Barra Can’t Blame ‘Old GM’ for Today’s Problems | Commentary
Why did General Motors wait a full decade to recall more than 1.6 million vehicles that have been connected to 31 deaths and dozens of injuries?
Most of the questions at this week’s Congressional hearings will certainly focus on who knew what, and when they knew it. The answers, and how they relate to the 2009 government bailout of GM, could have political and criminal implications. When it comes to questions of vehicle safety, congressional investigators no doubt will find that the bailout only enabled a culture of mediocrity at GM.
The 2009 auto industry bailout meant goodbye to the “Old GM” and ushered in the “New GM.” The GM bankruptcy agreement granted legal immunity to the automaker for all incidents prior to 2009. Taxpayers directly lost over $10 billion when the U.S. Treasury Department announced it had sold its remaining stake in the company last December.
But GM’s pre-bankruptcy safety decision-making debacles are not just confined to the “Old GM.” In fact, “New GM” has been forced to announce four expansive recalls of vehicles designed, built and sold in the last four years. For example, an embarrassed GM announced the January 2014 recall of the Chevy Silverado just days before the truck won North American Truck of the Year accolades at the Detroit Auto Show. Videos and news reports document the truck bursting into flames on roads and driveways across the country.
“New GM” can’t blame “Old GM” for this recall, nor can it blame “Old GM” for the 300,000 Chevy Cruzes recalled in August 2013 due to brake problems, the more than 400,000 recalled for fire risk in June 2012, or the 120,000 recalled for steering issues in May 2011. On Friday, GM announced two more recalls, bringing the number of recalled GM vehicles to almost 5 million.
With the public faith in GM’s safety practices so badly shaken, and so many “Old GM” executives still employed in key decision-making positions at “New GM,” who can say with confidence where these problems might end?
We shouldn’t be surprised that little has changed in Detroit since the government takeover of the auto industry. Did anyone really expect that throwing billions of taxpayer funds at GM, and making the United Auto Workers a political protectorate, would improve vehicle quality? It is also hard to expect reform when many of the company executives that had line authority before the bailout — and back in 2001 when the Cobalt defaults were first realized — still hold executive positions with the company today.
This week’s hearings before the House Energy and Commerce Committee and the Senate Commerce Committee are an opportunity to address the issue of GM’s broader company culture that has failed to make auto safety a priority and what, if anything, the country gained from its bailout investment. We hope that new CEO Mary Barra will be asked about which executives with decision-making authority prior to the 2009 bailout are still with the company today and what positions they hold, and also if anyone lost their job as a result of the February 2014 recall, the January 2014 Silverado recall, the recalls on Friday, or any of the other recalls announced since the bailout. The American people deserve better answers than those we’ve gotten so far.
Peter Flaherty is president of the National Legal and Policy Center, a 501(c)(3) foundation that promotes ethics in public life through research, investigation, education and legal action.