Top officials at Chrysler Financial turned away a government loan because executives didn't want to abide by new federal limits on pay, according to new findings by a federal watchdog agency.
The government had offered a $750 million loan earlier this month as part of its efforts to prop up the ailing auto industry, including Chrysler, which is racing to avoid bankruptcy. Chrysler Financial is a major lender to Chrysler dealerships and customers.
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.
This gets at an observation I've long had about capitalist economics. Capitalism assumes that corporations will behave in the ways that maximize their profits. But that's not quite right. Corporations will behave in the way that maximizes the interests of their elite decision makers (e.g., the top executives). These overlap considerably, but they aren't the same thing, as this case indicates. To take another example, if the Board of Directors of X-Co, Inc., found that they could save a net hundred million dollars by out-sourcing their own jobs to India, they still wouldn't do it, because executives obviously aren't going to eliminate their own jobs, only other people's jobs.