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GM fined $35 million over defect

Feds impose maximum penalty

  • This Friday, May 16 2014 photo shows the General Motors logo at the company's world headquarters in Detroit. U.S. safety regulators fined General Motors a record $35 million Friday for taking at least a decade to disclose defects with ignition switches in small cars that are now linked to at least 13 deaths. (AP Photo/Paul Sancya)

    This Friday, May 16 2014 photo shows the General Motors logo at the company's world headquarters in Detroit. U.S. safety regulators fined General Motors a record $35 million Friday for taking at least a decade to disclose defects with ignition switches in small cars that are now linked to at least 13 deaths. (AP Photo/Paul Sancya)

  • FILE - This March 14, 2014 file photo shows Transportation Secretary Anthony Foxx on Capitol Hill in Washington.  U.S. safety regulators have fined General Motors $35 million for delays in recalling small cars with faulty ignition switches that are linked to at least 13 deaths. This marks the first time the government has imposed the maximum penalty allowed by law against an automaker. Still, the amount is less than a day's revenue for the automaker, based on the $37.4 billion it took in during the first quarter. (AP Photo/J. Scott Applewhite, File)

    FILE - This March 14, 2014 file photo shows Transportation Secretary Anthony Foxx on Capitol Hill in Washington. U.S. safety regulators have fined General Motors $35 million for delays in recalling small cars with faulty ignition switches that are linked to at least 13 deaths. This marks the first time the government has imposed the maximum penalty allowed by law against an automaker. Still, the amount is less than a day's revenue for the automaker, based on the $37.4 billion it took in during the first quarter. (AP Photo/J. Scott Applewhite, File)

  • This Friday, May 16 2014 photo shows General Motors' world headquarters in Detroit. U.S. safety regulators fined General Motors a record $35 million Friday for taking at least a decade to disclose defects with ignition switches in small cars that are now linked to at least 13 deaths. (AP Photo/Paul Sancya)

    This Friday, May 16 2014 photo shows General Motors' world headquarters in Detroit. U.S. safety regulators fined General Motors a record $35 million Friday for taking at least a decade to disclose defects with ignition switches in small cars that are now linked to at least 13 deaths. (AP Photo/Paul Sancya)

  • This Friday, May 16 2014 photo shows General Motors' world headquarters in Detroit. U.S. safety regulators fined General Motors a record $35 million Friday for taking at least a decade to disclose defects with ignition switches in small cars that are now linked to at least 13 deaths. (AP Photo/Paul Sancya)

    This Friday, May 16 2014 photo shows General Motors' world headquarters in Detroit. U.S. safety regulators fined General Motors a record $35 million Friday for taking at least a decade to disclose defects with ignition switches in small cars that are now linked to at least 13 deaths. (AP Photo/Paul Sancya)

  • FILE - This March 14, 2014 file photo shows Transportation Secretary Anthony Foxx on Capitol Hill in Washington.  U.S. safety regulators have fined General Motors $35 million for delays in recalling small cars with faulty ignition switches that are linked to at least 13 deaths. This marks the first time the government has imposed the maximum penalty allowed by law against an automaker. Still, the amount is less than a day's revenue for the automaker, based on the $37.4 billion it took in during the first quarter. (AP Photo/J. Scott Applewhite, File)

    FILE - This March 14, 2014 file photo shows Transportation Secretary Anthony Foxx on Capitol Hill in Washington. U.S. safety regulators have fined General Motors $35 million for delays in recalling small cars with faulty ignition switches that are linked to at least 13 deaths. This marks the first time the government has imposed the maximum penalty allowed by law against an automaker. Still, the amount is less than a day's revenue for the automaker, based on the $37.4 billion it took in during the first quarter. (AP Photo/J. Scott Applewhite, File)

  • This Friday, May 16 2014 photo shows the General Motors logo at the company's world headquarters in Detroit. U.S. safety regulators fined General Motors a record $35 million Friday for taking at least a decade to disclose defects with ignition switches in small cars that are now linked to at least 13 deaths. (AP Photo/Paul Sancya)
  • FILE - This March 14, 2014 file photo shows Transportation Secretary Anthony Foxx on Capitol Hill in Washington.  U.S. safety regulators have fined General Motors $35 million for delays in recalling small cars with faulty ignition switches that are linked to at least 13 deaths. This marks the first time the government has imposed the maximum penalty allowed by law against an automaker. Still, the amount is less than a day's revenue for the automaker, based on the $37.4 billion it took in during the first quarter. (AP Photo/J. Scott Applewhite, File)
  • This Friday, May 16 2014 photo shows General Motors' world headquarters in Detroit. U.S. safety regulators fined General Motors a record $35 million Friday for taking at least a decade to disclose defects with ignition switches in small cars that are now linked to at least 13 deaths. (AP Photo/Paul Sancya)
  • This Friday, May 16 2014 photo shows General Motors' world headquarters in Detroit. U.S. safety regulators fined General Motors a record $35 million Friday for taking at least a decade to disclose defects with ignition switches in small cars that are now linked to at least 13 deaths. (AP Photo/Paul Sancya)
  • FILE - This March 14, 2014 file photo shows Transportation Secretary Anthony Foxx on Capitol Hill in Washington.  U.S. safety regulators have fined General Motors $35 million for delays in recalling small cars with faulty ignition switches that are linked to at least 13 deaths. This marks the first time the government has imposed the maximum penalty allowed by law against an automaker. Still, the amount is less than a day's revenue for the automaker, based on the $37.4 billion it took in during the first quarter. (AP Photo/J. Scott Applewhite, File)

Federal safety regulators slapped General Motors with a record $35 million fine yesterday for taking more than a decade to disclose an ignition-switch defect in millions of cars that has been linked to at least 13 deaths.

