The Washington Post has a nice exclusive today on Chrysler Financial turning down a $750 million government loan because its executives didn’t want to abide by pay restrictions.
But the paper spends half the story backpedaling on its scoop, giving lots of space to company spokespeople and anonymous “industry officials” who implausibly deny that pay caps had anything to do with the refusal to take cheap money.
In other words, the paper has the goods here but chickens out. This isn’t just some technical, inside-baseball thing. The he said/she said back and forth leaves readers confused as to what really happened. That’s all Chrysler’s flacks needed to accomplish.
Adding to the question of why the Post wrote the piece the way it did is that the news is based on a solid source: a report being released today by the inspector general of the bailout.
Well, you say, Chrysler’s excuse is pretty good: It doesn’t need the money. But the Post has a couple of trump cards here:
In forgoing the loan, Chrysler Financial opted to use more expensive financing from private banks, adding to the burden on the already fragile automaker and its financing company.
And:
The Treasury Department previously lent Chrysler Financial $1.5 billion, when less stringent requirements on executive compensation were in place for recipients of federal bailout money. But since that first loan was announced on Jan. 16, the Obama administration and Congress have toughened the rules.
What more do you need to know?
How high into the double digits do you think that private loan is? It would have been good for the Post to get a number on that or at least estimate what it might be—and tell us what the government interest rate would have been.
And why would you let the following flackery go behind a wall of anonymity?
“If Chrysler Financial needs the cash to support Chrysler, they [the executives] are not going to put the auto company at risk,” said the senior industry official, who spoke on condition of anonymity because the negotiations were private. “These guys aren’t going to blow up the car company for their personal reasons. . . . They’ve done everything they can to support the automotive company.”
First of all, what is a “senior industry official”? Best I can gather, that would mean a lobbyist. I don’t have a problem with anonymous sources, but use them wisely. That quote needs to be on the record or it doesn’t need to be in the paper at all.
The Post does do well to follow all this PR with a paragraph reminding readers that the company is using more-expensive private financing, but that comes after six straight graphs of spin.
Finally, the Post buries this key bit of information three paragraphs from the bottom:
Chrysler and Chrysler Financial are separate companies. But both are owned largely by Cerberus, a private-equity firm.
That should have been up higher in the story, accompanied by something to the effect that Chrysler Financial is critical to the health of Chrysler the car company as its biggest single lender. If its borrowing costs are higher because it refused government loans, that makes each Chrysler more expensive to prospective buyers.
A little more context and a lot more conviction—that’s what this story needed.
Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR’s business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.