Why Punish Auto Dealers?
The bankruptcy and restructuring of two great American companies has resulted in trade-offs, compromises, risks and losses by many stakeholders including suppliers, employees, bondholders, taxpayers and, of course, entire communities. One group in particular, however, has been singled our for particularly harsh and inexplicable punishment: auto dealers.

The forced closure of family-owned businesses around the country is the most Orwellian economic "recovery" measure in memory. Perhaps decision makers think that shuttering community-based businesses, killing jobs and reducing competition will help spur auto sales. If so, then the notion was dreamed up by the folks who thought credit default swaps based on subprime mortgages was a good idea.

One group, however, is being protected in the GM bankruptcy, trial lawyers. With NGOs leading the charge, supported by some state attorneys general, GM has agreed to aid the litigious lawyers. While GM had planned to leave product-liability claims behind in bankruptcy court, "The Center for Auto Safety, Consumer Action, Consumers for Auto Reliability and Safety, National Association of Consumer Advocates and Public Citizen filed objections to the GM bankruptcy sale because it attempted to immunize the new GM from claims of people who have been or will be victimized by defective GM vehicles."

As a result of the pressure, "G.M. has told a bankruptcy court in Manhattan that it is willing to accept responsibility for owners of current vehicles, who have accidents in the future and file product-liability suits." Since the new GM will be mostly government owned, the cost of the inevitable lawsuits, including attorneys fees, will be, in essence, charged to taxpayers. While the agreement allows dealers some recourse in state courts, for many it is too little, too late.

If the NGOs were truly acting in the public interest, they would support the small businesses that built this country, not lawyers feeding off the remains.

See Consumer Affairs