Auto Dealers Meet with the New Bosses; Reagan Statue Dedicated

At a hearing yesterday at the Senate Commerce Committee, a few of the beleaguered Chrysler and GM auto dealership owners got to voice their frustration with the Obama administration and their heavy-handed control over the auto industry.  

One of the witnesses was John McEleney, Chairman of the National Automobile Dealers Association.  “I have represented dealers in three meetings with the President’s Auto Task Force as well as in conference calls, and have provided at their request many documents and data,” McEleney said.  “At our meetings with the Task Force, we have repeatedly explained the fact that dealers are not cost centers for manufacturers but rather externalize the manufactures’ costs. Dealers are the largest source of revenue for the manufacturers, and to the extent there is ‘overdealering’ in certain areas, the past 50 years the dealer population has declined every year due to orderly consolidations.”

Make no mistake about exactly who is running these car companies.  President Obama fired the CEO of General Motors, sets salaries and is dictating what kind of cars they can build, among other things.  Obama and his auto task force gave the order to close these dealerships, the actual revenue generators for the auto companies.

As was noted by Senators in the hearing and by House members in special orders floor speeches yesterday, the overwhelming majority of the dealership closures are in rural areas and are owned by Republican donors or politicians. A great deal of them are very profitable. 

Adding more fuel to the fire, Mark Tapscott pointed out in the Washington Examiner, “White House car czar Steven Rattner is married to Maureen White, the former national finance chairman of the Democratic National Committee.”

As each day passes with no disclosure of the process, standards or guidelines used to order these dealerships closed, it is becoming more evident that the Obama administration is using every aspect of this bankruptcy for political purposes.  

Senator Jim DeMint (R-S.C.) opposed the auto bailouts from the beginning, favoring this Chapter 11 bankruptcy process the automakers are now going through — but before U.S. taxpayers dumped billions into the companies to give the Obama administration control.  

DeMint spoke with HUMAN EVENTS yesterday about the circumstances surrounding these ordered closures and the criteria being used by the Obama administration to order the closures.

“Under a normal bankruptcy we wouldn’t have to worry about political manipulation and retribution,” DeMint said.  “When things are done politically behind closed doors, and whether that’s true or not, it becomes an issue of suspicion.  That’s not how we’re supposed to operate.  When we do something like this that goes around our established laws, now everyone is wondering who is going to be the winner and the loser and why? … We’re going down a very dangerous road ignoring laws that are in place and doing things here that are clearly out of political interest rather than the American interest.

I asked DeMint about the legal questions surrounding the legitimacy of using the bankruptcy laws, as Obama administration has done, to end contracts with these dealerships, some very successful, which are the sources of revenue for the auto companies.

“There are a lot of legal questions, and I’ve talked to some dealers back home who got a letter yesterday, dealers who have invested a lot of money and for the most part don’t cost General Motors anything,” DeMint said.  “In fact, they’re kind of a sales asset out there.  They extend the value of General Motors without costing them anything.  They appear to be the last place that should get the shaft.  I think they should have their lawyers looking at whether or not this is violating laws.  A lot of states like South Carolina have franchise protection laws.  But what they’re trying to do with this bankruptcy is ignore what bankruptcy is supposed to do with union contracts and bond holders but apply it to dealers.  I don’t think that is an equitable application of the law.”

At the hearing, the horror stories from these dealerships continued.  Russell Whatley of Russell Whatley Motor Company in Texas testified about the heavy-handedness of the closure process.  

“You just can’t close a dealership in three weeks, it is not possible,” Whatley said.  “Over the past three, four months we were practically forced to order heavy inventories. We were told, ‘Chrysler has no cash-flow,’ that they ‘rely on the dealers,’ and that if we do not order vehicles ‘we will all be out of business.’ We were also told they ‘will remember who did not help.’ Now, we have an eight month supply of vehicles and only 3 weeks to clear them out. Other dealers are full, Chrysler Financial is gone, and GMAC is not on board yet. There is just no place to go.”

Earlier this week, Rep. Jeb Hensarling (R-Texas), the lone sitting Member of Congress on the Congressional Oversight Panel for the TARP program, got an agreement from the oversight panel to hold hearings.  Now he’s joined by ranking Republican Spencer Bachus (R-Ala.) for the House Financial Services Committee calling for oversight hearings into how the Obama administration handled the bankruptcy arrangements for Chrysler and General Motors.

“I was pleased this week that the Congressional Oversight Panel for TARP responded to my call for greater scrutiny of these deals and will convene an oversight hearing for July,” Hensarling said.  “In the same manner, the Financial Services Committee will be negligent in its duties to taxpayers and this body if we choose to ignore the troubling questions that have arisen over the conduct of the Obama Administration’s Auto Task Force.”

“Chairman Frank should join with Ranking Member Bachus and me to ensure that taxpayer dollars were not used to give preferential treatment to the administration’s political allies,” Hensarling concluded.  “If investors perceive that political might, rather than the rule of law, governs the financial markets, it will greatly discourage further participation in our markets — extending our economic downturn.”

Ronald Reagan Statue Unveiled in Capitol Rotunda

A seven-foot bronze statue of Ronald Reagan was unveiled in the Capitol Rotunda yesterday in a ceremony that included former First Lady Nancy Reagan and Former Chief of Staff James Baker.

The former first lady shed a tear when a blue curtain was pulled back revealing the statue of her beloved “Ronnie.”  Nancy Reagan touched the statue’s knee, saying, “The last time that I was in this room, it was for Ronnie’s service.  It’s nice to be back under happier circumstances.”

The Rotunda was packed with the Reagan fraternity and sitting officials.  James Baker told the assembled crowd at the statue unveiling, “It will stand forever as a silent sentry in these hallowed halls, to teach our children and our grandchildren about that which once was and to inspire them with visions of that which can be again — today, tomorrow and unto the generations.”

The sculptor, Chas Fagan, enmeshed the top of the statue’s base with chips of the Berlin Wall running around the perimeter. One of Reagan’s hands rests on a shelf, emblazoned with a torch. The presidential seal is embossed on one side of the base. The California state seal adorns the other. A quote from the 40th president is inscribed on the back: “America’s best days are yet to come. Our proudest moments are yet to be. Our most glorious achievements just ahead.”

I miss Ronald Reagan.