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Govt watchdog criticizes handling of car dealers

Goobieman

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Govt watchdog criticizes handling of car dealers
By KEN THOMAS (AP) – 18 hours ago

WASHINGTON — The Treasury Department failed to consider the economic fallout when it told General Motors and Chrysler to quickly shutter many dealerships as part of government-led bankruptcies, a federal watchdog found.

A report released Sunday by the special inspector general for the government's bailout program raised questions about whether the Obama administration's auto task force considered the job losses from the closings while pressuring the companies to reduce costs.

Treasury didn't show why the cuts were "either necessary for the sake of the companies' economic survival or prudent for the sake of the nation's economic recovery," said the audit by Neil Barofsky, the special inspector general for the Troubled Asset Relief Program, the $787 billion stimulus program known as TARP.

"Treasury made a series of decisions that may have substantially contributed to the accelerated shuttering of thousands of small businesses," investigators said.

Those decisions resulted in "potentially adding tens of thousands of workers to the already lengthy unemployment rolls — all based on a theory and without sufficient consideration of the decisions' broader economic impact," the report said.
The Associated Press: Govt watchdog criticizes handling of car dealers

Excellent work, Your Majesty. Without Your wise leadership, we surely would all perish.
 

Deuce

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I'll take some jobs lost over all of the jobs lost.
 

Goobieman

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I'll take some jobs lost over all of the jobs lost.
As noted in the story and the OP:

Treasury didn't show why the cuts were "either necessary for the sake of the companies' economic survival or prudent for the sake of the nation's economic recovery,"
 

Deuce

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As noted in the story and the OP:
Without the bailout, the presumption is that GM would not presently be operating at all, right?

Especially when it is not YOUR job!
Yes. If my choice is firing 5,000 people or 10,000 people, I'll choose the 5,000. (assuming all other factors equal. I'd fire 10,000 news commentators before I fired 1 school teacher! ;) )
 

The Dane

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As noted in the story and the OP:
No, AS NOTED IN THE STORY BUT NOT THE OP:

Herbert M. Allison Jr., Treasury's assistant secretary for financial stability, said the administration's actions "not only avoided a potentially catastrophic collapse and brought needed stability to the entire auto industry, but they also saved hundreds of thousands of American jobs and gave GM and Chrysler a chance to re-emerge as viable, competitive American businesses."
Yeah, I don't know why some of you guys try to snag us with edited news stories.
 

Lord Tammerlain

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Note to the Watch Dog


General Motors wanted to close down quite a few dealerships before they went bankrupt and sought government money. They could not at the time because of contracts that could only be nullified in bankruptcy.

This was not some strange idea thought up by the government, but something the domestic auto companies wanted to do but could not without paying the dealers out (which they could not afford to do)
 

Goobieman

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Without the bailout, the presumption is that GM would not presently be operating at all, right?
That's YOUR presumption. The story says:

Treasury didn't show why the cuts were "either necessary for the sake of the companies' economic survival or prudent for the sake of the nation's economic recovery,"
 

Goobieman

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No, AS NOTED IN THE STORY BUT NOT THE OP:
Yes.
An adminitration official disagreed with a report that makes the administration look bad.
What a surprise.
 

The Dane

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No, the story contradicts itself:

Herbert M. Allison Jr., Treasury's assistant secretary for financial stability, said the administration's actions "not only avoided a potentially catastrophic collapse and brought needed stability to the entire auto industry, but they also saved hundreds of thousands of American jobs and gave GM and Chrysler a chance to re-emerge as viable, competitive American businesses."
 

Deuce

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That's YOUR presumption. The story says:
The bailout, not the cuts. The bailout is the reason GM still exists at all, is what I was saying.

But yes, if these particular job cuts were truly unnecessary then it was a bad decision. But somebody saying so doesn't necessarily make it so.
 

Goobieman

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No, the story contradicts itself:
In so far as the charge was answered by an adminitration official disagreed with a report that makes the administration look bad.
 

Goobieman

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The bailout, not the cuts. The bailout is the reason GM still exists at all, is what I was saying.
10-4.

But yes, if these particular job cuts were truly unnecessary then it was a bad decision. But somebody saying so doesn't necessarily make it so.
Do you have a specific reason to question the credibility of the group or or the accuracy of its conclusion?
 
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The Dane

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Yes.
An adminitration official disagreed with a report that makes the administration look bad.
What a surprise.
Uhh, your entire premise was that the treasury could not show why they made those cuts and that it was completely theory. Wellllll here is someone from the treasury completely disagreeing with that so you're kind of **** out of luck there son.
 

Goobieman

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Uhh, your entire premise was that the treasury could not show why they made those cuts and that it was completely theory. Wellllll here is someone from the treasury completely disagreeing with that so you're kind of **** out of luck there son.
Somebody (who has a vested interest in protecting the credibility of the Administration from news that makes it look bad) saying so doesn't necessarily make it so.

Do you have a specific reason to question the credibility of the group or the accuracy of its conclusion?
 

