Good Stewardship or Meddling? Congress Taking a “Hands On” Approach with GM and Chrysler Group

Despite the Obama administration’s assertions that it will not involve itself in the management of GM and Chrysler Group, Congress appears compelled to weigh in on the ongoing dispute between the automakers and rejected dealers.

An October 30 Wall Street Journal article stated, "Federal support for companies such as GM, Chrysler Group LLC and Bank of America Corp. has come with baggage: Companies in hock to Washington now have the equivalent of 535 new board members – 100 U.S. senators and 435 House members."

Rep. Denny Rehberg (D-MT) was quoted as saying, "The simple fact is, when GM took federal dollars, they lost some of their autonomy." GM has accepted $58 billion in federal aid, giving U.S. taxpayers a 60% stake in the troubled automaker.

The article chronicled how Sen. Jay Rockefeller intervened on behalf of one of his constituents, Pete Lopez, who heads the Spencer Auto Group in Spencer, West Virginia. Last May, Lopez was notified that he would be losing both his GM and Chrysler dealerships. Soon thereafter, Lopez contacted Sen. Jay Rockefeller (D-WV), who chairs the Senate Commerce Committee. Rockefeller arranged for Lopez to testify before the committee and even arranged for him to meet personally with GM CEO Fritz Henderson.

The following month, Lopez was notified that GM had reversed its decision to close his dealership.

The Wall Street Journal article stated that, "Similar rescues have played out across the country." GM has granted 70 reprieves to rejected dealers across the country.

The article also reported that a number of Congressional members "have jumped into a union fight that pits GM and Chrysler against two trucking companies that haul new cars around the country. The automakers want to give some of the work to cheaper nonunion contractors. But that raised the ire of lawmakers who support the International Brotherhood of Teamsters."

It also claimed that GM has received pressure from a Montana Congressional delegation to reinstate a contract the automaker had with a palladium mine. Palladium is used by GM in the production of catalytic converters.

It also quoted some car company executives as saying, “Congressional demands gobble up time and make a rocky business environment even more unpredictable."

In a November 20 letter to GM and Chrysler, Sen. Rockefeller and Sen. Kay Bailey Hutchison (R-TX) said, "Given the federal government’s ownership stake in Chrysler and GM, it is our shared obligation to ensure all impacted dealers are treated as fairly as possible." They went on to urge the automakers to, “take all actions necessary to uphold the assurances you provided earlier, as well as to achieve a mutually agreeable and timely outcome to the negotiations between Chrysler, GM and the dealers."

They also requested progress reports in seven areas of concern including their ongoing negotiations with rejected dealers and their efforts to replenish inventories.

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