LaTourette leads bipartisan effort to help GM dealers

Friday, October 29, 2010

U.S. Rep. Steven C. LaTourette (R-OH) said more than 20 additional lawmakers signed a letter asking the Obama administration to suspend GM dealership closures until a current investigation of dealer terminations is completed.

LaTourette said the new letter was signed by several Ohio lawmakers, including U.S. Reps. Betty Sutton, Dennis Kucinich, Marcia Fudge and Marcy Kaptur. Ohio Sen. Sherrod Brown (D-OH) has also asked for help for the dealers.

Nearly 500 GM dealerships across the country could close on Oct. 31, including Sims Chevrolet of Lyndhurst and one other NE Ohio dealer. LaTourette had led the effort to ask the Administration to suspend the closures. The average dealership employs as many as 50 employees.

Here is the text of the letter to President Obama:

Dear President Obama:

We write to request your help to immediately suspend pending auto dealer closures, many of which will happen by the end of the month, until an ongoing investigation is completed.

As you know, Sec. 746 of Public Law 111-117 (signed Dec. 16, 2009) allowed General Motors (GM) and Chrysler auto dealers to pursue binding arbitration to save their dealerships. The law stated that both dealers and automakers "may present any relevant information during the arbitration." The arbitration process was to be completed by mid-June, 2010, but was extended 30 days into July as allowed by law.

While we greatly appreciate and applaud Special Inspector General Neil Barofsky's efforts, the release of the SIGTARP report just days after arbitration ended effectively denied auto dealers vital information that could have assisted in arbitration cases, or efforts to reach fair and fully informed settlements with automakers.

The SIGTARP report was rife with troubling conclusions:

"No one from Treasury, the manufacturers or from anywhere else indicated that implementing a smaller or more gradual dealership termination plan would have resulted in the cataclysmic scenario spelled out in Treasury's response; indeed, when asked explicitly whether the Auto Team could have left the dealerships out of the restructurings, Mr. Bloom, the current head of the Auto Team, confirmed that the Auto Team 'could have left any one component (of the restructuring plan) alone,' but that doing so would have been inconsistent with the President's mandate for 'shared sacrifice.'"
"GM did not document the meetings during which decisions were made about dealerships in their networks. GM did not document the rationale for granting or denying appeal requests from dealerships. Chrysler did not document meetings held to determine dealerships closures. The Auto Team did not document some of the meetings it held with auto industry analysts."
The SIGTARP report also found that the Administration's auto team consulted with many outside experts and consulting firms about dealer terminations and the automakers' overall viability, but Ron Bloom told SIGTARP "these were off-the-record conversations and were not documented. However, according to Mr. Bloom, the experts supported dealership terminations as a necessary part of GM and Chrysler's restructuring."
"GM did not consistently follow its stated criteria. In the first phase, for example, two of the terminated dealerships did not fit into either termination category, and GM retained 364 dealerships that potentially qualified for termination. In phase two, GM terminated 39 dealerships that did not meet any of the objective criteria and retained more than 1,062 dealerships that met one or more criteria for termination."
Finally, the report confirmed reports that "none of the Auto Team leaders or personnel had any experience or expertise in the auto industry."

As the findings of this investigation may shed some much needed light on the proceedings affecting hundreds of dealerships nationwide, we believe it is necessary to thoroughly analyze its results before continuing with the closures of hundreds of dealerships, and the potential loss of thousands of jobs.

Thank you for your consideration of this request.