Defying President Obama, House Takes What Critic Calls “Hardcore Bipartisan NIMBY” Action on Chrysler and GM Auto Dealers
EmailThe Democratic-controlled House yesterday spurned the strong recommendations of President Obama and voted to undo the shuttering of more than 2,000 Chrysler and General Motors dealers closed as part of the restructuring of those two companies.
A source involved in the auto restructuring called the vote "hardcore bipartisan NIMBY," using the acronym for "Not In My Back Yard," a derisive term for politicians who take the most parochial views of issues, defying the "greater good."
As part of the auto companies' restructuring, Chrysler shut down 789 dealerships and General Motors informed roughly 1,300 dealerships that their franchise deals wouldn’t be renewed in 2010.
The legislation, drafted by Rep. Steve LaTourette, R-Ohio, and added in the Appropriations to the $24 billion Treasury Department funding bill, would stop those dealership closings and require Chrysler and GM to pursue any future closings in court.
“I don’t think Chrysler or GM has been able to demonstrate there is a savings associated with fewer dealers, since the dealers themselves bear the costs of operating their dealerships with little help from the manufacturers,” LaTourette said. “I think the closing of these dealerships was punitive and secretive, and it’s the most un-American thing for the government to help force you out of business and deprive you of the American dream.”
The larger bill was approved last night by the House by a vote of 219 to 208.
While not issuing a veto threat — the bill has yet to go through the Senate, where the support of Senate Majority Leader Harry Reid, D-Nev., is less than assured — the White House earlier this week said that President Obama's administration "strongly opposes the language in the bill that attempts to restore prior Chrysler and General Motors (GM) franchise agreements."
Arguing that the Small Business Administration on July 1 "implemented a new program to provide guaranteed floor plan financing loans" for dealers hurt by the restructuring, the administration said that "the decision by Chrysler and GM to rationalize their dealer networks was a critical part of their overall restructuring to achieve long-term viability in order to save jobs in the long run, and to improve the prospects for the companies’ repayment of the substantial taxpayer investments. Without the significant steps these automakers have taken to revamp their operations, the companies would have failed – imperiling every GM and Chrysler dealer in the country."
The move by Congress, the Obama administration said, "would set a dangerous precedent, potentially raising legal concerns, to intervene into a closed Judicial bankruptcy proceeding on behalf of one particular group at this point."
Last Fall, Sen. Bob Corker, R-Tenn., said that U.S. automakers "have all kinds of legacy issues they have not been able to deal with. Let me point out one. General Motors has 7,000 dealers. They probably need about 1,500 dealers. What the dealers did years ago is, they went around and got states to pass laws that said that GM could not do away with their dealerships. We have had the strong dealers actually calling our office and telling us they actually have hurt themselves by putting these state laws in place, because there are so many dealers that each of them is having trouble making a profit. It would be a tremendous disservice for us to grant money to these companies without causing them to reorganize."
But earlier this week the House Appropriations Committee approved LaTourette's amendment. House Appropriations Chairman David Obey, D-Wisc., agreed with LaTourette, saying he'd heard "legitimate concerns from a doggone good" auto dealer from his congressional district.
“Dealerships across Wisconsin and the 7th district have received notices that they are to close affecting places like Antigo, Chippewa Falls, St. Croix Falls, Phillips, Medford, Marshfield, Wisconsin Rapids, Wittenberg, Cornell, Cumberland and many others," Obey said at the beginning of June. "The loss of dealerships in many of these communities will present a real hardship."
But Rep. John Dingell, D-Mich., a longtime supporter (some might say enabler) of the US auto industry, disagreed.
“This is a very fragile industry and its survival even without that amendment is not necessarily assured,” Dingell said. “The amendment could be a burden that the industry simply cannot carry.”
This argument was repeated by the automakers.
“Chrysler has had many conversations with members of Congress to explain the critical importance of an effective dealer network,” said a Chrysler spokesman.
Said a GM spokesman: "this legislation seeks to overturn the bankruptcy court’s decision after the fact to protect a single stakeholder among so many that have been called to sacrifice.”
