DETROIT — President Barack 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.
The report by Neil Barofsky, the special inspector general for the Treasury Department’s Troubled Asset Relief Program, 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 Sunday, 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 serves more as a review of the process. It does not carry the authority to initiate any corrective action.
But it comes at a politically sensitive time for the Obama administration, which is facing skepticism from the public about the strength of the recovery and criticism from Republicans who are seizing on the economy — including the effectiveness of the federal bailout — as an issue heading into the midterm elections.
GM and Chrysler, which went through separate six-week stays in bankruptcy protection last year, received a total of $62 billion under the Troubled Asset Relief Program. GM repaid $6.7 billion in April, 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.”
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