House reverses Obama on car dealerships

It seems Obama's star power is fading rapidly. The Treasury Appropriations bill was passed 219-209 yesterday in the House. The roll call shows that the 219 is 215 dems and 4 pubs.

Tucked away in the bill is a provision that is a bit of extortion: No money can be used to obtain a financial ownership in any car manufacturer if that manufacturer deprives a car dealer of its economic right under its dealer agreement. Thump!

"The measure would overturn bankruptcy court decisions to shutter 789 Chrysler dealers and more than 2,000 GM dealers. In Ohio, 47 Chrysler dealerships and 79 GM dealerships would be affected. The closings would eliminate more than 100,000 jobs across the nation and roughly 8,700 jobs in Ohio, the industry's trade association predicts."

More good stuff from the amendment's author, Rep. Steve LaTourette, (R-Ohio), “I don’t think Chrysler or GM has been able to demonstrate there is a savings associated with fewer dealers, since the dealers themselves bear the costs of operating their dealerships with little help from the manufacturers,” LaTourette said. “I think the closing of these dealerships was punitive and secretive, and it’s the most un-American thing for the government to help force you out of business and deprive you of the American dream.”

"The Administration strongly opposes the language in the bill that attempts to restore prior Chrysler and General Motors (GM) franchise agreements. The auto companies, like many in the country, face difficult economic and fiscal decisions. The Administration shares the Committee’s concern for dealers affected by Chrysler and GM bankruptcy agreements, and has taken steps to help support viable dealerships during this transition. For example, [blah, blah, blah] ...

"Sec. 745. (a) None of the funds made available in this or any other Act may be used to obtain a financial or ownership interest (or right to acquire such an interest) in an automobile manufacturer that deprives an automobile dealer of its economic rights under a dealer agreement and does not assume (or assign to a successor in interest) each dealer agreement which is valid and in existence (and has not been lawfully terminated under applicable State law) before the date of the commencement of a case under title 11, United States Code, by such automobile manufacturer. (b) Any automobile manufacturer with respect to which the Federal Government has a financial or ownership interest (or right to acquire such an interest) shall, to the extent that a valid dealer agreement existing immediately before the date of the commencement of a case under title 11, United States Code, by such automobile manufacturer is not assumed by or assigned to another automobile manufacturer, require any new entity created in such case to enter into a new dealer agreement with the dealer whose agreement was not so assumed or assigned, and on the same terms as existed immediately before such date."

since the dealers themselves bear the costs of operating their dealerships with little help from the manufacturers,” LaTourette said.

So, this guy thinks he fixed the problem right?...wrong. As Chrysler/Jeep/Dodge master certified technician, I can attest that this situation is not that cut and dry afterall.
No, Dealer can do business without a contract with the FACTORY. If the factory/manufacturer do not want to renew the contract, no law can reverse that!

Further more the notion that the Dealers finance themselves is utterly ridiculous!Unless you are a very well capitalized Dealer, which I doubt it!
The way the Dealer system works is thru "flooring" a system whereby a third party finances your purchase of vehicle(i.e. banks, and/or the factory)They are buying the vehicles to sit on your lot and collecting flooring money(xyz amount a day).When the vehicle is sold the flooring will be added to the final selling price.

It is also known that the factory paid the lease/mortgage/rent of the dealer's property, not to mention a host of other goodies slipped under the warranty claims for vehicles way out of warranty.

To me this bit of feel good BS of government intervention is going to hurt the factory/dealer relationship, by making the manufacturer more rigid in it's decisions.
To make it simple, the manufacturer can go and nullify the dealer's contract when due for renewal!

Further more the notion that the Dealers finance themselves is utterly ridiculous!Unless you are a very well capitalized Dealer, which I doubt it!

The way the Dealer system works is thru "flooring" a system whereby a third party finances your purchase of vehicle(i.e. banks, and/or the factory)They are buying the vehicles to sit on your lot and collecting flooring money(xyz amount a day).When the vehicle is sold the flooring will be added to the final selling price.

OK, as I understand what you are saying is the dealer is buying his inventory on short term credit from Ford, Chrysler or GM. Financing is either from financing arms of the manufacturer or a bank.

When the car is sold the loan is repaid with interest.

The issue of the dealer defrauding the manufacturer on warranty work aside, I do not see where your argument that the dealers are not standing or falling on their own efforts holds water.

If the manufacturer is loaning the money to the dealer and making a profit on the loan I do not see how that is an additional cost of doing business with a given dealer.

Here in my area several very large and profitable dealers had their dealerships closed by the bankruptcies. These dealers moved a lot of cars for GM and Chrysler. Closing them did not from my point of view make sense.

it is a big bill:

H.R.3170
Financial Services and General Government Appropriations Act, 2010

They would have to vote yes to all of it.
Don’t be so fast to shoot them down on it. They may have been doing us quite a favor.
When we look through the legislation, we may be asking, why the hell did any republicans vote for this at all!

