Case #733.0

Chrysler Corporation (A): The Bid

Publication Date: January 01, 1984
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As its financial troubles worsened through the late 1970s, the Chrysler Corporation pinned its hopes on governmental assistance. This four-part case examines the events from Chrysler's request for federal aid in 1979, to the receipt of said aid one year later. In Part A, sympathetic legislators carry Chrysler's message to the Carter White House. The initial pitch--for a tailored tax subsidy, cast as compensation for the burdens that government regulation placed on Chrysler--was quickly rejected by government officials loath to set such a precedent. In Part B, the Carter administration, pressed by the auto workers' union and the mayor of Detroit, agreed to support legislation providing a federal guarantee of Chrysler's debt. But as the legislation moved through Congress, senators anxious to protect the public's stake pressed to make the loan guarantees conditional on management reforms and additional sacrifices by Chrysler's workers, creditors, suppliers, and other constituents. Part C outlines the agreement reached by Congress and the White House, which required Chrysler to come up with specified contributions from seven other sources before it could tap $1.5 billion in government-backed loans. Part D begins with the delivery of Chrysler's first $800 million of guaranteed loans in mid-1980.

Other Details

Case Author:
Robert Reich and John D. Donahue
Faculty Lead:
Robert Reich and John D. Donahue
Pages (incl. exhibits):
United States
Funding Source:
Center for Business and Government at Harvard's Kennedy School