Kelly demands answers on dealership closings
Stirred by the Internal Revenue Service’s mea culpa over its targeting of conservative groups, U.S. Rep. Mike Kelly wants to know if politics played a role in the closing of nearly 3,000 car dealerships during the auto industry bailout.
A Republican and Butler car dealer, Kelly last week sent a letter to Treasury Secretary Jack Lew demanding answers to questions concerning actions taken as part of the $80 billion federal loan to General Motors and Chrysler during the financial crisis in 2008 and 2009.
Kelly, a two-term congressman from the 3rd District, which includes all of Butler County, co-wrote the letter with fellow GOP congressman and former car dealer Rep. Jim Renacci of Ohio.
“I’m not accusing anyone. I’m only asking questions that I believe need answered,” Kelly told the Butler Eagle.
“Some dealers always thought political profiling may have been involved in deciding which dealerships were closed and which remained open. And given what the IRS has done, you now say, anything is possible.”
Kelly and Renacci, a native of suburban Pittsburgh, both owned car dealerships before the financial crisis that began five years ago.
Kelly’s business is still open in Butler Township. However, Renacci’s was closed.
Renacci, whose Canton-based district stretches from Lake Erie to Wooster in northeast Ohio, was a self-proclaimed “big supporter” of Republican Sen. John McCain during the 2008 presidential campaign.
“I raised a lot of money for Sen. McCain,” Renacci said to the Butler Eagle. “I often wondered if that had something to do about the decision to close my dealership.”
He said he hopes the letter he and Kelly sent to Lew on Thursday will answer his concerns.
“We are troubled by the recent reports from the Treasury Department indicating that the Internal Revenue Service targeted groups for excessive scrutiny on the basis of their political affiliation,” the congressmen said in their letter.
“This news raises serious questions about past decisions made by the department regarding auto dealership closures that occurred in 2008 and 2009.”
Kelly and Renacci said they want Lew to disclose the criteria and the names of officials who crafted the criteria that went into choosing which dealerships to shutter.
They referred to the 2010 report by a special inspector general for the Troubled Asset Relief Program that found “little or no documentation of the decision-making process to terminate or retain dealerships with similar profiles, or of the appeals process.”
The recent revelations about the IRS’ politically biased scrutiny of conservative groups raised new concerns about the SIGTARP findings, Kelly and Renacci said.
“We formally request all e-mails, phone records, notes, memoranda, reports, and other communications regarding the decision-making process for dealership closures from the Automotive Task Force,” the letter said.
Kelly and Renacci admit they remain bitter over the Obama administration’s plan that restructured the automobile industry. Specifically, they are angered by what they believe was the callous treatment many dealers received during the bankruptcy process.
That anger was the driving force in their decisions to run for Congress in 2010. They would both go on to defeat Democratic incumbents.
Kelly recalled being told in 2009, following the government’s initial bankruptcy plan, that his family owned Chevrolet and Cadillac dealership founded by his father in 1953 could no longer sell Cadillacs.
After a heated phone conversation with a GM executive, he decided to fight. He went to arbitration and won the right to continue selling Cadillacs.
But his victory did not come without a cost.
“I probably paid $60,000 to $70,000 in legal fees,” he said. “I never got that money back.”
Renacci’s story has a different ending.
In 2006, he bought his Chevy dealership with GM’s blessing after the former owner ran into legal problems that jeopardized the 50-year-old business in Wadsworth, about 35 miles southeast of Cleveland.
Renacci, a certified public accountant with a long resume of successful business ventures, said he was “absolutely shocked” when he received his so-called “wind-down letter” from GM, telling him that his dealership would be closed as part of the government’s restructuring plan.
“I brought (the dealership) back to life,” he said. “I had a great relationship with GM.”
But after he got his letter and tried to talk to someone at the company, they wouldn’t take his call.
He opted not to participate in the arbitration process because by then, his business was losing market share to dealerships that were slated to stay open.
To this day, Renacci and Kelly say they do not know why certain dealers were spared and others were not.
That nagging question is the reason for last week’s letter to the Treasury Department. Neither Kelly nor Renacci has gotten any response yet.
An e-mail the Butler Eagle sent Monday to the Treasury Department seeking comment was not immediately answered.