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June26,2009

The HonorableBarackObama
President
The White House
1600PennsylvaniaAvenueNW
Washington,DC 20500

DearMr. President:

As minorityMembersof Congress, we respectfully writeto you to expressour seriousconcernson the

financialstabilityof minority-owned autodealerships. Severalsuch dealershipsfrom acrossthecountry
havecontactedus andotherMembersregardingthe harshandunfair financialdemandsthey arefacingas
franchiseddealers.As GeneralMotorsandChryslerreceivefinancialassistance from the federal
government,minority-owneddealerships havenowhereto turn for assistance
andaregoingout of
businessat alarmingrates.On June24,2009, theNationalAssociation of MinorityAutomobile
Dealershipsmet with you andyour staff andexpressed the urgentneedfor the Administrationto useall
availabletoolsto addressthis crisis. It is imperative
thatwe actimmediately.To thatend,we wantto
ensurethattax-payermoneyinjectedinto the autoindustryis alsousedproperlyandeffectivelyto make
creditavailablefor minority-owned dealersin the industry.

Minority autodealerships represent vital componentsof our localcommunities and,if theyareforcedto

close,will leadto higherunemployment andto tremendous andineplaceable lossof localeconomic
revenuefor manyof our communities.In 2008,of the 1000dealerships thatclosed,200wereownedby
minorities.For example,Chryslerhada minoritydealerrepresentation of lessthan5o/o, butterminated
over20Yoof its minority dealerbody. GeneralMotorshada minority dealerrepresentation of lessthan
4Yo,butterminated 20%o of its minoritydealerbody. Theseclosuresrepresent theequivalent of about
150,000directandindirectjob losses.In2009,we projectthatroughly300to 400minority-owned
dealerships will be lost,leadingto an additional250,000 directandindirectjob losses.

In addition,dealership
closingswill havea detrimental
impacton the localtax base.Theestimated
averagedealer'srevenuein 2008was$33million. Thisrevenueis taxedlocallyand,for manyminority
communities, representsa dependablerevenuesource.It is imperativethatwe helpour local
communitiesby trying to savetheserevenuesources.

We respectfullyrequestthat specialconsiderationbe madefor minority-ownedauto dealersin light

of the recentdevelopments with GeneralMotors,GMAC, ChryslerLLC, and ChryslerFinancial.
To assistminority auto dealers,we urgeyou to considerthe followingproposals:

1. Implementationof a Direct Loan Prosram

The SmallBusinessAdministrationor otherappropriateagencyshouldimplementa directloanprogram
designed to provideimmediateaccessto workingcapital.Suchprogramswereimplemented successfully
in 1980(duringthe CarterAdministration)whenthe nation'sdealers,particularlyethnicminority dealers,
facedsimilarfinancialchallenges.Dueto theseprograms,minority-owneddealerships wereableto
surviveduringtheturbulentfinancialcrisisof the 1980's.The 1980programmay serveasa modelfor
structuringa comparableapproachtoday.

PRINTEO
D N R E C Y C L EPDA P E R
2. Modify AAA ReqBiremeqtfor AutomoFileLoans(floor nlannins)Under Term Asset-Backed
SecuritiesLendineF?cilifv (TALF).
Theimmediate restorationof access to floorplanfinancingis essentialto restoringretailautosales.The
financialassistance programannounced by theAdministration on March3,2009,requireseachloanto
havean AAA rating,andexcludesfloor planfinanceloansall together.Franchised autodealersrely on
wholesale "floorplan"financingto buy vehiclesfrom manufacturers. This enables dealersto purchase
neededinventoryto providetheirconsumers with a widevarietyof purchaseoptions.Liquidity
constraintsfelt by the autoindustryasa wholehavehaltedanyfloorplanactivity by lenders.Eventhe
mostcreditworthy dealersareunableto access capitalwith reasonableterms.In caseswherefinancingis
available,dealersareaskedto agreeto financingtermsthatarenot commensurate with therisk to the
borrower.Thesereductions in floorplanlinesof creditandthe increased costsof floorplanfinancingare
dramatically reducingthenumberof vehiclesthata dealermaypurchase from a manufacturer.

