Obama: Don’t protect Chrysler, GM dealerships image

President Barack Obama “strongly opposes” an effort in Congress to require General Motors Corp. and Chrysler LLC to restore relationships shed during bankruptcy proceedings, while stopping short of a veto threat.

The administration said today in a statement that “the decision by Chrysler and GM to rationalize their dealer networks was a critical part of their overall restructuring to achieve long-term viability in order to save jobs in the long run.”

The statement also said it would set a “dangerous precedent” to “intervene into a closed judicial bankruptcy proceeding on behalf of one particular group at this point.”

The House of Representatives is slated to vote tomorrow on a bill that would require the automakers to restore their franchise agreements as a condition of receiving federal aid. The plan, opposed by both GM and Chrysler, comes amid complaints from lawmakers that the carmakers terminated dealerships with little notice or explanation.

GM plans to shutter about 2,400 dealerships, said spokesman Greg Martin, Chrysler officials have said 789 dealerships were targeted for closing.

While the bill is likely to pass the House, it received a chilly response from the Senate’s top Democrat. Senate Majority Leader Harry Reid of Nevada said yesterday that “when you have a bankruptcy, there are winners and losers.”

He also said “we’ll be happy to take a look at” the House proposal, “but it’s nothing that is certainly on top of the agenda in the Senate at this time.”

The plan was attached to an annual spending bill setting the Treasury Department’s budget for the 2010 fiscal year beginning Oct. 1.