- jpt
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“The move by Congress, the Obama administration said, ‘would set a dangerous precedent, potentially raising legal concerns, to intervene into a closed Judicial bankruptcy proceeding on behalf of one particular group at this point.’”
The dangerous precedent was set by the U.S. government taking over a private industry.
There’s nothing in Article 1, Section 8 of the Constitution that grants the government the power to provide for the financing and management of commerce.
Posted by: WhereWasThePress? | July 17, 2009, 11:12 am 11:12 am
“the decision by Chrysler and GM to rationalize their dealer networks was a critical part of their overall restructuring to achieve long-term viability in order to save jobs in the long run”
Hmm…a bit of a head scratcher…close dealerships to save jobs…
But wait! Joe Biden weighs in:
“Now, people when I say that look at me and say, ‘What are you talking about, Joe? You’re telling me we have to go spend money to keep from going bankrupt?’ The answer is yes, that’s what I’m telling you.”
OK, now it makes sense. Close down dealerships to save jobs, spend money to avoid bankruptcy. Obamanomics!
Posted by: tjp612 | July 17, 2009, 11:21 am 11:21 am
While not issuing a veto threat — the bill has yet to go through the Senate, where the support of Senate Majority Leader Harry Reid, D-Nev., is less than assured — the White House earlier this week said that President Obama’s administration “strongly opposes the language in the bill that attempts to restore prior Chrysler and General Motors (GM) franchise agreements.”
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But Obama doesn’t want to run GM!
This whole thing has been wrapped in secrecy and threats. Obama made the unprecedented move of making us the largest stakeholder of a private company, and the information and reporting has been abysmal.
The source involved with the restructuring deserves no anonymity. They are responsible for letting us know what is going on. We deserve a seat at that table.
Where is our representation on this?
Posted by: MayBee | July 17, 2009, 11:34 am 11:34 am
Congress, unable to grasp the fact that too many people (i.e. dealers) competing for the same limited resource (sales, service, etc) is not sound economic policy. Competition can only go so far, until it ultimately becomes a race for who goes under fastest. Oddly enough, this is the same ignorance that is likewise driving Congress agenda on immigration. They fail to recognize that too many people competing for the same limited resources is not sane, sustainable, social, economic or environmental policy! How did these boneheads ever manage to get elected?
Posted by: Ed Devine | July 17, 2009, 11:35 am 11:35 am
If the goal here is to run GM as a welfare system for autoworkers and dealers, the slugs in Congress should just admit that, and stop pretending that the goal is to make a lean and effective GM that can compete on the world market.
Posted by: Chuck Cardiff | July 17, 2009, 11:37 am 11:37 am
Free markets are dead until the GOP gets back in the driver’s seat. Democrats will never stop meddling. They’ve gotten a taste of it now and they’re hooked. It’s like having a whole new set of toys to play with.
Posted by: Traffic Cop Timmy | July 17, 2009, 11:42 am 11:42 am
Said a GM spokesman: “this legislation seeks to overturn the bankruptcy court’s decision after the fact to protect a single stakeholder among so many that have been called to sacrifice.”
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And what is this language about people being called to “sacrifice”?
People who are losing their jobs, livelihoods, and investments aren’t going to be happy about it. Period. Certainly the idea that they’ve saved someone else’s job isn’t going to be much of a comfort. Certainly the idea that a group of people have banded together to save *other* people’s jobs isn’t much of a comfort.
How many people, upon getting a lay-off notice, think “well, I’m proudly sacrificing so that Joe Roe can still have his job”?
Posted by: MayBee | July 17, 2009, 11:44 am 11:44 am
“There’s nothing in Article 1, Section 8 of the Constitution that grants the government the power to provide for the financing and management of commerce.”
That’s Congress. The executive branch can and does run companies, such as Amtrak, Fannie Mae, the Corporation for Public Broadcasting, and others.
Not to mention that this is a bankruptcy proceeding. It is quite typical for a court to tell a bankrupt business what they can or cannot do.
Indeed, I would suggest that your comment shows exactly why Congress shouldn’t be sticking its nose in here. It is the only branch of government that specifically shouldn’t be in on this.