Under an agreement with the Transportation Department, GM admitted it was slow to inform regulators, promised to report problems faster and submitted to more in-depth government oversight of its safety operations.

The fine was the maximum the department can impose.

“Literally, silence can kill,” Transportation Secretary Anthony Foxx said, adding, “GM did not act and did not alert us in a timely manner. What GM did was break the law.”

Safety advocates said the fine, which is less than a day’s revenue for GM, is too small to deter bad behavior.

Clarence Ditlow, executive director of the nonprofit Center for Auto Safety, said the Justice Department – which is conducting a parallel criminal investigation – should fine the company $1 billion or more and bring charges against GM engineers and their superiors.

“That’s the only way you’re going to change GM’s behavior,” he said.

Congress is also investigating GM, and the automaker faces hundreds of lawsuits over deaths and injuries attributed to the ignition switch.

The company has acknowledged knowing that the switches in its small cars had problems since at least 2001. But it was not until February that it began recalling 2.6 million of the cars, mainly Chevrolet Cobalts and Saturn Ions.

Automakers are required by federal law to report safety defects to the government within five days of discovering them.

When jostled, the ignition switches can slip out of the “run” position and shut off the engine. That cuts off the power steering and brakes, potentially causing drivers to lose control. It also disables the air bags.

GM says at least 13 people have died in crashes linked to the problem. Lawyers suing the company say the death toll is at least 53.

The Transportation Department’s National Highway Traffic Safety Administration, which has been criticized for failing to take action on the switches despite thousands of complaints from car owners, used a news conference to turn the tables on GM, detailing some of the most damning evidence against the automaker.

Acting NHTSA Administrator David Friedman said a 2009 memo from a parts supplier to GM stated that the switch problem could disable the cars’ air bags. Had the government been told that at the time, it would have sought a recall, Friedman said.

Friedman said it was clear many GM employees knew about the bad switch years ago, from engineers to executives.

But he said the agency has no records to contradict CEO Mary Barra’s claim that she found out about it only recently.

He portrayed the scandal as part of a larger problem with the safety culture at GM, saying the automaker’s training materials discouraged employees from using words like “defect” or “dangerous” when reporting trouble up the chain of command.

“The fact that GM took so long to report this defect says there was something very wrong with the company’s values,” Friedman said.

GM received a $49.5 billion bailout from Washington during its 2009 bankruptcy, and the government was once the automaker’s majority shareholder, but it sold off the last of its GM stock in December.

GM stock closed Friday down just 36 cents, or 1 percent, at $34.

GM is already making changes. It has named a new safety chief and has begun checking records for problems that could lead to recalls. So far this year the automaker has issued 24 recalls totaling 11.2 million cars and trucks.

“We have learned a great deal from this recall. We will now focus on the goal of becoming an industry leader in safety,” Barra said.

Earlier this year, after a four-year criminal investigation, the Justice Department made Toyota pay $1.2 billion for concealing unintended acceleration problems from NHTSA. No individuals were charged with a crime.

While the maximum fine that the Transportation Department can impose was doubled to $35 million this year, Foxx urged Congress on Friday to raise it to $300 million.

Even though GM’s bankruptcy shields it from some past liability, the company has hired lawyer and compensation expert Kenneth Feinberg to negotiate settlements.

Carl Tobias, a law professor at the University of Richmond, said the government’s action Friday “makes GM’s exposure to liability greater, or the damages for which families ultimately settle larger.”

Under the agreement, GM has to give NHTSA full access to the results of an internal investigation being done for the company by a former federal prosecutor. It will probably be finished in about two weeks.

Legacy Comments3

Big business doing business as usual. A days fine is just accepted as the cost of doing business. They are happy to pay it as no person from the company that ACTUALLY made the decisions will pay any price. Those people made deliberate decisions that are linked to at least 13 deaths....... A "business" is nothing more than a name on a piece of paper, it cannot make a decision, PEOPLE make decisions. Steal a loaf of bread and you will get prosecuted, hide defects that kill people and you will probably get a bonus for all the money the business saved.

A business owned by the unions . UAW is in a pickle because it relies too much on the performance of GM to fund retirement and health for members. Hmmmm.... the Veterans Admin has killed 40 with more to be discovered and the NObama people cover it up like the other scandals that are rampant in this scandal plagued NObama Admin. - nobody goes punished in any of them. Fast and Furious Gun running scandal has killed many with the numbers climbing - not one punished. etc etc etc

Most people know that GM is owned and operated by the unions. Their entire existence depends on the daily harvesting of money from the GM money tree

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