The U.S. government will likely recover only a small portion of the $4 billion it loaned Chrysler LLC in December because of its mainly junior creditor status in bankruptcy, an Obama administration official said on Thursday. "Among the stakeholders that will make sacrifices is the U.S. government," said the official after Chrysler filed for Chapter 11 bankruptcy protection in New York.

"Unfortunately, those loans were made to an overleveraged capital structure where (there) was probably never much hope of seeing much recovery," according to the official, who asked not to be named.

I have to ask at this point if the administration acknowledged that there was never much hope of seeing much recovery, why they loaned $4B to Chrysler in the first place. This is hard earned money belonging to the tax payers. Since the money has been given to Chrysler, it has reached some pockets out there definitely. So ironically speaking tax payers are giving away money to run charities which they do not really support and those charities aren’t involved in any good social act anyway. Going by that rule, government might as well go ahead and make charitable contribution compulsory in upcoming times. One thing is very clear that is in this particular situation it never was a loan, at heart. It was a wealth transfer from Government (read: normal middle class American tax payers) to Chrysler executives. These executives made mistakes which led the company to this position to start with; in the process they accumulated millions of dollars in salary and bonuses year after year until the company totally collapsed. At that point they turned to the government to get free dollars which they aren’t really supposed to return.

Maybe it is time for the government to take a step back and instead of imposing regulations on banking system and credit card industry, nail down the executives who caused this mayhem and arrest them for their life time. Chrysler is an LLC, so court cannot really seize their personal assets. May be it is time when government revises the rule of the game and allow seizure of personal assets as well in such a serious event. That’s where the recovery will start. At least it will send the correct message across the industry letting people know that playing with taxpayers’ money is not that easy anymore.