Congress' fight to restore dealerships axed as part of the restructuring of General Motors Co. and Chrysler Group LLC appears to be reaching its crescendo, as legislation winds its way through the House and the Obama administration hints it could be open to a deal.
The provision to restore dealerships terminated as part of the automakers' Chapter 11 cases, part of a financial services spending bill, is scheduled to be voted on by the full House on Thursday. With 243 of the chamber's 435 members listed as co-sponsors, passage seems likely.
It is still unclear whether the legislation can get through the Senate, or how lawmakers would go about undoing the past and restoring these dealerships if it somehow was signed into law. The White House, whose automotive task force helped usher the automakers through bankruptcy and supported the dealership cuts,
according to Automotive News told Congress Wednesday it "strongly opposes" the legislation and worries "it would set a dangerous precedent, potentially raising legal concerns, to intervene into a closed judicial bankruptcy proceeding on behalf of one particular group."
But this is not just any group. Dealers tend to be big employers, Little League sponsors and contributors to congressional election campaigns. And so far lawmakers show no sign of backing down.
Many have long suspected the ultimate resolution will not be to have the dealerships restored, but rather some sort of settlement that is more likely to be paid by the U.S. Treasury than by GM or Chrysler. Indeed, even Rep. Steven LaTourette, R-Ohio, author of the provision, told Auto News "the purpose of my bill was to keep the pressure on" and said an agreement other than legislation would be best.
The White House, according to participants, is open for a compromise. With all parties interested in dealing, and considering the potential ramifications to established bankruptcy law if the terminations are reversed, expect some sort of settlement sooner rather than later. -
Lou Whiteman
Lou Whiteman is a senior writer covering the automotive, transportation and industrial sectors. Follow him on Twitter @louwhiteman
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