Jun 07 2009

President Obama Has Some ‘Splaining To Do On the GM and Chrysler Dealergate

Published by at 9:08 am under All General Discussions

When the news broke about Dealergate I expected this might be one of those last straw things. Dealergate involves GM and Chrysler dealers across the country and where sound and profitable dealers were closed as questionable or troubled ones were left open – apparently with the discriminator being political connections to democrats in DC. At the time (my previous posts are here and here) I felt that Congress needed to investigate the process which led to determining which dealers would survive and which would live to reap the benefits of the closed dealers.

I was heartened when two, bipartisan senators from Missouri asked in an open letter that the Obama administration do some explaining. Now I am extremely heartened by a letter being distributed around capitol Hill by the leading Democrat in the House:

Dear President Obama: 

We are writing to express our concerns about General Motors’ and Chrysler’s decision to close profitable automobile dealerships across the country, and urge you to ask GM and Chrysler to delay final action on proposed closures pending further review of the decision to consolidate dealerships and the process by which Chrysler and GM selected the dealerships to close. 

Closing these dealerships will put over 100,000 jobs at risk at a time when our country is shedding jobs at an alarming rate. We also question the criteria being used to determine which dealerships should be closed and the fundamental fairness involved in this effort. It is our view that the market rather than leaving it up to the manufacturers whose poor leadership contributed to their demise. Furthermore, we believe car dealers will be key players in any effort to revive the American auto industry. 

Outstanding. Hubris is a very tough thing to deal with when a young, new and inexperienced administration takes over in DC. All these cocky people come to DC ready to remake the world in their image of perfection. And the inexperienced ones have no clue of the hidden traps containing powerful backlashes. The government has many, many check and balances – and when used in unison they can pack quite a counter punch.

Obama is now going to have to explain and defend the decision process, which appears to be indefensible given the lack of transparency we have seen to date. Lots of hand waving, no details. And this is not the only front on which Obama is going to have to defend his administration’s questionable government take over of the private businesses GM and Chrysler:

Chrysler LLC creditors asked a U.S. Supreme Court justice to block the carmaker from selling its assets as early as tomorrow to a group led by Italy’s Fiat SpA.

Indiana pension funds that lent Chrysler money said in papers filed late yesterday that they will seek a Supreme Court review of a ruling allowing the sale. The funds asked Justice Ruth Bader Ginsburg for an order blocking the transfer until the high court decides whether to hear the funds’ appeal.

“Absent a stay, the sale will close on Monday, June 8, 2009,” the funds said in their court papers, filed in Washington. They said they would suffer “irreparable harm” should the sale go forward.

Team Obama, like everything they have been doing for the last few months, has been winging it. They are not prepared to take on challenges. They did not do the due diligence required by federally mandated processes (trust me, environmental impact reports are not the only reports required to build the mountain of paperwork that is the federal government). They did not do the trade studies or analysis required before the government is legally allowed to act.

Furthermore, they forgot rule one in DC – don’t pick a fight with a group who has clout in multiple congressional districts. Car dealers hale from all over this country and can mobilize a lot of political clout. Obama’s young administration is about to learn a lesson on why neophyte hubris usually causes inexperienced administrations to stumble badly.

3 responses so far

3 Responses to “President Obama Has Some ‘Splaining To Do On the GM and Chrysler Dealergate”

  1. kathie says:

    When you, as President of all the people, use a mountain of tax payers dollars for political purposes, you should get into more then a little trouble.

    Obama acts like the Geniuses President. And God must create the world in my moral, true image. Unfortunately many of us have been through the reincarnation process and have a 200 year old memory.

  2. giantslor says:

    Nate Silver looked into this and found no evidence of Republican dealerships being closed at a higher rate than Democratic ones:


    The main thrust is that the reason it looks like Republicans are being targeted is because most dealerships are in fact owned by supporters of Republicans.

  3. Frogg says:

    I’m glad to see some Democrats concerned over the dealership closings and starting to ask questions.

    Maybe they can also find out why Barney Frank could make one phone call to the car Czar and save a dealership in his district after it was slated to be dropped.

    And, there is more troubling news now:



    As a result of Lauria’s legal efforts, we have also learned of e-mails showing that the government drove the Chrysler-Fiat deal over Chrysler management concerns, and did so despite more than likely knowing very little about shotgun marriage partner Fiat.
    An internal memo 13 days later from Chrysler’s advisory team also said Fiat’s “off-balance-sheet investments” in joint ventures around the world posed an economic risk and a political risk,” including the appearance that “Treasury/Chrysler” was “in bed with a shady partner.”

    Mr. Lauria’s persistence led one government lawyer in the Chrysler case to dub him a “terrorist” in an email to a Chrysler adviser.