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Old 04-02-2014, 11:09 AM  
Cochise Cochise is offline
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Government Motors Hires Lawyer Specializing in Disaster Payouts

http://www.nytimes.com/2014/04/02/bu...ring.html?_r=0

G.M. Hires Lawyer Specializing in Disaster Payouts
By BILL VLASIC and MATTHEW L. WALDAPRIL 1, 2014

WASHINGTON — As families of crash victims lined the back of the House hearing room, displaying photos of their lost loved ones, Mary T. Barra, the General Motors chief executive, told lawmakers that the company was considering paying damages to victims of accidents in the millions of cars recalled for defective ignition switches.

To help decide, General Motors hired Kenneth Feinberg, a celebrated lawyer who handled payouts in the Sept. 11, 2001, victims fund and the Gulf of Mexico oil spill, she told a House committee investigating the company’s failure to fix a faulty part that it knew about for more than a decade.

It was the first time G.M. had acknowledged that it may pay damages in accident cases that occurred before the company filed for bankruptcy in 2009, even though — to the increasing outrage of victims’ families — the company is legally protected by agreements made in bankruptcy court.

“G.M. has civic and legal responsibilities, and we are thinking through exactly what those responsibilities are,” Ms. Barra said, though she stopped short of committing to such a fund, and, in one tense exchange, refused to say that the automaker was responsible for the crashes.

The compensation issue was one of many dramatic moments in the two hours of testimony by Ms. Barra, who took over as G.M.’s chief in January — just as an engineering panel was about to recommend a recall of defective Chevrolet Cobalts and other compact cars.

Speaking in measured tones and resting her hands on the table, Ms. Barra often condemned G.M.’s actions, calling them at times “unacceptable” and “disturbing.”

But she offered scant new information about the central reason for the hearing: How and why did G.M. repeatedly fail to fix faulty ignition switches on Cobalts and other compact cars, despite conducting multiple internal studies of the problem since 2001.

“I cannot tell you why it took years for a safety defect to be announced in that program, but I can tell you that we will find out,” she said. “I am deeply sorry.”

Consistently, she did not answer pointed questions, saying she did not know or noting that an internal investigation was underway. “I want to know the answer, too,” she often said.

Since February, G.M. has recalled 2.6 million Cobalts and other small cars because flawed ignition switches could suddenly cut off engine power and deactivate air bags. The company has linked 13 deaths to the faulty switch.

Ms. Barra was followed by David Friedman, the acting administrator of the National Highway Traffic Safety Administration, which also has come under withering criticism for not detecting the defect despite mounting reports that something was wrong.

In his testimony, Mr. Friedman strongly criticized the automaker and vowed to “hold General Motors accountable” if the company failed to provide appropriate and timely information to regulators.

He said the agency reviewed mounds of information about consumer complaints, early warning data, special crash investigations and manufacturer information about how air bags function.

“Some of that information did raise concerns about air bag nondeployments,” he said in a statement that appeared to go beyond the agency’s previous assertions that it never had enough evidence to detect a potential problem.

But ultimately, he said, regulators did not have enough conclusive evidence to order a recall.

Ms. Barra’s testimony came during a campaign seeking to reach out to the families of victims. On Monday night, she met with 22 relatives of accident victims who had traveled to Washington for the hearings.

Both she and Mr. Friedman are scheduled to appear before a Senate panel on Wednesday for another round of questioning.

In announcing the hiring of Mr. Feinberg, Ms. Barra said that no decision had been made on restitution for accident victims and their families.

Mr. Feinberg, in an interview, confirmed as much.

“It is very premature,” he said by telephone, adding, “All I’ve been asked to do is to take an independent, objective look at what is in the public interest, in the victims’ interest, in G.M.’s interest — and to consider all the options.”

But the hiring of Mr. Feinberg — who has overseen victims’ funds in almost every prominent disaster in recent memory — was viewed by some legal experts as a shrewd public relations move.

“It has the benefit of making the company look responsible,” said Carl Tobias, a law professor at the University of Richmond, who specializes in product liability. But he cautioned that the establishment of a compensation fund might be impractical and do little to stem the tide of litigation.

“I wonder whether there’s time to do that type of effort just given where we are,” Mr. Tobias said. “As more information comes out I think there will be more and more potential plaintiffs, and their lawyers are litigating.”