Posted by: David | July 17, 2009, 11:49 am 11:49 am
“I think the closing of these dealerships was punitive and secretive”
Well of course it was. Trouble is many of the dealers are not going away and putting up a real stink. Many were profitable and closed while unprofitable dealerships stayed open. Many were GOP supporters. I’ve seen dealers (with strange East Coast accents) being interviewed – ready for a fight.
This is not NIMBY – it’s CYA.
Posted by: Traffic Cop Timmy | July 17, 2009, 11:49 am 11:49 am
Congress should just do an investigation on the selection process. What criteria was used to close dealerships? It seems rather random, everything from the #1 dealer in a region being closed, to unprofitable dealerships. There seems to be no logical pattern to it which makes people think that the pattern is more corruption based and that could be valid.
Who set the criteria for dealership closings?
Who selected the dealerships that would close?
Why were profitable dealerships closed as apposed to unprofitable?
Questions I think everyone should know.
Posted by: KR | July 17, 2009, 12:11 pm 12:11 pm
Seems like the dealers were separate businesses that could sink or swin based on their capability to run their dealership. Individual dealers did not cause GM/Chrysler to go into bankruptcy and a case could be made that the more outlets to sell a product – all the better.
Chicago style business management.
Posted by: Wheels | July 17, 2009, 12:15 pm 12:15 pm
I think there is a bigger stink underneath this all. GM and Chysler over produced. Dealers would begin to go away if they simply lowered production and closed some plants, and the market would choose which dealers would go away.
GM and Chry complained that there were too many dealers. Well, if thats the case, how did they get their cars? If “1,500″ is the magic number for dealers, then why did you produce cars for 7,000 dealerships?
I think it has more to do with shifting the blame from having too many manufacturing plants. I think this is going to backfire on them.
Posted by: KR | July 17, 2009, 12:18 pm 12:18 pm
exactly, KR.
Posted by: MayBee | July 17, 2009, 12:27 pm 12:27 pm
“I think there is a bigger stink underneath this all. GM and Chysler over produced. Dealers would begin to go away if they simply lowered production and closed some plants, and the market would choose which dealers would go away.”
It was almost startling how many more dealers GM had then the next competitor.
Do you think the over production in a recent trend (since the economy soured) or has it been building?
Posted by: Ryan C | July 17, 2009, 12:36 pm 12:36 pm
Good questions, KR –
Who set the criteria for dealership closings?
Who selected the dealerships that would close?
Why were profitable dealerships closed as opposed to unprofitable?
Posted by: Danilo | July 17, 2009, 12:53 pm 12:53 pm
From what I hear from my sources is that if you were a democrat owned dealer you were left alone but republican dealers were told they were being shut down. This is really scary that the Goverment is involved in making decions of this nature.
Posted by: billy bob | July 17, 2009, 12:59 pm 12:59 pm
The Obama team has a big agenda ,to run the world.socialism is his high prioity.any moron that,closes jobs to create jobs ,are stacking things to there favor.no real answer has or will justfy closing these dealers.my owner buys all his cars from gm,he doesnt finance them.are they saying they dont want our cash,because they are selling to us.
Posted by: bobby robinson | July 17, 2009, 1:12 pm 1:12 pm
The idea of closing dealerships defies all logic – when taken with the story that the government is selling…that they are trying to save the companies and the economy. It make perfect sense if you consider that the government is trying to sabotage this “rescue” and that this “rescue” is just one more boondoggle to drive our country and our economy deeper into a hole.
I’m honestly starting to believe that this administration is deliberately sabotaging this country by overspending into oblivion. They are not this incompetent — even George Bush was not this incompetent, which leads me to conclude that this administration’s actions are treacherous.
Posted by: paul | July 17, 2009, 1:38 pm 1:38 pm
If GM was barely selling any cars already, how could making it more of an effort to buy one actually HELP sales? It wouldn’t. You would end up having to drive past Toyota and Honda dealers to get to an out-of-the-way GM dealer.
That’s just begging for people to give up on GM altogether. I am starting to believe that’s what the governemnt wants after they spend billions of our tax dollars. They want more money down the hole of waste.
