, financial statements of the Board and combined financial statements of the Reserve Banks, financial statements for Federal Reserve priced services, information on other services provided by the Reserve Banks, directories of Federal Reserve officials and advisory committees, statistical tables, and maps showing the System's District and Branch boundaries. (Read on)

Get the REAL Facts about Raising the Debt Limit

By Zach Foster

A recent press announcement from the Federal Reserve would lead Americans to believe that failing to raise the debt limit “would have catastrophic economic consequences.”  Despite the glossiness that the economists hired by the Federal Reserve Board of Governors that might make a “slight increase” seem like a sensible thing to do, and even downright responsible, IT IS NOT TRUE.  Failing to raise the debt limit would not have catastrophic consequences at all.  Any “catastrophe” appearing to result from suspension of payments by the federal government for salaries or operations that would occur, if Congress took the high road and enforced it this time, would NOT be a consequence of enforcing the debt limit; any and all catastrophe would be consequences of the last seventy-eight times the debt limit was raised.

The federal government cannot continue to incur debt any longer, especially at the rate of eleven trillion dollars of debt incurred under the Obama administration.  If things aren’t going to be paid for, then it is up to Congress to cut federal expenditures and to do so immediately.  Congressman Ron Paul (R-TX) has repeatedly recommended across-the-board cuts so that all expenditures are affected equally.  Yes, it will be painful, but it has to be done.  Someday large portions of the national debt may be called in by the loaners (foreign banks and foreign governments), and America’s inability to pay will make hundred dollar bills useful only as fuel for fires and toilet paper for private-area hygiene.

Congressman Paul has also repeatedly called for the abolition of the Federal Reserve, because the existence of that entity is parasitic to the national economy and only grows the federal debt.  The Fed wants the federal government debt to grow.  Some might ask why anyone would want this.  The answer they seek is that the Federal Reserve is a bank that loans money out, even to the federal government, and the Fed is running quite a racket.  Every dollar that the federal government speaks into existence and is printed or minted by the Treasury Department is actually being loaned to the federal government by the Federal Reserve, and the Fed charges interest.  Therefore, not only is it bad enough that the constant printing of money makes the dollar worth even less, but the government is already in debt to a bank before it even gets to print its own money.  The amount owed is ever increasing, since interest rates accumulate and compound the balance owed.

The debt limit has been raised seventy-eight times since the year 1960, which means this willful self-impoverishment has only gone on for sixty-one years.  If the country managed to survive 184 years without greatly raising the debt ceiling, then it can manage going more time without allowing greater debt.

Get the Facts: Raising the Debt Limit

A Press Announcement from the Federal Reserve

The debt limit is the total amount of money that the United States government is authorized to borrow to meet its existing legal obligations, including Social Security and Medicare benefits, military salaries, interest on the national debt, tax refunds, and other payments. The debt limit does not authorize new spending commitments. It simply allows the government to finance existing legal obligations that Congresses and presidents of both parties have made in the past.  

Failing to increase the federal debt ceiling would have catastrophic economic consequences. It would cause the government to default on its legal obligations – an unprecedented event in American history. That would precipitate another financial crisis and threaten the jobs and savings of everyday Americans – putting the United States right back in a deep economic hole, just as the country is recovering from the recent recession.  

Congress has always acted when called upon to raise the debt limit. Since 1960, Congress has acted 78 separate times to permanently raise, temporarily extend, or revise the definition of the debt limit – 49 times under Republican presidents and 29 times under Democratic presidents.  In the coming weeks, Congress must act to increase the debt limit. Congressional leaders in both parties have recognized that this is necessary.

Treasury: U.S. Still Projected to Exhaust Borrowing Authority on August 2nd

WASHINGTON – Today, Mary Miller, Assistant Secretary for Financial Markets at the U.S. Department of the Treasury, issued the following statement reaffirming the projected date on which the United States will exhaust borrowing authority under the statutory debt limit.  Treasury has committed to providing Congress with updates each month of when extraordinary measures taken to keep the nation from defaulting will be exhausted.

“On the basis of careful analysis of actual and projected revenues and expenditures, the Treasury Department continues to project that the United States will exhaust its borrowing authority under the federal debt ceiling on August 2, 2011.  Secretary Geithner continues to urge Congress to avoid the catastrophic economic and market consequences of a default crisis by raising the statutory debt limit in a timely manner.”

United States Mint to Begin Taking Orders for American Eagle Silver Bullion Coins at its San Francisco Facility

WASHINGTON - The United States Mint announced today that, effective May 31, it will fulfill orders for American Eagle Silver Bullion Coins with coins minted at its San Francisco facility, in addition to its facility at West Point. 

Demand for American Eagle Silver Bullion Coins remains at unprecedented high levels.  The United States Mint at West Point has been the sole producer of the coin for several years.   Adding production at the United States Mint at San Francisco provides manufacturing flexibility across the bullion and numismatic product lines to meet customer needs.    

The United States Mint conducted American Eagle Silver Bullion Coin trial strikes at San Francisco in March.  The San Francisco facility will use the same manufacturing process and packaging currently used for coins minted at West Point.  There will be no visible difference between the coins, and they do not have a mint mark.  The United States Mint has the capacity to mint up to several hundred thousand coins per week in San Francisco.

The overall allocation methodology for distribution to Authorized Purchasers will continue to be done weekly and will include West Point volumes in the allocation calculation.

The United States Mint, created by Congress in 1792, is the Nation's sole manufacturer of legal tender coinage and is responsible for producing circulating coinage for the Nation to conduct its

trade and commerce.  The United States Mint also produces proof, uncirculated and commemorative coins; Congressional Gold Medals; and silver, gold and platinum bullion coins.

Agencies Release List of Distressed or Underserved Nonmetropolitan Middle-Income Geographies

The federal bank and thrift regulatory agencies today announced the availability of the 2011 list of distressed or underserved nonmetropolitan middle-income geographies where revitalization or stabilization activities will receive Community Reinvestment Act (CRA) consideration as "community development."

"Distressed nonmetropolitan middle-income geographies" and "underserved nonmetropolitan middle-income geographies" are designated by the agencies in accordance with their CRA regulations. The criteria for designating these areas are available on the Federal Financial Institutions Examination Council (FFIEC) website. The designations reflect local economic conditions, including triggers such as unemployment, poverty, and population changes.

As with past releases, the 2011 list will incorporate a one-year lag period for geographies designated as distressed or underserved in 2010, but not designated as such in the 2011 release. Geographies subject to this one-year lag period are eligible to receive consideration for community development activities for 12 months after publication of the 2011 list.

The 2011 list and lists from previous years can be found on the FFIEC website, along with information about the data sources used to generate the list of distressed or underserved geographies.