Update on the GM Crisis

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Details on the GM crisis are continuing to unfold. According to the Wall Street Journal, it appears that the entire ignition problem can be traced to a $2-5 part. Transportation Secretary Anthony Foxx is insisting that the NHTSA would have acted sooner, but its investigation of 3 of the crashes in question were inconclusive. Here are the 3 key issues at this point.

1. GM knew there was an ignition problem–probably for 10+ years–and could have fixed it but did not. GM has immunity for pre-2009 cases because of the bankruptcy deal and is not commenting on calls to waive it. The company insists that it’s committed to doing the right thing, but that currently includes $500 for unhappy customers towards the lease or sale of a new GM vehicle. Just imagine if Toyota had suggested this as the fix for it’s brake crisis.

2. The NHTSA either chose not to pursue the case or lacked the ability to investigate complaints properly, or both. Our taxpayer funded “watchdog” is demanding answers from GM but it is unclear what will be done if the answers are not satisfactory. A serious, independent investigation of the NHTSA is in order.

3. At least some of the GM executives involved in the bankruptcy restructuring negotiations had to have known at the time this would probably be made public at some point, but they said nothing. That deal was pushed by President Obama and the UAW. It allowed the “new GM” to obtain tax benefits by counting some future profits against some “old GM” losses, but did not require the “new GM” to accept product liability linked to the “old GM.”

A few Democrats are calling for more investigations, but none have called for GM to waive its immunity and accept all legal responsibility. In the end, GM might very well be pressured into establishing a “fund” for the victims, but my guess is nothing more. The goal now is the pin the problem on the “old (pre-bailout) GM.” It’s still difficult to tell exactly how this case will end, but it has already raiseed serious questions about GM, the NHTSA, and the entire bailout process. There’s still more to come.

5 Comments

5 Comments

  1. Chuck2  •  Mar 17, 2014 @5:21 PM

    The GM CEO sounds like Obama. She apologizes in scripted statements but won’t take any questions. Both really blame their problems on previous administrations.

  2. jill  •  Mar 17, 2014 @5:40 PM

    quit beating up GM. why do you want this company to fail? i thought you supported successful companies.

  3. John Parnell  •  Mar 17, 2014 @8:04 PM

    Jill- Just to clarify, I don’t want GM or any other company to succeed or fail. I just want the outcome to be determined by the market. The bailout shafted the bondholders, propped up the UAW, gave future tax breaks to the company at public expense, and shielded GM from liability for product negligence. The NHTSA flogged Toyota for months during its brake problem, but it claims to lack sufficient evidence on GM. This is not an equal playing field. It’s cronyism, which always lines the pockets of the connected few at everyone else’s expense. If those on the left hate cronyism as much as they claim to, then they should insist on a full blown investigation of both GM and the NHTSA. This goes for those who call themselves conservative as well.

  4. J  •  Mar 18, 2014 @5:45 PM

    Hey Jill- ditto to what Parnell said. GM should be held accountable for its own problems like any other company. I wanted a stronger GM, which is why I wanted them to go through bankruptcy and face their problems head on without any special deals from the government.

  5. Aliza  •  Mar 19, 2014 @8:09 AM

    EVERY company that acts negligently should pay for the harm it created, whether it was bail outed or not, whether it’s old GM or new GM.