It has these sections in it:

Beginning
TITLE I
DEPARTMENT OF THE TREASURY
Departmental Offices
department-wide systems and capital investments programs
treasury inspector general for tax administration
Financial Crimes Enforcement Network
Treasury Forfeiture Fund
(rescission)
Financial Management Service
Alcohol and Tobacco Tax and Trade Bureau
United States Mint
united states mint public enterprise fund
Bureau of the Public Debt
administering the public debt
Community Development Financial Institutions Fund Program Account
Internal Revenue Service
taxpayer services
enforcement
operations support
business systems modernization
health insurance tax credit administration
administrative provisions—internal revenue service
Administrative Provisions—Department of the Treasury
TITLE II
EXECUTIVE OFFICE OF THE PRESIDENT AND FUNDS APPROPRIATED TO THE PRESIDENT
Compensation of the President
The White House
Executive Residence at the White House
reimbursable expenses
White House Repair and Restoration
Council of Economic Advisers
National Security Council
Office of Administration
Office of Management and Budget
Office of National Drug Control Policy
Federal Drug Control Programs
high intensity drug trafficking areas program
other federal drug control programs
Unanticipated Needs
Partnership Fund for Program Integrity Innovation
Special Assistance to the President
Official Residence of the Vice President
Administrative Provisions—Executive Office of the President and Funds Appropriated to the President
TITLE III
THE JUDICIARY
Supreme Court of the United States
care of the building and grounds
United States Court of Appeals for the Federal Circuit
United States Court of International Trade
Courts of Appeals, District Courts, and Other Judicial Services
defender services
fees of jurors and commissioners
court security
Administrative Office of the United States Courts
Federal Judicial Center
Judicial Retirement Funds
payment to judiciary trust funds
United States Sentencing Commission
Administrative Provisions—The Judiciary

Sec. 307. Section 203(c) of the Judicial Improvements Act of 1990 (Public Law 101-650; 28 U.S.C. 133 note), is amended—

TITLE IV
DISTRICT OF COLUMBIA
Federal Funds
federal payment for resident tuition support
federal payment for emergency planning and security costs in the district of columbia
federal payment to the district of columbia courts
defender services in district of columbia courts
federal payment to the court services and offender supervision agency for the district of columbia
federal payment to the district of columbia public defender service
federal payment for water and sewer services
federal payment to the criminal justice coordinating council
federal payment for judicial commissions
federal payment to the office of the chief financial officer of the district of columbia
federal payment for school improvement
federal payment for consolidated laboratory facility
federal payment for the district of columbia national guard
federal payment for housing for the homeless
federal payment for youth services
federal payment for public health services
District of Columbia Funds
TITLE V
INDEPENDENT AGENCIES
Administrative Conference of the United States
Consumer Product Safety Commission
Election Assistance Commission
election reform programs
Federal Communications Commission
Federal Deposit Insurance Corporation
office of the inspector general
Federal Election Commission
Federal Labor Relations Authority
Federal Trade Commission
General Services Administration
real property activities
federal buildings fund
limitations on availability of revenue
general activities
government-wide policy
electronic government fund
allowances and office staff for former presidents
federal citizen services fund
administrative provisions—general services administration

Sec. 501. Funds available to the General Services Administration shall be available for the hire of passenger motor vehicles.

Merit Systems Protection Board
Morris K. Udall Scholarship and Excellence in National Environmental Policy Foundation
morris k. udall scholarship and excellence in national environmental policy trust fund
environmental dispute resolution fund
National Archives and Records Administration
operating expenses
electronic records archives
repairs and restoration
national historical publications and records commission
grants program
National Credit Union Administration
central liquidity facility
community development revolving loan fund
Office of Government Ethics
Office of Personnel Management
(including transfer of trust funds)
government payment for annuitants, employees health benefits
government payment for annuitants, employee life insurance
payment to civil service retirement and disability fund
Office of Special Counsel
Postal Regulatory Commission
Privacy and Civil Liberties Oversight Board
Securities and Exchange Commission
Selective Service System
Small Business Administration
surety bond guarantees revolving fund
business loans program account
disaster loans program account
(including transfers of funds)
administrative provisions—small business administration
United States Postal Service
payment to the postal service fund
office of inspector general
United States Tax Court
salaries and expenses
TITLE VI
GENERAL PROVISIONS—THIS ACT
TITLE VII
GENERAL PROVISIONS—GOVERNMENT-WIDE
Departments, Agencies, and Corporations

Sec. 721. (a) In this section, the term `agency’—

(transfer of funds)

Sec. 738. (a) Definitions- For purposes of this section the following definitions apply:

TITLE VIII
GENERAL PROVISIONS—DISTRICT OF COLUMBIA
(including transfer of funds)
TITLE IX
ADDITIONAL GENERAL PROVISIONS

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