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.