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| July 20, 2010: President Obama’s Auto Task Force pressed General Motors and Chrysler to close scores of dealerships without adequately considering the jobs that would be lost or having a firm idea of the cost savings that would be achieved, an audit of the process has concluded, according to The New York Times. The report by Neil M. Barofsky, the Special Inspector General for the Troubled Asset Relief Program of the Treasury Department, said both carmakers needed to shut down some underperforming dealerships. But it questioned whether the cuts should have been made so quickly, particularly during a recession. The report, released on Sunday, July 18, 2010, estimated that tens of thousands of jobs were lost as a result. “It is not at all clear that the greatly accelerated pace of the dealership closings during one of the most severe economic downturns in our nation’s history was either necessary for the sake of the companies’ economic survival or prudent for the sake of the nation’s economic recovery,” the report said. The report does not make any recommendations, and is a review of the process. The document does not carry the authority to initiate corrective action. General Motors and Chrysler, which went through separate six-week stays in bankruptcy protection in 2009, received about $62 billion under the Troubled Asset Relief Program. GM repaid $6.7 billion in April, 2010, but the remainder of its government debt was converted into a 61 percent equity stake. The Treasury owns 8 percent of Chrysler. Treasury officials, in a letter of response, said they “strongly disagree” with the report’s conclusions, arguing that the administration’s actions toward GM and Chrysler “not only avoided a potentially catastrophic collapse” but also “saved hundreds of thousands of American jobs.” About a year ago, GM informed more than 2,000 dealers that some or all of their franchise agreements would not be renewed in October, 2010. Chrysler eliminated 789 dealers, or about a quarter of its network, with less than a month’s notice. Both carmakers voluntarily rescinded some terminations--666 at GM and 50 at Chrysler--which, the report said, “suggests, at the very least, that the number and speed of the terminations was not necessarily critical to the manufacturers’ viability.” |
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