GM CEO confronts 90-cent change that could have spared lives in Senate hearing

Family members of victims of the GM recall failure arrive to hold a news conference on the U.S. Capitol grounds in Washington April 1, 2014. General Motors has not yet reported to federal regulators the "vast majority" of 133 cases of safety concerns about ignition switches, House of Representatives Democrats said on Tuesday ahead of congressional testimony by General Motors (GM) Chief Executive Mary Barra. REUTERS/Jonathan Ernst (UNITED STATES - Tags: POLITICS TRANSPORT BUSINESS) (REUTERS)

General Motors has hired the mediator who handled victims' claims from Sept. 11 and the BP oil spill to work on its response to victims of a defect in some 2.6 million vehicles linked to 13 deaths.

But under tough questioning from lawmakers, GM chief executive Mary Barra declined to explore many specifics about when GM found out about the problem and who would be held responsible, deferring to its own independent probe headed by attorney Anton Valukas.

And when shown documents that suggested GM engineers rejected changing the bad ignition switches because doing so would cost 90 cents a part, Barra said the information was "very disturbing," and rejected the claim that the company was making trade-offs between safety and cost.

"If there's a safety issue we take action," Barra said. "We've moved from a cost culture after the bankruptcy to a customer culture."

She did say that in the period since she first learned about the recall on Jan. 31, the company has already changed, and she said she was "deeply sorry" to the victims' families for the crashes and deaths linked to bad igntion switches.

Both hearings in the U.S. House and Senate featured Barra along with regulators from the National Highway Traffic Safety Administration who blame GM for withholding key details that they say could have spurred the agency to act earlier. Since launching a review of its safety process last month, GM has recalled some 7 million vehicles worldwide.

On Monday night, Barra met with family members of people who had died or were injured in crashes from the bad ignition switches; many of them later turned up outside the Capitol this morning. GM acknowledges at least 13 deaths linked to the ignition switches in Chevy Cobalts and other GM cars; safety advocates say the number could be far higher. "This car was surely a death trap," Samantha Denti, of Toms River, N.J., told USA Today. "Driving this car was like playing a game of Russian roulette."

During her two-hour appearance, Barra’s lack of specific answers often frustrated members of the committee, whose efforts to know what GM has done so far and who would be held accountable were met with Barra’s insistence that she would rely on Valukas to investigate those issues in due time.

"The red flags were there for GM and NHTSA to take action," said U.S. Rep. Tim Murphy, R-Penn, "but for some reason it didn't happen." He added: "To borrow a phrase, what we have here is a failure to communicate, and the results were deadly."

During his questions, Rep. Bruce Braley, D-Iowa, pulled out a tiny screwdriver and cap that he said was a promotional item GM gave out two decades ago, emblazoned with the slogan "Safety Comes First At GM.”
"Hasn't the core values of GM always been that safety comes first?" Braley asked.

"I've never seeen that part before," Barra replied. "All I can tell you is that today's GM is focused on safety."

Barra testifies again on Wednesday morning to the Senate Commerce committee; refresh this page for the latest live updates from the hearing below.

 

10:30 AM: Sen. Claire McCaskill, D-Mo., begins the hearing by recounting the crash of Brooke Melton, 29, who died in a 2010 crash of a 2005 Chevy Cobalt. A lawsuit by her parents first uncovered that GM had changed the ignition switch without changing the part number.

McCaskill says GM has "a culture of cover-up," noting that after the Meltons' attorneys revealed the problem, GM still waited nine months before issuing a recall.

“It’s now clear GM knew the switch was faulty in 2004,” McCaskill says. "We don’t know how many people crashed because of this cover-up. We do know many people died, including Ms. Melton.”

GM does not include Melton's death in the 13 it's linked to the defect; neither the front or side air bags in her Cobalt deployed.

10:35 AM: Sen. Dean Heller, R-Nev., suggests a link between GM's government bailout and the delay in the recall, asking whether GM was worried it couldn't survive such a recall during its bailout. "From where I'm sitting, GM has a lot of explaining to do both to this committee and to taxpayers."

10:42 AM: Mary Barra repeats her testimony from Tuesday, noting again her apologies on behalf of GM employees and herself.

10:48 AM: McCaskill goes back to the Melton case, asking for which GM lawyers were handling the case and who they told about the defective ignition parts: "If I'm a lawyer and I'm at a depostion where this bombshell is dropped on a client — I'm on my cellphone in the lobby telling General Motors 'we have a problem.'"

Barra says that question would be part of the GM investigation. McCaskill presses again; why wouldn't the attorneys report word of a serious safety defect to top executives? "So you don't know whether anything happened?"

