House Panel to Probe GM Handling of Recall Over Switches
Paul Warner/Getty ImagesGM CEO Mary Barra
By Jeff Plungis and Jeff Green

A House panel will investigate the response of General Motors (GM) and U.S. regulators to consumer complaints about ignition-switch failures that led to the recall of 1.6 million vehicles and are linked to at least 13 deaths.

The House Energy and Commerce Committee will explore whether the automaker or the National Highway Traffic Safety Administration missed "something that could have flagged these problems sooner," Representative Fred Upton, the panel's chairman, said in a statement last night.

"If the answer is yes, we must learn how and why this happened, and then determine whether this system of reporting and analyzing complaints that Congress created to save lives is being implemented and working as the law intended," said Upton, a Michigan Republican, who said the committee would hold a hearing in the coming weeks.

The issue is emerging as the first major test for GM Chief Executive Officer Mary Barra, who was promoted to replace retiring CEO Dan Akerson two weeks before an internal company decision on Jan. 31 to do a recall. She is personally leading senior executives who are monitoring progress on the recall, which includes Chevrolet Cobalt and Pontiac G5 small cars.

The hearing focused on GM puts the Cobalt recall in a select group of defects going back to the 1970s. It would be only the fourth automotive recall to get congressional oversight since then, according to Joan Claybrook, a former NHTSA administrator and longtime consumer advocate who has been critical of GM's response

Company Probe

GM said yesterday it had hired Jenner & Block Chairman Anton Valukas, who served as a U.S. Justice Department-appointed examiner of the downfall of Lehman Brothers,
to lead an internal company inquiry into the handling of the ignition-switch flaw.

The company probe is being conducted jointly by a team led by Chicago-based Valukas and GM General Counsel Michael Millikin, the automaker said in a statement. Attorneys from the law firm King & Spalding are also part of the team, GM said.

The internal company investigation is running parallel to a query from NHTSA on what steps the company took to investigate engineering concerns and consumer complaints dating from 2004. Detroit-based GM has until April 3 to answer specific questions in a 27-page order the agency issued March 4.

"We are fully cooperating with NHTSA and will do so with the Committee, too," GM spokesman Greg Martin said in an email last night. "We welcome the opportunity to help both parties have a full understanding of the facts."

Key Rings

GM last month said heavy key rings or jarring can cause ignition switches on some Chevrolet, Pontiac and Saturn vehicles to slip out of position, cutting off power and deactivating air bags. GM has linked the defect to at least 23 crashes, including the 13 deaths.

The auto-safety regulator could fine GM as much as $35 million, which would be the most ever by the U.S., if it finds the automaker didn't pursue a recall when it knew the cars were defective. The agency can also seek criminal charges.

The initial recall on Feb. 13, covering 778,562 Cobalts and G5s, was widened less than two weeks later to more than 800,000 additional vehicles. Those include 2003-2007 Saturn Ions, 2006-2007 Chevrolet HHRs, 2006-2007 Pontiac Solstices and 2006-2007 Saturn Skys. Other models affected are the 2005-06 Pontiac Pursuit sold in Canada and the 2007 Opel GT sold in Europe.

GM North America President Alan Batey said in a Feb. 25 statement expanding the recall to the Saturn Ion and other models that the company's "process employed to examine this phenomenon was not as robust as it should have been." GM is preparing a second timeline related to that recall expansion.

10-Year Timeline

Valukas, 70, was the U.S. attorney in Chicago from 1985 to 1989. He also served as special counsel to the City of Chicago investigating the city's health-care system and in 1993 was chairman of the Illinois Governor's Task Force on Crime and Corrections, which led to prison reform legislation, the law firm said in his biography on its Web page.

The company's reputation may be driven by how it responds, Barra said in a March 4 note to employees.

GM "has acted without hesitation" to address the recall in the past few weeks, Barra said in a note on a website last week for employees. "We have much more work ahead of us."

NHTSA is seeking information on 107 separate questions about the company's steps leading to the recall, including the 10-year timeline the company provided regulators Feb. 24.

2007 Meeting

The agency said it wants names and correspondence from any employee involved in the company's attempts, going back to 2004 to investigate and isolate ignition-switch failures. It asks for details on why engineering fixes proposed in 2004 and 2005 weren't implemented.

NHTSA also said it wants to know what happened after a 2007 meeting in which regulators and GM discussed an air bag failure after a Cobalt lost engine power. U.S. auto-safety regulators were told by a research team in 2007 of a possible link between defective ignition switches and air bags not deploying.

GM described the issue in a technical service bulletin to dealers the previous year that the automaker said resulted in repairs for 474 customers. NHTSA didn't start a defect investigation at the time and GM didn't issue a recall until this year.

NHTSA is also facing questions about why more wasn't done to address the Cobalt safety questions in 2007 and earlier. Claybrook on March 7 asked the Transportation Department's inspector general to investigate.

'Significant Questions'

The most recent safety issue to get a congressional hearing was in early 2010, when Toyota Motor (TM) President Akio Toyoda was called to testify about the company's response to reports of sudden, unintended acceleration. Reports of Firestone Wilderness AT tires suffering tread separations, and hundreds of rollover accidents involving Ford Explorer sport-utility vehicles in 2000 and 2001 drew several hearings. A recall of Firestone 500 tires in the 1970s drew House scrutiny.

Upton cited the Ford-Firestone tire malfunctions in the committee statement last night, saying the inquiry led to legislation designed to strengthen communication between carmakers and regulators, while enhancing NHTSA's ability to assess risks.

"Congress passed this bipartisan solution with the intention of exposing flaws and preventing accidents and fatalities," the lawmaker said. "Yet, here we are over a decade later, faced with accidents and tragedies, and significant questions need to be answered."

Did GM Know About Faulty Switch 10 Years Ago?

More From Bloomberg:

Increase your money and finance knowledge from home

Introduction to ETFs

The basics of Exchange Traded Funds and why ETFs are hot.

View Course »

Investing in Startups

The lucrative and risky world of startups.

View Course »

Add a Comment

*0 / 3000 Character Maximum


Filter by:

I am not surprised at the GM fiasco. I had new Cadillac SRXs in 04 and 06. Between the two cars the left turn signal burned out 5 times in the four years that I had the cars. I questioned the service write up personnel at Findlay Cadillac in Henderson, Nevada and they dissed me and then they switched me to an obnoxious confrontational person. The bulb is $12 but to change it you have to remove the front bumper, $135 each time. No pattern there though. I have purchased my last GM product in 06 and will never go back.

March 11 2014 at 3:27 PM Report abuse rate up rate down Reply

".......heavy key rings or jarring....."

Just how heavy is heavy? Why aren't other manufacturers experiencing the same problem then? What sort of jarring? A bump on the road? Wow.

March 11 2014 at 10:18 AM Report abuse rate up rate down Reply

I'll give the White House panel something to investigate. Investigate how GM got a loan and walked away owing the Taxpayers $10 billion? Making a profit now and still owes money to us. I don't know who set this deal up, but in Private industry they would be locked up.

March 11 2014 at 9:02 AM Report abuse rate up rate down Reply
1 reply to Bob's comment

You would have to ask the Bush Admin. about that Bob. That was done in 2008 under the TARP Program.

March 11 2014 at 12:37 PM Report abuse +1 rate up rate down Reply