Obama auto team: Unaware of GM switch defect – USA TODAY
WASHINGTON — Members of President Obama’s auto team that led the restructuring of General Motors five years ago said Wednesday they knew nothing at the time about an ignition-switch defect that has led the company to recall 2.6 million vehicles this year.
“As best we know, the senior people at GM didn’t even know,” said Steve Rattner, who directed the Obama administration’s efforts to run GM and Chrysler through bankruptcy with the more than $80 billion of taxpayer dollars. “They can’t tell you about something they didn’t know.”
Rattner’s comments came after a 3-hour retrospective held at the Brookings Institution on the government’s rescue of GM and Chrysler, both of which have returned to profitability.
Separately on Wednesday, GM CEO Mary Barra told lawmakers that GM could simultaneously release its internal investigation and settlement recommendations to compensate those injured and families of those killed in crashes tied to the ignition switch defect, the Associated Press reported, citing a congressional aide.
Barra met with members of Congress in Washington, D.C., to brief them on the status of the automaker’s recall investigation. The congressional aide asked not to be identified because the meetings were private.
Some of GM’s success has been overshadowed by the recall, which began in February. Records show some at GM knew about problematic ignition switches in Chevrolet Cobalts, Saturn Ions and other cars a decade or more ago, but it never came up during bankruptcy proceedings.
“We’re not forensic accountants; we’re not FBI investigators,” said Rattner, adding that his team only had 40 days to structure a deal to save the companies.
But Rattner and another auto team member, Harry Wilson, who also spoke, said they weren’t surprised the culture at GM could have kept information from being acted upon.
“We didn’t know anything about this,” said Wilson, adding that information regarding the ignition switch defect now linked to 13 deaths and 42 crashes “seems to have been stuck in the middle of the engineering department.”
Lawrence Summers, a former director of the White House National Economic Council during the auto restructuring, said the government was “not to try to run the company.”
A problem at the old GM could have a wide-ranging impact on the new one, however. If top executives were found to have withheld relevant information during bankruptcy proceedings, a bankruptcy judge could remove a shield the government gave the company from product liability claims prior to July 2009.
Rattner said he sees positive changes at the company now, but there may need to be more.
“I think part of what you see with all these recalls now is GM being extra super careful,” he told reporters. “I think the old company was too often in denial about problems and this is a (new) company I think is clear-eyed and hardheaded about problems.”
GM’s recalls have spread since February to include more than 15 million cars in the U.S., including dozens of models. Congressional investigators and federal regulators have launched probes into why the initial recall wasn’t ordered sooner.
Last week, GM was fined a record $35 million by the National Highway Traffic Safety Administration for failing to order the recall sooner. Today, GM CEO Mary Barra was back on Capitol Hill meeting with U.S. Sen. Claire McCaskill, D-Mo., about its progress in completing an internal investigation.
McCaskill, who chairs a Senate Consumer Protection subcommittee, plans to hold a second hearing on the recall once the GM investigation is complete.
GM declined to say who Barra met with other than to say that since becoming CEO, she “has made visits to congressional members to discuss issues that are important to them.”
Sergio Marchionne, Fiat Chrysler’s CEO, told reporters that GM recalls have changed how all automakers decide whether and how often to order recalls.
“I think it’s more than likely that automotive houses will now shift their attitude and be even more prudent than they would have been under normal circumstances and probably beyond what is required,” he said.
He said Chrysler is beginning a review of its defect investigation processes without outside consultants. Improvements will be made if necessary.
“It’s nothing to be swept under the carpet. It’s not something that’s going to go away in two months,” Marchionne said. “It needs to become an endemic part of the organization and I think if effectively this frequency of recalls becomes a norm — if everybody starts doing this — I think you will see this cost being shifted to the consumer.”
Marchionne repeated his contention that GM got more favorable conditions from the government in 2009 than Fiat did for Chrysler.
“I think GM should have gotten the same treatment” as us, Marchionne said. “It would have made them better people.”