Government-led carmaker bankruptcies face skeptics
WASHINGTON — Government-led bankruptcies of General Motors and Chrysler are drawing opposition in Congress, where bailout-weary lawmakers want explanations for the billions in more federal aid and the planned shuttering of hundreds of car dealerships.
A group of Republicans wants to give Congress veto power over the expenditure of any bailout money by the government to buy a stake in a company. They complain Congress had no opportunity to review the Obama administration’s decision to take 60 percent ownership of GM and a smaller stake in Chrysler.
“I think it’s all starting to hit us in the face what government-managed economies feel like,” said Sen. Jim DeMint, R-S.C.
Sen. Chris Dodd, D-Conn., who leads the Senate Banking Committee, scheduled a hearing for next week to examine the administration’s auto task force. Dodd said he wanted to review the use of taxpayer funds to restructure the auto industry and the decisions by the Obama administration to take ownership roles in GM and Chrysler.
Executives with General Motors Corp. and Chrysler LLC received a chilly reception Wednesday when they told senators their companies need to shed hundreds of dealerships as part of their bankruptcies. They called the decisions painful yet necessary moves to right-size their companies.
“This is our last chance to get it right,” GM Chief Executive Fritz Henderson told the Senate Commerce Committee. He cited “tough times for everyone in the GM family.”
Chrysler President Jim Press said underperforming dealers are making it hard for his company to return to profitability. But Chrysler was “working hard to achieve a soft landing” for them.
“I think ’soft landing’ is wishful thinking,” responded Sen. Frank Lautenberg, D-N.J., comparing it to a “parachute with holes.”
Chrysler has identified 789 dealerships it plans to close by June 9, about a quarter of the company’s network. General Motors told 1,100 dealerships it does not plan to renew their franchise agreements and expects to shed an additional 900 dealerships through attrition and by selling or discontinuing its Hummer, Pontiac, Saab and Saturn brands. By 2010, it hopes to reduce its 6,000 dealers to about 3,500 to 3,800, Henderson said.
Chrysler’s Press defended the company’s June 9 termination date for dealers, saying it was needed so their dealership structure was in place when its new company is formed with Italian automaker Fiat Group SpA.
But car dealers told the committee they were being forced to close shop with lots full of vehicles after heeding Chrysler’s call to take on a larger inventory.
“We have an eight-month supply of vehicles and only three weeks to clear them out,” said Russell Whatley, a Chrysler-Dodge-Jeep dealer in Mineral Wells, Texas.
Lawmakers pressured GM and Chrysler to do all it could to help the dealers cope with the closings. “I don’t believe that companies should be allowed to take taxpayer funds for a bailout and then leave local dealers and their customers to fend for themselves with no real notice and no real help,” said Commerce Committee Chairman Jay Rockefeller, D-W.Va. “That is just plain wrong.”
Chrysler is hoping to emerge from bankruptcy protection within the next few days. General Motors filed for Chapter 11 protection on Monday, and its officials said they hope to be able to reorganize as a new company in 60 to 90 days.
Associated Press writers Jim Kuhnhenn and Tom Raum contributed to this report.
Related News
LaHood: Government has compensated dealers for 70 percent of Cash for Clunker deals so farSeptember 16th, 2009 Gov't has made 70 percent of clunker paymentsWASHINGTON — The government has compensated dealers for 70 percent of the cars sold under the popular Cash for Clunkers program and they should be fully paid by the end of September, the transportation secretary said Wednesday. Secretary Ray LaHood told the National Automobile Dealers Association that 478,000 of the nearly 700,000 car vouchers have been paid, or about $2.4 billion.
GM, Chrysler defend cutting of dealerships under bankruptciesJuly 22nd, 2009 GM, Chrysler defend dealer cutsWASHINGTON — General Motors and Chrysler defended their plans Wednesday to eliminate about 3,000 dealerships, calling it a vital piece of their strategy to rebound from government-led bankruptcies. "This is a painful process that spares no particular group," Michael Robinson, General Motors Co.'s vice president and general counsel, said to critics in Congress.
Auto task force head warns against plan to restore closed GM, Chrysler dealershipsJuly 21st, 2009 Obama auto task force warns against dealer planWASHINGTON — The Obama administration urged Congress Tuesday not to intervene in the closings of hundreds of General Motors and Chrysler dealerships, warning it could undermine the automakers' ability to rebound. Ron Bloom, the leader of the White House's auto task force, told a House Judiciary subcommittee that a plan approved by the House to restore dealerships would set a "dangerous precedent" and could jeopardize the taxpayers' recovery of billions in federal aid to GM and Chrysler as they emerge from bankruptcy.
