The Chrysler Corporation Loan Guarantee Act of 1979 is a federal statute enacted to provide federal loan guarantees to the Chrysler Corporation in response to the company's financial crisis. Signed into law by President Jimmy Carter, the act authorized up to $1.5 billion in federal loan guarantees, enabling Chrysler to avoid bankruptcy.[1]
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| Long title | An Act to authorize loan guarantees to the Chrysler Corporation for financial assistance. |
|---|---|
| Enacted by | the 96th United States Congress |
| Effective | January 7, 1980 |
| Citations | |
| Public law | Pub. L. 96–185 |
| Statutes at Large | 93 Stat. 1324 |
| Legislative history | |
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The bill, formally known as H.R. 5860, was sponsored by Representative James Blanchard (D-MI).[1] The House of Representatives then passed the bill by 271-136 on December 13, 1979.[2] On December 21, 1979, the Senate voted 53-44 to pass the bill.[3] President Carter signed the bill into law on January 7, 1980.[4]
Background
editIn the late 1970s, American automakers struggled to keep up with the evolving market, which left Chrysler–one of the “Big Three” American automobile manufacturers–at the verge of bankruptcy. Chrysler’s bankruptcy was projected to result in a significant number of job losses, reduced federal and local revenues, and an end to the automobile industry in America. Chrysler’s president at the time, Lee Iacocca, with the plan of preventing the company's failure, approached Congress and secured a bailout from the federal government. Congress later passed the Chrysler Corporation Loan Guarantee Act of 1979, which re-stabilized the company, signed and approved by President Jimmy Carter in January of 1980, authorized $1.5 billion in federal loan guarantees to the Chrysler Corporation, making it the largest government bailout of a private company at the time.[5]
Provisions
editThe Chrysler Corporation Loan Guarantee Act of 1979:
- Authorized up to $1.5 billion in federal loan guarantees.[1][6]
- Required Chrysler to implement cost-cutting measures, which included the sale of assets, reforms and labor concessions.[7]
- Established the Chrysler Loan Guarantee Board, an overseeing body that consisted of officials from the Department of Treasury, the Federal Reserve, and the Comptroller General of the United States.[8]
- Protect the taxpayers’ interests as well as minimizing any risk of financial loss that the federal government could endure.[9][10]
- Chrysler was required to provide collateral, which included liens on many such company assets, which in time would reduce the likelihood that taxpayers in any event would be subjected to paying the cost of Chrysler’s failure.[9][11]
- Chrysler shall report on a regular basis to Congress along with the board, ensuring transparency throughout the entirety of the recovery process.[8]
References
edit- ^ a b c H.R.5860 - 96th Congress (1979-1980): Chrysler Corporation Loan Guarantee Act of 1979 | congress.gov | library of Congress. (n.d.). https://www.congress.gov/bill/96th-congress/house-bill/5860
- ^ Congressional Record. December 13, 1979. "House Vote on H.R. 5860." https://www.govinfo.gov/content/pkg/GPO-CRECB-1979-pt27/pdf/GPO-CRECB-1979-pt27-5-1.pdf
- ^ "Senate, by 53 to 44, Backs Chrysler Aid; Interim Help Loses Conference on Bill Due Today." The New York Times, 20 Dec. 1979. https://www.nytimes.com/1979/12/20/archives/senate-by-53-to-44-backs-chrysler-aid-interim-help-loses-conference.html
- ^ By STEVEN R. WEISMAN Special to The New York Times. (1980, Jan 08). Carter signs chrysler aid bill. New York Times (1923-) Retrieved from https://www.proquest.com/newspapers/carter-signs-chrysler-aid-bill/docview/121169379/se-2
- ^ "Massive Trade Bill Sails Through Congress." 1979. Congressional Quarterly Almanac 1979. 293.
- ^ Gregg, Gail. 1979, December 22. "Chrysler Aid Cleared; Congress Goes Home." Congressional Quarterly Weekly Report. 2871.
- ^ Wilson, Paul H. Jr., and Peter L. Borowitz. 1984. "Working out with the Government: The Chrysler Loan Guarantee Program." Journal of Law and Commerce 4(1): 19-44. HeinOnline.
- ^ a b Bickley, M. James. December 22. 2008. "Chrysler Corporation Loan Guarantee Act of 1979: Background, Provisions, and Cost.” Congressional Research Service.
- ^ a b Freeman, Brian M.; Mendelowitz, Allan I. (Summer 1982). "Program in Search of a Policy: The Chrysler Loan Guarantee". Journal of Policy Analysis and Management. 1 (4): 443–453. doi:10.2307/3324774.
- ^ Gregg, Gail. 1979, August 18. "Hill Leaders Pledge Prompt Consideration of Chrysler Aid." Congressional Quarterly Weekly Report. 1695.
- ^ Turkel, Gerald. 1982. “Situated Corporatist Legitimacy: The 1980 Chrysler Loan Guarantee.” Research in Law, Deviance, and Social Control 4: 165-189.