Representative Henry A. Waxman, a California Democrat on the House Energy and Commerce committee, said G.M. had an obligation to make restitution to victims, even though it is legally protected.

“The victims need to be compensated, and G.M. shouldn’t hide behind the statute,” Mr. Waxman said.

During her testimony, Ms. Barra was confronted by evidence that G.M. knew about the ignition problem even before the first Cobalts and other affected vehicles went on sale a decade ago.

House investigators found that the switch’s supplier, Delphi, had pointed out to G.M. engineers that the switch did not meet the automaker’s own specifications.

G.M. and Delphi also quietly changed the switch in 2006 so that it required more force for drivers to turn the key, reducing the chance that it could be accidentally jostled and shut off engine power and air bags.

The House committee produced a document showing that the chief switch engineer at the time, Raymond DeGiorgio, approved the change in April 2006. Mr. DeGiorgio denied making that decision during a deposition last year in a wrongful-death suit involving a woman who died in a 2010 Cobalt crash in Georgia.

The committee also showed Ms. Barra documents that said G.M. did not change the switch earlier because of cost considerations.

In one document from 2005, a G.M. official estimated that the price of a new switch would cost the company 90 cents extra.

“If that was the reason the decision was made I find that unacceptable,” Ms. Barra said, criticizing what she termed G.M.’s “cost culture” in the past.

Lawmakers homed in on G.M.’s pattern of failure to address the ignition flaw, as well as the company’s unwillingness to inform consumers of the danger of driving defective vehicles.

“We are in a situation, Ms. Barra, where we don’t trust the company right now,” said Representative Gregg Harper, Republican from Mississippi.

Ms. Barra repeatedly said she and other G.M. senior executives did not know all the reasons the switch’s initial design was substandard, or who in the company was responsible for investigating problems with the part while neglecting to fix it and order a recall of affected models.

She said the company had hired a former United States attorney, Anton Valukas, to investigate G.M.’s actions, but said she could not comment on what occurred inside the automaker until the inquiry is completed.

At one point, Ms. Barra — a G.M. employee for more than 30 years and a high-ranking executive before becoming chief — said she was unaware of the scope of the switch problems until a safety committee finally recommended a recall on Jan. 31.

“I personally did not withhold any information,” Ms. Barra said during questioning.

That answer prompted a pointed response from Representative Peter Welch, Democrat of Vermont, who challenged Ms. Barra to take full ownership of the issue. “You are the company right now,” he said.

Correction: April 1, 2014
An earlier version of this article misspelled the first name of a congressman from Mississippi. He is Representative Gregg Harper, not Greg.
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Old 04-02-2014, 05:27 PM   #16
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Old 04-02-2014, 05:32 PM   #17
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Originally Posted by Amnorix View Post
"Government Motors"? The US government no longer has any equity stake in GM.


http://www.bloomberg.com/news/2013-1...t-motors-.html
How much did we taxpayers lose in that investment?
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Old 04-02-2014, 06:26 PM   #18
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I kind of feel bad for the GM CEO. She just took the job in January, but is bearing the brunt of the anger.
She has worked for GM forever, and previously in some capacities that oversaw design. Obviously she didn't make the decisions to cheap out on these parts, but she's been there for some time.
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Old 04-02-2014, 06:55 PM   #19
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Originally Posted by HonestChieffan View Post
How much did we taxpayers lose in that investment?
This will be ignored.

As will all the dealers who had their businesses taken away by the gov't...
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Old 04-03-2014, 08:05 AM   #20
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Originally Posted by HonestChieffan View Post
How much did we taxpayers lose in that investment?

Straight up, about $10 billion. Once you factor in the loss of jobs through the entire supply chain and loss of economic activity across the country that would have resulted from GM's failure, it's a net gain for the government.

http://www.latimes.com/business/auto...#axzz2xpOaeCfr


I don't think that even factors in the further systemic damage that would've been done to the US economy if GM/Chrysler had been allowed to fail. It's easy to forget now that we were at the edge of a cliff, and nobody knows how far down the bottom was if we'd gone over.
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Old 04-03-2014, 08:05 AM   #21
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This will be ignored.
Or not.

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As will all the dealers who had their businesses taken away by the gov't...

How many dealers would've had their dealerships if GM/Chrysler had been allowed to fail? Oh right, none.
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