May 22, 2009

Missouri Senators Press Auto Task Force for Answers

Request information on behalf of Missouri dealerships

WASHINGTON, D.C. – In a letter sent today to the Presidential Task Force on the Auto Industry, U.S. Senators Claire McCaskill and Kit Bond sought answers to concerns raised by those Missouri dealerships selling Chrysler and General Motors vehicles that learned last week that their contracts will soon be terminated.
 
Dealerships from across the state have expressed frustration to McCaskill and Bond about the lack of information they have received from Chrysler and GM.  Specifically, they have not been given an understanding of the criteria used to make contract termination decisions.   The two Missouri senators asked the task force today to assist them in getting answers for their constituents, including the criteria used to determine how many and which dealerships would be terminated, as well as the process for dealerships to appeal decisions.
 
In addition, the two Missouri Senators asked for information on how individual GM investors will be fairly represented in the restructuring decisions.
 
The full text of the letter is below.
 
 
May 22, 2009
 
Mr. Steve Rattner
Auto Task Force
U.S. Department of the Treasury
1500 Pennsylvania Avenue, NW
Washington, D.C. 20220
 
Dear Mr. Rattner:
 
We are contacting you on behalf of our constituents who either own or are employed by the Chrysler and General Motors (GM) auto dealerships recently notified that their contracts with these companies will soon be terminated.  Due to questions these constituents have raised, we have several concerns about the decisions that were made as part of the auto restructuring efforts you currently oversee.  While we understand that your office was not directly involved in deciding which or how many dealers should be closed, you do have direct responsibility for reviewing, approving, and overseeing the implementation of the restructuring plans submitted by Chrysler and GM.  To that end, we seek your help in getting answers to our constituents' questions.
 
Concerns have been raised by many of our constituents that Chrysler and GM did not provide dealers with a complete understanding as to why each of their dealer contracts were being terminated.  They have been given virtually no understanding of the criteria used to select their dealership as one for termination, nor an understanding of how such criteria will lead to the long-term viability of the companies.  Many Missouri dealers are asking us why certain profitable dealers, costing the auto companies nothing, were selected for closure.  From this perspective it appears an arbitrary standard may have been used to make these decisions.  We are seeking your help in getting the transparency and answers these dealers are owed.
 
Specifically, we are asking that you and your team provide to us information regarding the criteria used to decide how many and which dealers were eliminated; the role that your office played in the development of that criteria; how those criteria will help the auto companies reach long-term viability; how the Task Force is ensuring dealers are given the proper time, ability and criteria to appeal the decision for closure; and what help, if any, the Auto Task Force will be providing to these dealers in their time of transition.
 
We understand that these were not easy decisions for the companies to make and we firmly believe that it is critical to our nation’s economy and the long-term viability of our domestic auto industry.  However, these dealers deserve a little more than just a pink slip in the mail.  Many of them have been loyal to GM and Chrysler for over thirty years.  They are entrenched in their local communities, providing good paying jobs and quality vehicles.  Now that this all may be slipping away, the least they deserve is a full explanation of their termination.
 
On a related issue, we have also heard from constituents who are individual GM bondholders.  They are concerned that they have been left out of the restructuring efforts.   These constituents are not institutional investors, hedge funds, or private equity firms; they are individual investors who have in some cases invested significant portions of their savings in GM bonds.  We understand there are tens of thousands of these individual GM bondholders across the nation.  While all of the stakeholders will be required to make some sacrifice if GM is to be restructured successfully, we are concerned that these individual investors are not participating in the Administration’s efforts to facilitate that objective.  We request you provide us with a description of the steps that the Task Force will take to ensure that these individuals are represented in the restructuring efforts for GM.
 
We appreciate your immediate attention to these matters and look forward to your response.
 
Sincerely,
 
Claire McCaskill                                                                      
U.S. Senator
 
Christopher Bond
U.S. Senator