Government drops pay restraints on Chrysler Financial

Chrysler Financial’s executive compensation is no longer subject to review by Kenneth Feinberg, the Treasury’s pay czar for companies that sought refuge under the government’s Troubled Asset Relief Program.

A May payment of $1.9 billion from Cerberus Capital Management allowed Chrysler Financial to eliminate the government’s debtor-in-possession loans, freeing it from government oversight. The payment does not equal the total amount provided by the Treasury but it is significantly more than the government expected to recover.

When the loans were granted, Cerberus had indicated it intended to wind down Chrysler Financial and, as reported on Allpar, the one-time captive auto finance company had made less than $100 million in new loans this year. However, Cerberus has retained consultants to study the feasibility of re-entering the automotive lending market and may change Chrysler Financial’s name.

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