Chrysler Financial rejects $750-million government loan

Top officials executives at Chrysler Financial turned away a $750-million government loan because they didn’t want to abide by new federal limits on pay, sources familiar with the matter say.

The government had been offering the loan 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 vital lender to Chrysler dealerships and customers.

Chrysler Financial instead opted to use more expensive financing from private banks, adding to the burdens of the already fragile automaker and its financing company.

Chrysler Financial denied in a statement that its executives had refused to accept new limits on their pay.

The company’s decision comes amid a firestorm on Capitol Hill and elsewhere over the lavish pay of executives at companies being aided by government money. The uproar has made companies skittish about taking federal aid and hindered the Obama administration’s effort to revive lending by replenishing the coffers of the nation’s financial firms.

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.