Congress may help dropped auto dealers

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WASHINGTON (Reuters) -- U.S. lawmakers whose home districts include General Motors Corp. and Chrysler LLC operations in Michigan are weighing the possibility of legislation to help auto dealers being dropped by the two distressed companies.

Senate and House officials told reporters on Thursday that Congress could intervene to at least soften the landing for dealers being notified this week that their contracts will not be renewed.

Bankrupt Chrysler said earlier on Thursday that it would terminate 789 U.S. dealerships. GM (GM, Fortune 500) is expected to notify up to 2,000 dealers about termination, sources have told Reuters.

"I have more questions for the companies themselves as to what the process is going to be going forward," said Rep. Gary Peters. "Dealers understand there will be consolidation. They want an orderly process."

Dealers have met with congressional officials and members of the Obama administration's autos task force, which is overseeing industry restructuring, to try to get Washington to slow the downsizing.