House committee approves request to White House for GM, Chrysler documentsJuly 17th, 2009 House committee wants GM, Chrysler documentsWASHINGTON — A House committee asked the Obama administration Friday to release documents on the federal bailouts of General Motors Co. and Chrysler Group LLC, seeking more details on decisions that led to the auto industry bankruptcies.
House approves White House-opposed measure to restore closed GM, Chrysler car dealershipsJuly 17th, 2009 House breaks with White House on car dealersWASHINGTON — The House broke with the Obama administration Thursday over a key part of the auto industry restructuring, pressing General Motors and Chrysler to restore dealerships shuttered by the car companies' bankruptcies. The House approved the car dealer measure Thursday as part of a spending bill.
House expected to approve White House-opposed measure to restore closed car dealershipsJuly 16th, 2009 House poised to defy White House on car dealersWASHINGTON — The House is considering a break with the Obama administration over a key part of auto industry restructuring by pressing General Motors and Chrysler to restore dealerships shuttered by the car companies' bankruptcies. The House was poised to approve the car dealer measure Thursday as part of a spending bill.
Chrysler Financial repays $1.5 billion in TARP loansJuly 14th, 2009 Chrysler Financial pays off $1.5B in TARP loansFARMINGTON HILLS, Mich. — Chrysler Financial, the former financing arm of automaker Chrysler LLC, said Tuesday that it has repaid in full its $1.5 billion in government loans.
GM, Chrysler press lawmakers to back off House legislation to restore closed dealershipsJuly 9th, 2009 GM, Chrysler fight reopening of closed dealershipsWASHINGTON — General Motors and Chrysler urged lawmakers Thursday to block legislation that would prevent them from consolidating their dealership networks, warning it would complicate their emergence from government-led bankruptcies. With GM poised to exit bankruptcy protection, company leaders pressed House members to overturn an amendment approved late Tuesday by a House committee that would force General Motors Corp.
Auto parts suppliers survive with government and automaker help, but more trouble in sightJune 15th, 2009 Government, automaker aid keeps parts makers aliveDETROIT — Government aid and timely payments by General Motors, Ford and Chrysler have held off the predicted collapse of the nation's auto parts supply base, but industry officials say more bankruptcies are coming as the effects of Detroit's temporary factory closures continue to ripple through the economy. Hundreds of companies large and small across the country make everything from bolts to axles to transmissions, shipping them to Detroit Three factories as well as those of foreign automakers with U.S.
Auto Shop: Dealer closings mean extra towing, research for some Chrysler ownersJune 11th, 2009 Dealer shutdowns mean extra towing for some ownersDETROIT — There are 789 fewer Chrysler dealers this week. And by the end of next year, there will be 1,100 fewer General Motors dealers.
Republican lawmakers press for deadline to end government stake in GM, ChryslerJune 11th, 2009 Senators seek deadline for stake in GM, ChryslerWASHINGTON — Republicans want the Obama administration to set a deadline for the government to sell its ownership stakes in General Motors Corp., Chrysler LLC and financial institutions. South Dakota Sen.
Auto task force: 'Reasonable scenarios' where taxpayers might get car bailout money backJune 10th, 2009 No more federal bucks planned for GM, ChryslerWASHINGTON — President Barack Obama's auto task force told skeptical lawmakers Wednesday the government had no plans to pump more dollars into General Motors and Chrysler and that the public had a "reasonable probability" of getting its money back. Ron Bloom, a senior adviser to the task force, faced numerous questions about the roughly $80 billion in federal aid to the car companies, their lending affiliates and suppliers.
Auto task force: 'Reasonable scenarios' where taxpayers might get car bailout money backJune 10th, 2009 No plans to pump more dollars into GM, ChryslerWASHINGTON — President Barack Obama's auto task force told skeptical lawmakers Wednesday the government had no plans to pump more dollars into General Motors and Chrysler and that the public had a "reasonable probability" of getting its money back. Ron Bloom, a senior adviser to the task force, faced numerous questions about the roughly $80 billion in federal aid to the car companies, their lending affiliates and suppliers.
Lawmakers examine GM, Chrysler plans to shed hundreds of dealershipsJune 3rd, 2009 Senate reviews closing of GM, Chrysler dealershipsWASHINGTON — Top executives from General Motors and Chrysler face tough questions from lawmakers about sweeping plans to close hundreds of car dealerships as the auto companies undergo government-led bankruptcies. The executives will appear before a Senate committee Wednesday to talk about their dealership plans.
Senate committee to hear from GM, Chrysler executives on dealer closingsJune 1st, 2009 GM, Chrysler executives to face Congress WednesdayWASHINGTON — Top executives from General Motors and Chrysler will appear before a Senate committee Wednesday to address concerns about hundreds of dealership closings as the two automakers work through government-led bankruptcies. GM CEO Fritz Henderson and Chrysler President Jim Press will appear before the Senate Commerce Committee chaired by Democratic Sen.
Loading ...