Back in July, the Special Inspector General for the TARP program (SIGTARP) released a damning report on GM and Chrysler’s efforts to cull dealers during their government-overseen bailout-bankruptcies. The upshot: GM and Chrysler handled the culls either inconsistently or subjectively, and the President’s auto task force pressed the issue unnecessarily and “without sufficient consideration of the decisions’ broader economic impact.” And though that report, the product of a year’s worth of investigation, made the automakers and their government “saviors” look mighty stupid, the awkward walk-back of most of the dealer cuts had already made the point fairly well. But with the TARP program now largely rolled up, the SIGTARP’s office has been bulking up on investigators, targeting fraud and criminal activity around the entire TARP program. And, according to Automotive News [sub], the dealer cull is on the agenda. SIGTARP won’t “disclose the targets of the investigation or the actions being probed,” but it has “opened a follow-up investigation of possibly illegal activity in the [dealer-cull] effort.”
There are plenty of possible targets… especially if you ask aggrieved former dealers. Some point to holes in GM’s documentation of dealer cull decision making. Some point to “false statements” in congressional testimony by GM’s Fritz Henderson, Chrysler’s Jim Press and others, especially in regards to the claimed cost savings of cutting dealers (an issue the SIGTARP report tackled specifically). Others point to a seemingly endless list of possible “inside deals” in which struggling but well-connected dealers were spared at the expense of profitable dealerships. Wherever SIGTARP comes down on possible illegal activity in the dealer cull, it’s good to know that more light is being cast on that murky and controversial chapter in the great Detroit rescue.