"I don't have the complete facts to share with you today," Barra said.

"That is incredibly frustrating," McCaskill replies.

10:53 AM: Heller brings up GM's bailout and how the company was 60 percent owned by the U.S. Treasury, saying it faced "multiple conflicts of interest" in the years when it failed to recall the switches. He asks Barra — who has only been CEO since January — to "explain yourself."

Barra repeats from Tuesday: "We have done several things at the company to change our culture since the bankruptcy," adding "If there's a safety defect, there's not a calculation done on business case or cost."

10:58 AM: Sen. Barbara Boxer, D-Calif., brings up the Ford Pinto and the GM Malibu cases from the '70s — where auto engineers made calculations about how much a repair would cost versus the liabiity from deaths, pressing Barra on whether this was a similar case in 2005. Barra repeats such metrics would be unacceptable.

11:05 AM: Sen. Amy Klobuchar, D-Minn., brings up one of the deaths of a Minnesota woman in a Cobalt crash. She asks about process GM uses to determine a recall, which Barra replies has been strengthened in the past two years: "The most important thing is if there's a safety issue...We will do the right thing, and if it requires a recall we will do a recall."

11:10 AM: Under question from Sen. Dan Coats, R-Ind., Barra recasts an answer from the House hearing, saying the company will share "anything and everything" from the Valukas report related to safety, and will only hold back competitive information or data that might affect the privacy of its employees.

11:15 AM: Sen. Ben Nelson, D-Fla., mentions, as several lawmakers have, that he's a lifelong GM customer, asking Barra whether owners should feel comfortable driving vehicles before the recalled parts can be repaired. Barra repeats GM's advice that the cars should be safe if only the ignition key is left hanging in the switch, adding that customers can ask for loaners if they don't feel safe.

"I suspect Cobalt drivers would not take comfort in that advice," Nelson said.

11:23 AM: Sen. Richard Blumenthal, D-Conn., presses Barra to set up a compensation fund for victims, and notes GM is still "invoking a blanket shield of liability" from its bankruptcy, where it shed liabilities for crashes before 2009. (As part of the bankruptcy agreement with the U.S. government, the "new" GM post-bankruptcy agreed to be responsible for any safety defects of older models.)

Blumenthal then asks: "Would you allow your son and daughter to drive a Cobalt?"

"I would allow my son, he's the only one old enough, to drive with only the ignition key," Barra replies.

11:28 AM: Sen. Kelly Ayotte, R-N.H., asks whether President Obama's Auto Industry Task Force that oversaw GM's bankruptcy whether they knew about any ignition lawsuits. Barra says she can't say.

11:32 AM: The lawmakers keep running into the same cul-de-sac; outside of a single engineer who signed off on the part change without altering the part number, there's no names attached as responsible parties to GM's many decisions and mistakes. Barra and other executives have said the issue wasn't raised to the top level until December, and she never directly oversaw the parts, cars or safety processes in question.

11:42 AM: Sen. Ed Markey, D-Mass., asks Barra to commit to disclosing all consumer complaints about all potential safety problems, not just Cobalt. Barra says the company would work with Congress on legislation, but declines to go so far as Markey wants.

11:49 AM: McCaskill comes back, asking whether the engineer who approved the changes in 2006 has been fired; Barra says no, personnel changes are still to come. McCaskill accuses the engineer of lying under oath

"It's hard to imagine you would want him near anything in engineering at General Motors," McCaskill says. "For the life of me I can't understand why he still has his job."

McCaskill brings up the $1.2 billion settlement against Toyota for its recalls — noting that Toyota engineers also redesigned a part without changing a part number expressly to avoid having the change caught by NHTSA.

12:00 PM: Sen. Boxer gets heated with Barra over an issue Boxer has been pressing for years: Requiring rental companies to park cars with open recalls. Boxer notes that while GM is providing loaners, many of those borrowed vehicles could also have unrepaired defects. Boxer notes that GM and other automakers oppose her bill that would outlaw renting cars with unfixed recalls.

"You can send an owner of one of these rental cars, and they could get a defective car," Boxer tells Barra. When Barra declines to support her bill without seeing details, Boxer becomes more cross. "These issues run deep...Woman to woman, I am very disappointed. The culture you represent today is the culture of the status quo."

12:10 PM: Blumenthal, the former attorney general of Connecticut, sums up his take: The more he sees, "the more convinced I am that GM has a real exposure to criminal liability. I think it's likely and appropriate that GM will face criminal prosecution."

12:25 PM: Barra's testimony ends with a promise to return to the committee after the Valukas report is complete.