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House's top Republican calls on Obama to suspend GM dealer closings

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House's top Republican calls on Obama to suspend GM dealer closings

GM says a delay would 'divert' attention at a 'critical' time

Neil Roland

Automotive News -- October 25, 2010 - 12:58 pm ET

The House's top Republican called on the Obama administration to suspend plans to close 500 General Motors Co. dealerships this week until a federal investigation of dealer cuts has been completed.

House Minority Leader John Boehner of Ohio joined another Republican lawmaker from the state, Rep. Steven LaTourette, in sending an Oct. 22 letter to the U.S. Treasury Department asking it to intercede with GM.

“As the findings of this investigation may shed much-needed light on the proceedings affecting hundreds of dealerships nationwide, we believe it is necessary to thoroughly analyze its results before continuing with the closures of hundreds of dealerships,” the joint letter said.

500 dealers at stake

Boehner stands to replace Rep. Nancy Pelosi, D-Calif., as House speaker if Republicans take control of the chamber in the Nov. 2 congressional elections.

About 500 GM dealerships that were tagged for termination last year as part of GM's bankruptcy proceeding will see their sales and service agreements expire Sunday, Oct. 31. The federal government owns 61 percent of the automaker.

GM, in an e-mailed statement, said it has no plans to extend the wind down agreements’ deadlines with dealers.

"GM and its dealers have made significant progress over the last several months with a clear focus on selling great cars and trucks and providing a superior retail experience," the statement said.

"An extension would only divert our collective attention at a critical time and would ignore the independent decisions of arbitrators and individual settlement agreements between GM and its dealers."

Treasury spokesman Mark Paustenbach declined to comment.

The Office of the Special Inspector General for the U.S. Troubled Asset Relief Program has said it is investigating possible illegal misconduct in more than 2,000 GM and Chrysler dealer terminations by the automakers and the administration.

The investigation is a follow-up of a July audit performed by the office, headed by former federal prosecutor Neil Barofsky.

Barofsky's office has not said who it is investigating or what specific actions are involved. Nor have investigators said when they expect their work to be completed.

Doubts about savings

The audit raised doubts about the automakers' estimates of cost savings from the dealer cuts. It also expressed concern about GM's lack of documentation on its decision-making process for dealer cuts and the company's deviation from its stated criteria for dealer terminations.

LaTourette had scheduled a 1 p.m. news conference today in the Cleveland area with several auto dealers, including Alan Spitzer, a leader of a group of rejected dealers called the Committee to Restore Dealer Rights.

Last year, LaTourette was the first to introduce a bill to reverse the 2,000 dealer terminations. The legislation, which Spitzer's group pushed, ultimately led to a law setting up dealer arbitration.

Read more: http://www.autonews.com/apps/pbcs.dll/article?AID=/20101025/RETAIL07/101029915/1178#ixzz13Ok4pr6Q

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