Thursday, July 16, 2009

U.S. House debates dealer-closing bill; vote set for later today

U.S. House debates dealer-closing bill; vote set for later today
David Shepardson / Detroit News Washington Bureau

Washington -- The U.S. House of Representatives completed two hours of debate this afternoon on a spending bill that includes a provision that seeks to reverse the closing of 789 Chrysler Group LLC dealers and the planned closing more than 2,000 General Motors Co. dealers.

House Appropriations Committee chairman David Obey, D-Wis., strongly backed the provision, noting that GM and Chrysler have received billions in loans, $1 billion for a "Cash for Clunkers" program, $2 billion in battery research funding and $300 million for the federal government to buy new advanced technology vehicles.

"This Congress has provided $60 billion in funding to the auto industry. I think that somehow to suggest that they have been abused ... is in my view off the point," Obey said. "I hardly think they have been underprivileged in terms of their treatment by this Congress."


Obey said dealers are entitled to a "decent review process, a decent appeals process."

Obey said the language in the bill will change when the House and Senate negotiate over the bill, but he said it was written as a lever to force the automakers and dealers "sit down and work out a better appeals process."

Rep. John Dingell, D-Dearborn, said the bill could "jeopardize" the recovery of both GM and Chrysler and the taxpayer funds invested in the automakers and lead to a "serious disaster."

"If the auto industry goes down because we have taken sides in a quarrel between the auto industry and the dealers, we will have destroyed not only the dealers that complain, but all of the other dealers," Dingell said on the House floor. "We are playing with fire here."

A vote on the bill is set for later this afternoon.

Despite a White House statement saying it "strongly opposes" efforts to hamstring GM and Chrysler's efforts to slim down their dealer networks, the financial services and general government spending bill is expected to pass later today. Its fate in the Senate is uncertain.

Sen. Majority Leader Harry Reid, D-Nev., said he wasn't inclined to take up the dealer bill, but 25 senators have now signed onto a bill to reverse the closings.

Last week, Rep. Steve LaTourette, R-Ohio, attached an amendment to the bill in the House Appropriations Committee that was passed by a voice vote seeking to restore the dealer agreements of about a quarter of Chrysler dealers that were closed on June 9. GM has sent closing notices to 1,340 dealers, but it has reversed those decisions in 70 instances. GM expects another 1,250 dealers will close their doors voluntarily by the end of next year.

"We will not as taxpayers in this country give billions to General Motors and Chrysler until they come to terms with the hundreds of thousands of people they have put out of work," LaTourette said today on the House floor.

The National Automobile Dealers Association says the closing dealers could result in 170,000 job losses nationwide. But GM and Chrysler say it is imperative they reduce their dealer networks, to ensure the remaining dealers are more profitable. They also say the cuts will reduce their costs.

GM and Chrysler have received about $65 billion in taxpayer loans. The companies had the ability to cancel dealer agreements because they both were in bankruptcy protection. Bankruptcy law gives companies wide latitude to terminate previous business contracts.

LaTourette said the closings are the result of "the goofy action of an unelected task force and now the car companies taking advantage."

The Obama administration forced both automakers into bankruptcy after the White House rejected the automakers restructuring plans.

Rep. Shelia Jackson Lee, D-Texas, also criticized the closings, calling it an "atrocity."

"Let us get Chrysler and GM at the table to restore the ownership of these dealerships ...," she said on the floor of the House. "Get these car dealers back doing their jobs." (202) 662-8735

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