April 28, 2009

Chrysler Financial seen as vital

The U.S. Treasury Department is pushing to find a fix for Chrysler Financial, which is deemed a critical component of the third largest U.S. automaker.

A solution under consideration is the purchase of Chrysler Financial by GMAC, General Motors' financial firm, but finding support for the plan has been difficult, The Washington Post reported Tuesday.

The Federal Reserve would require a waiver to rescue a company that is not a bank, the Post said.

Saving the company is vital to our success, said Dale Early, owner of Deerbrook Forest Chrysler and Jeep in Kingwood, Tex.

Both GMAC and Chrysler Financial have been weakened by the economic downturn.

GMAC, however, turned itself into a bank holding company last year to take advantage of government financing and has received $6 billion in federal aid. It is the stronger of the two, but hasn't enough money to buy Chrysler Financial without more help, the Post said.

Chrysler has until May 1 to engineer deals with creditors and Fiat of Italy in order to sustain its own federal line of credit. But it is expected to declare bankruptcy Thursday, the newspaper said.