We respectfullyrequestconsiderationof the followingproposalsfor thoseminority dealersthat

were either rejectedor terminatedby GeneralMotors or Chrysler:

3. ConsiderRelievi4eDealersfrgm PersonalGuarantqgsfor both Term an4 Floor Plan Loans

Manydealersthattooktermor floorplanloansfrom manufacturers areunableto repaytheseenormous
debts,especially in caseswherea manufactureris forcinga dealershipto closewithoutprovidingfair
compensation (i.e.inadequatewind-downpayments).As a resultof the strictenforcement of thepersonal
guarantees,dealersarelosingtheirhomesandpersonal assets.Dealershaveattempted, withoutavail,to
seekredress throughthebankruptcy courts.Putsimply,it is inconsistent
for thefederalgovernmentto
relievethedebtsof automanufacturers by providingtaxpayerdollarswhile allowingthesesame
manufacturers' captiveinstitutions
to demandthatmoneytheyhaveloanedto dealersmustbepromptly
repaid.

4. Future DearershipOpnortuniliestor Terminated/Reiecled Dealers

In mostcases,th,eclosingof dealershipsis duenotto dealers'poormanagement butto theirlackof access
to workingcapitalandto automanufacturers downsizing theirdealerbody. Dealers,especially minority-
owneddealerships, wantto bepartof thenationaleconomicrecoveryandto supporttheirlocal
economies.We askthatconsideration be givento theaffecteddealersof bothGeneralMotorsand
Chryslerif anduzhentheseautomanufacturers decideto re-enterthe marketplace. We imaginethat,in
mostinstances,a dealerthatwasforcedto closewouldbethebestcandidate to re-establish
a dealership
shouldan automanufacturer decideto returnto the affectedmarketareabecause that dealerwould bring
experience andexpertise.We suggest thata "first right of refusal"be consideredasa meansto ensure
'
thataffecteddealersaregiveneveryopportunity to re-establish theirdealershipsshouldecbnomic r '
conditionsimprove.

5. TARP Fund Allocationto Mingrity DealqrDevelopmentProsrams

Minority-owne:d dealershipswantto be partof theecon,,'mic
recoveryandwill expandon theirsuccessful
business modelsif giventheopportunityto do so. We requestthatyou considerallocatinga portionof
TARP fundsto supportthe minority dealerdevelopment programsfor bothGM andChryslerwhich are
neededto maintainandgrowthenumberof minority-owned dealerships.
Thesedealerships maybenew
to a particularmarket,buttheyhavebeenvery successful in buildingworkingrelationships
u,ithinour
communities.Theuseof TARP fundsto supportminoritydealerdevelopment programs wouldhelp
address thealarmingrisein dealerconsolidation,whichhasbeendisastrous for minoritydealers.As of
the endof 2008,a totalof 1,200minoritydealershipshadbeenconsolidated, reducingthenumberof
minoritydealerships to numbersnot seensincethelate 1980'sandearly 1990's.As thedemographics of
Americacontinqeto changeandminoritypopulations exponentiallygrow,America'sautomobile
dealership bodyshouldreflectthedemographic make-uip
of our nation.
 to preventhundredsof minority autodealersfrom goingout of
Urgentattentionto this issueis necessary
business, disruptingour communities andleavingthousands unemployed.Theautoindustryis composed
of severalpieces.Minority-ownedautodealersarea vital pieceof the puzzleand,moreimportanfly,for
our communities.As the primaryautomotiveretailersin minority communities,minority dealersplaya
criticalrole in providingemployment andsupporting key communityorganizations. Moreover,these
dealersserveasa foundationof thelocaltax basewhich,if lost,wouldnegativelyimpactour
communities.

We respectfully requestyour consideration presented

of theproposals above,Theautoindustryneeds
urgentattention,butthatattentionmustincludea specialfocuson minority-owned dealers,who are
essential
economiccomponents of our communities.We enthusiasticallyseekto work with you in the
creationof fair andviableopportunities to assistminorityautodealersandto providea directloanfundto
supplythemwith workingcapitalandfloorplanfinancing.

Sincerely,

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J9YBACA
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CORRTNEBROWN
Member of Congress Memberof Congress

PEDROPIERLUISI
Memberof Congress Memberof Congress

"0\2l*ffi
MEL WATT
Memberof Congress
GRIJALVA

NAPOLITANO BEN RAY LU

Member of Congress
MIKE HONDA

Memberof Congress