Saturday, May 23, 2009

Chrysler Dealers

In most communities auto dealers are among the local power elite. I wonder how many auto dealers vote Democratic. I ask this question after reading this article about how Chrysler dealers are being treated in the auto bailout. The disaffected have formed
the Committee of Chrysler Affected Dealers, who are contesting the company’s action. Next week and on June 3, the bankruptcy judge handling Chrysler’s case will consider their objections.

Many of those fighting the hardest are dealers who recently spent huge amounts of money to stay in the company’s good graces, who sacrificed their own profits to help keep the company intact or who otherwise thought they had bent over backward to ensure that Chrysler could survive, only to learn that they were the ones who would not.
Now I am certainly not contesting the view that Chrysler and GM have too many dealers. It is just that Chrysler and GM had too much of everything, but given electoral politics it seems that the President's auto task force is listening to the electoral polls as it distributes the burden among workers, bondholders, and dealers.

This has led to complaints from a group of Congressmen who argue (according to this article in the Post) that
the auto task force is waging a "war on capital" by favoring the United Auto Workers, who are being offered a 39 percent equity stake in the new GM, over bondholders, many of them small investors and retirees, who are being offered 10 percent.
The irony here, of course, is that most of the same Congressmen voted against any bailout when this issue was before the Congress. Given that they punted the ball to the President is it cool now to complain and demand that the ball be returned?

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