The government-led bankruptcy reorganizations "have been the leading edge of the Obama administration's war on capitalism," Rep. Lamar Smith, R-Texas, said during a House Judiciary Committee meeting.
When Washington gets involved in a company, "the disaster that follows is predictable," The Washington Post quoted Rep. Trent Franks, R-Ariz., as saying.
Shutting down more than 2,700 dealerships amounts to an "unprecedented taking," said Rep. Darrell Issa, R-Calif.
Chrysler is eliminating 789 dealerships, while GM is cutting nearly 2,000. The House recently approved a bill that would reverse those closings.
Reversing or stopping the dealership closings could threaten the automakers' turnarounds and keep them from repaying billions in government loans, administration automotive task force head Ron Bloom told the panel.
But committee members expressed outrage that profitable and longstanding dealerships in their districts had been eliminated, The New York Times reported.
Rep. Henry Johnson, D-Ga., called the closings "mindless" and "devastating." He said he feared they suggested anyone who had contributed to the automakers' past success was now expendable.
Rep. Dan Maffei, D-N.Y., said, "There's been very little transparency into how these closings were done."
Bloom insisted the government played no role in choosing which dealerships should stay open, despite having a stake in the new Chrysler and GM, the Times said.
He rejected claims that minority dealers had been affected disproportionately or that a dealer's political leanings had been considered.
He also said the bailout saved "literally hundreds of thousands of jobs."