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Obama Auto Bailout Under Attack

Lawmakers wary of a plan that sheds dealers.

by on May.22, 2009

Senator Hutchison

A powerful political force, dealers have been up in arms over the closing announcements.

The Obama Administration’s proposed bailout of General Motors and Chrysler is facing a growing chorus of criticism – and, significantly, it’s coming from both sides of the political aisle.

Nearly 40 Senators, including both Republicans and Democrats, lent their names to an amendment to an appropriations bill, sponsored by Kay Bailey Hutchison, R-TEX, that would have blocked federal aid for the two makers if steps weren’t taken to ease the pain facing close to 2,000 dealers GM and Chrysler intend to fire as part of their restructuring plans.

Earlier this month, Chrysler said it was immediately terminating 789 of its retailers, while GM sent letters to 1,100 dealers letting them know their franchise agreements wouldn’t be renewed.  (Another 500 will be cut when the big automaker sells off or closes its Saab, Saturn, Hummer and Pontiac divisions.)  While GM’s action will not be finalized until late in 2010, Chrysler’s termination notice was effective immediately, pending approval by the bankruptcy judge hearing its case, in New York City.

A powerful political force, dealers have been up in arms over the announcements.  GM is already facing at least one lawsuit, as reported yesterday.  Dealers have been pressing the NY judge to reject Chrysler’s plan and have been threatening legal action of their own, though it is generally accepted that the courts, in such a bankruptcy hearing can overrule normally restrictive state franchise laws. (more…)