Chrysler Turns Down Government Aid Over Objections to Executive Pay Limits

Chrysler Financial turned down a $750 million government loan because executives did not want to adhere to limits on executive pay that would come with the money, a government official said.

Chrysler Financial, which is a major lender to Chrysler dealerships and customers, denied the allegation. It issued a statement saying it has enough private capital to meet its short-term needs of lending money to dealers and customers, and it doesn't need more money now from the government's Troubled Asset Relief Program, or TARP.

"Chrysler Financial has determined that it has adequate private capital funding to cover the short-term needs of our dealers and customers and as such, no additional TARP funding is necessary at this time," Chrysler spokesman Bill Porter said.

"As a result, executives have not been presented with any new demands with regard to executive compensation. As a TARP recipient, the Company remains in full compliance with current executive compensation requirements," he said.

But The Washington Post reported Tuesday that executives' refusal to accept compensation limits led the Treasury Department to withdraw the loan offer.

The $750 million in aid would have been on top of the $1.5 billion it already has received. Chrysler Financial received a $1.5 billion loan from the bank bailout program in January and said it would use the money to provide low-rate financing to more car buyers.

The government also restricted executive pay for federal bailout recipients at that time, but the restrictions have gotten tougher since then.

A Treasury Department spokesperson said the government will continue to monitor Chrysler's financial picture.

"Unlocking credit and helping consumers get access to affordable auto loans is an important component of our efforts to stabilize the financial system," the official said. "As part of that effort, the Auto Task Force continues to monitor closely the financing situations for both GM and Chrysler. This is an issue that Chrysler and its stakeholders will need to address as part of this process and any potential deal.."

The federal loan Chrysler Financial received is separate from the $4 billion the government has lent to Chrysler LLC to aid the Auburn Hills, Mich., automaker's struggling manufacturing operations. Chrysler LLC faces an April 30 deadline to restructure and ink an alliance deal with Italy's Fiat Group SpA or it won't get any more government loans.

A federal report released Tuesday by a special inspector general says the government will loan GM up to $5  billion more to make it through June 1, and Chrysler LLC could get up to $500 million more by April 30.

Chrysler Financial probably didn't need the government money to fuel dealer and customer financing because the automaker is selling fewer cars and trucks. U.S. sales of its Chrysler, Dodge and Jeep brands were down 46 percent in the first quarter compared with the same period last year.

FOX News' Major Garrett and FOX Business Network's Peter Barnes and The Associated Press contributed to this report.