Posted by: paul | July 17, 2009, 1:42 pm 1:42 pm
I want a special investigator appointed by Congress to uncover who was behind this plan to close dealerships. The whole thing seems nefarious to me.
Posted by: paul | July 17, 2009, 1:43 pm 1:43 pm
From what I hear from my sources is that if you were a democrat owned dealer you were left alone but republican dealers were told they were being shut down. This is really scary that the Goverment is involved in making decions of this nature.
Posted by: billy bob | Jul 17, 2009 12:59:13 PM
___________________________________
I saw some dealers interviewed when this came down from the mountaintop. One I remember had a proven track record and the shlub across the street was safe.
But it was on Fox News so I figured it was just a bunch of lies reported by liars and fear mongerers.
/do I need a sarc?
Posted by: Traffic Cop Timmy | July 17, 2009, 4:15 pm 4:15 pm
“From what I hear from my sources . . .” Posted by: billy bob | Jul 17, 2009 12:59:13 PM
___________________________________
Oh sure . .. ‘your sources’ billy bob . . .. excellent. How could anyone doubt or question ‘your sources’? Sounds like unimpeachable evidence to me.
Posted by: danita | July 17, 2009, 4:41 pm 4:41 pm
Reasonable doubt?
The company is called RLJ-McLarty-Landers, and it operates six Chrysler dealerships throughout the South. All six dealerships are safe from closing. The dealer locations are:
Bentonville, AR
Lee’s Summit, MO
Branson, MO
Olathe, KS
Bossier City, LA
Huntsville, AL
The three main owners are Steve Landers (long-time car dealer, 4th-generation dealer), Thomas “Mack” McLarty (former Chief of Staff for President Clinton), and Robert Johnson (founder of Black Entertainment Television and co-owner of the NBA’s Charlotte Bobcats). Landers has given money to Republicans in the past, but McLarty campaigned for Obama in 2008, and Johnson has given countless amounts of money to Democrats over the years.
Posted by: Traffic Cop Timmy | July 17, 2009, 5:04 pm 5:04 pm
Mr. President, I never promised you rose
garden or sun shine ever day.
Posted by: william | July 17, 2009, 9:27 pm 9:27 pm
Yeah Traffic Cop Timmy, unfettered Free markets were sure good for this ecconomy! You are right, let the Banks and Financial WIzzards regulate themselves. I mean, look how well we did!
While we are at it, lets take refs and umpires out of sports. That is regulation and meddeling. Ditch the NCAA, lets just let Colleges do anything they want is sports, hire pros if they want.
Cripes. Will the stupid logic ever stop? YOU ARE A COP! (a government agency) WHY? BECAUSE IF THE FOX IS WATCHING THE HEN HOUSE, ALL THE BIRDS ARE DOOMED!
Posted by: John Lee Bingham | July 17, 2009, 11:51 pm 11:51 pm
“It’s not nice to fool Mother Nature!”
Do I detect that (Union made)sandaled foot just slip beneath the water the messiah’s walking on?”
Posted by: Don L | July 18, 2009, 6:08 am 6:08 am
“unfettered Free markets were sure good for this ecconomy! You are right, let the Banks and Financial WIzzards regulate themselves. I mean, look how well we did!”
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Are liberals really this dumb or are they just good at reciting the DNC talking points? Can someone tell me when in the history of the U.S. we actually had a true “unfettered” free market?
The book of federal regulations GREW under Bush by something like 200,000+ pages!!!
This idea that we need MORE federal regulations is just a ploy by the Dems to take more of our freedom.
Posted by: Dan In SC | July 18, 2009, 4:06 pm 4:06 pm
This is exactly why the government role in Health Care should be a limited as possible. The promise was that the car companyies would be run efficiently with business decisions taking priority. Instead we get political decisions, ala Barney Frank getting Chrysler to back off closing a plant in his district.
The same will happen with health care. Savings will never materialize because the politicians will always protect some special interest group. Costs will sky-rocket.
The only hope is to limit the size and power of the federal government. Return control to States, counties and cities, where common people have more influence.
Posted by: Terry | July 18, 2009, 7:36 pm 7:36 pm