Lord Tammerlain

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Somebody (who has a vested interest in protecting the credibility of the Administration from news that makes it look bad) saying so doesn't necessarily make it so.

Do you have a specific reason to question the credibility of the group or the accuracy of its conclusion?
Yes

The accuracy of the conclusion is in question because GM wanted to close some dealerships before its bankruptcy and was doing so




Having shuttered factories and eliminated hundreds of thousands of automaking jobs, Ford Motor (F), General Motors (GM) and Chrysler are now turning their attention to weeding out weaker dealers in bigger metro markets. They make fewer vehicles, so they don't need as many places to sell them.

Keystone was neither one of the biggest nor most prominent dealers. But it is one of the many that are disappearing. GM has reduced its dealerships by 229 to 6,807 in the past year; Ford had shrunk by 139 to fewer than 4,140 as of July; and Chrysler had eliminated 142 to 3,607 as of October.

Auto dealerships are almost always privately owned, either by big chains or individual families such as Stutzke's. Automakers are forced to argue, pay off or otherwise persuade the feeble ones to give

Updated 1/3/2008
The Treas was just accerating the closing of dealerships that would at the end of the day make GM and Chrysler more competitive and likely to survive
 

TOJ

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Somebody (who has a vested interest in protecting the credibility of the Administration from news that makes it look bad) saying so doesn't necessarily make it so.

Do you have a specific reason to question the credibility of the group or the accuracy of its conclusion?
Yeah. It makes the administration look like the incompetent, fools they are. ;)

.
 

Goobieman

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The accuracy of the conclusion is in question because GM wanted to close some dealerships before its bankruptcy and was doing so
This doesnt question the accuracy of the conclusion in any way - that GM may have wanted to close some dealerships doesnt necessarily mean that closing those dealerships were necessary for the survival of GM, the success fo the bail-out or the success fo the stimulus in general.
 

Lord Tammerlain

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This doesnt question the accuracy of the conclusion in any way - that GM may have wanted to close some dealerships doesnt necessarily mean that closing those dealerships were necessary for the survival of GM, the success fo the bail-out or the success fo the stimulus in general.
The closure of weak dealerships would cost GM less money in advertising, provide better customer service (through better capitalized dealerships) probably increase sales over time.

GM wanted to dump a large number of dealerships before it went into bankruptcy to make it a more profitable car company not just because it felt like it. It's bankrupcty and the government assistance allowed it to do what it wanted to do before, quicker and with less costs to the company. Overall GM would not have wanted to close the dealerships without a good reason (ie to make GM more money) which does mean the government closing the dealerships would have the same cause
 

Goobieman

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The closure of weak dealerships would cost GM less money in advertising, provide better customer service (through better capitalized dealerships) probably increase sales over time.

GM wanted to dump a large number of dealerships before it went into bankruptcy to make it a more profitable car company not just because it felt like it. It's bankrupcty and the government assistance allowed it to do what it wanted to do before, quicker and with less costs to the company. Overall GM would not have wanted to close the dealerships without a good reason (ie to make GM more money) which does mean the government closing the dealerships would have the same cause
You're just re-stating your original premise, in an expanded form. Doing so does not negate my presponse, and does not create a specific question as to the credibility of the conclusion.
 

Lord Tammerlain

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You're just re-stating your original premise, in an expanded form. Doing so does not negate my presponse, and does not create a specific question as to the credibility of the conclusion.
The credibility of the conclusion is questioned because GM wanted to close dealerships as well, before the economic crisis. Had GM and Chrysler not wanted to close dealerships before the crisis, I would accept the finding of the conclusion. But that is not the case, and the conclusion as such is questionable as a result


I would agree with the criticism in the way dealerships were closed

The audit also found that General Motors "did not consistently follow its stated criteria" for reducing its dealer network and noted that Chrysler failed to offer an appeals process.
but not that dealerships were to be closed.
 
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Goobieman

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The credibility of the conclusion is questioned because GM wanted to close dealerships as well, before the economic crisis.
No. Its not. Nothing in this illustrates that the closing of the dealerships, in total or on part, were -necessary- for the -survival- of GM or the economic recovery -of the nation-.
 

Lord Tammerlain

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No. Its not. Nothing in this illustrates that the closing of the dealerships, in total or on part, were -necessary- for the -survival- of GM or the economic recovery -of the nation-.
Then why did GM want to close dealerships before hand?

For the fun of it?
 

Goobieman

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Then why did GM want to close dealerships before hand?
For the fun of it?
To possibly make more money.
This is different that it being -necessary for the survival of the company or -the economic recover of the nation-.
 

Lord Tammerlain

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To possibly make more money.
This is different that it being -necessary for the survival of the company or -the economic recover of the nation-.
So when a company is losing money, and is very close to bankrupcty,( or in bankrupcty) cutting costs to make more money is not vital to the survival of the company?

GM had to cut costs to survive as a profit making institution, the cutting of dealerships was one part of the overall cuts that GM had to make in order to survive. Other's included cuts to wages, salaries, the number of people employed by GM directly.
 
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