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As GM Closes Out Ignition Investigation, CEO Barra Says Maker Learned its Lesson

On 3-year probation, GM's problems aren't yet over.

by on Sep.17, 2015

GM CEO Mary Barra addresses a company town hall to discuss the ignition switch settlement.

The U.S. Department has concluded a year-longer investigation into General Motors’ handling of a deadly ignition switch defect with a settlement that requires the automaker to pay a $900 million fine. The maker separately negotiated $575 million settlement to conclude various civil suits related to the ignition switch issue now blamed for at least 124 deaths.

The settlement was significantly less than many had expected. And federal investigators did not bring charges against anyone connected with the defect despite GM’s acknowledgement that it waited a decade to deal with the problem. The Justice Dept. had extracted a $1.2 billion fine from Toyota Motor Co. last year to settle charges it had delayed action on defects related to unintended acceleration.

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For her part, General Motors CEO Mary Barra told employees at a town hall meeting at the company’s Vehicle Engineering Center in Warren, Michigan that GM had “let (its) customers down.

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GM Reportedly Set to Settle Justice Dept. Case Over Faulty Ignition Switches

Penalty expected to be in “hundreds of millions of dollars.”

by on Sep.17, 2015

A replacement for the faulty GM ignition switches.

General Motors may take a step closer to wrapping up one of the most troubling incidents in its long history, according to news reports, agreeing to settle a Justice Department criminal investigation into it botched handling of a deadly ignition switch defect.

If preliminary reports prove accurate, GM would pay a penalty in the “hundreds of millions of dollars,” and perhaps as much as $900 million, according to sources close to the investigation quoted by NBC News and other media outlets. That would be substantially less than the $1.2 billion paid by Toyota Motor Co. in March 2014 to settle an investigation into its own safety-related problems.

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The GM settlement also is expected to include a wire fraud charge, though there are no indications any specific individuals will be subject to criminal prosecution, a possibility raised early in the Justice Dept. investigation – and by GM’s own move last year to fire 15 company employees due to their role in delaying a recall of 2.5 million vehicles equipped with faulty switches.

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GM Death Toll at 107 as Feds Find Criminal Wrongdoing

Hefty fines could follow

by on May.26, 2015

GM CEO Mary Barra testified before congressional subcommittees four times due to GM's recall of 2.6 million vehicles last year.

The official death toll from faulty General Motors ignition switches has jumped again, to 107. At the same time, federal prosecutors have reportedly decided there was criminal wrongdoing in the way the maker handled the defect, taking more than a decade to order a recall.

Whether any individual will be prosecuted for the flawed handling of the ignition switch problem is uncertain, but hefty fines appear likely to follow, with the New York Times reporting that the ongoing investigation could be wrapped up by summer.

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Those fines could run well in excess of the money GM already has laid out to settle claims filed with a victims’ compensation fund. Last year, GM set aside $400 million to cover potential claims. By the time of the filing deadline on January 31, administrator Kenneth Feinberg reported receiving 4,342 separate claims.

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GM Hit with 2nd $10 Bil Lawsuit

Suit claims losses on 27 million vehicles.

by on Oct.17, 2014

The lawsuit claims a 2010 Chevrolet Camaro has lost $2,000 in value due to the recall crisis.

General Motors has been hit with another lawsuit that could seek as much as $10 billion in compensation for owners who have allegedly seen the value of their vehicles fall due to the maker’s ongoing recall crisis.

Filed in Manhattan federal court, the lawsuit was prepared by the same, Seattle-based firm that brought another $10 billion claim against GM earlier this year, Hagens Berman Sobol Shapiro LLP.

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“The value of all GM-branded vehicles has diminished as a result of the widespread publication of those defects and New GM’s corporate culture of ignoring and concealing safety defects,” the lawsuit states, referring to the post-bankruptcy carmaker as “New GM.”

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Over 100 File Death Claims With GM Compensation Fund

Number could still rise.

by on Aug.26, 2014

One of the replacement GM ignition switches.

General Motors continues to say it knows of 13 deaths connected to the faulty ignition switches it used in a wide range of vehicles recalled earlier this year, but the special victims’ compensation fund it has set up has already received claims linked to the death of at least 100 people.

While it remains to be seen if the fund will approve payment to all those who’ve filed, it is also expected the number will continue to increase in the weeks and months ahead.

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GM has said it anticipates paying out from $400 million to $600 million in connection with the fund, which was set up under intense pressure from safety regulators, federal lawmakers and consumer groups after the maker acknowledged it knew about the ignition switch problem for as much as a decade before ordering the February recall of 2.6 million vehicles.

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Federal Judge Urges Settlement of GM Lawsuits

Most of the cases claim economic losses.

by on Aug.13, 2014

One of the replacement ignition switches.

A federal judge is encouraging attorneys to settle over 100 lawsuits that have been brought against General Motors in cases involving the maker’s defective ignition switches.

The majority of those cases involve economic losses, claims that used GM vehicles have lost value as a result of the maker’s ignition switch recall. But about a dozen of those cases involve personal injury claims, according to the Associated Press. In all, attorneys represent nearly 1,000 individual plaintiffs suing GM.

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U.S. District Judge Jesse M. Furman said he intends “to encourage settlement as much as possible.”  But whether the plaintiffs’ attorneys take the jurist’s advice may depend on what happens in another courtroom.

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GM Loses a Round in Key Ignition Switch Lawsuit

Court lets Melton family reopen lawsuit originally settled in 2013.

by on Aug.11, 2014

29-year-old Brooke Melton was killed in a crash involving her 2005 Chevrolet Cobalt.

General Motors’ legal morass continues to deepen, following an adverse ruling by a court in Georgia that allows the reopening of a case it thought it had settled out of the public’s eye more than a year ago.

Cobb County State Court Judge Kathryn Tanksley has denied GM’s motion to dismiss the new lawsuit filed in May by the family of Brooke Melton, a 29-year-old nurse killed in March 2010 when the ignition switch on her 2005 Chevrolet Cobalt slipped into accessory mode and the car collided with another vehicle, according to the suit. Melton died in Cobb County, part of the Atlanta metropolitan area.

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Melton’s parents originally sued the company in 2011 and settled in September 2013 for a reported $5 million. The couple decided to try to reopen the case when internal GM documents began to emerge showing it had long known about the ignition switch problem but delayed a formal recall until February of this year. Parents Ken and Beth Melton are now claiming fraud, negligence and concealment in their new lawsuit. (more…)

GM Earnings Crushed by Recall Costs

"Nevertheless, we remained profitable," said CEO Barra.

by on Jul.24, 2014

Earnings on new full-size models, such as this 2015 Chevy Tahoe, should boost GM's earnings going forward, analysts forecast.

The fallout from the ignition switch recall and other safety-related problems cut deeply into General Motors’ profitability for the second quarter, the maker reported.

Net income for the March to June period tumbled to just $200 million, or 11 cents per share, compared to a $1.2 billion net for the second quarter of 2013. The GM balance sheet was hammered during the latest period by one-time costs, most of them related to ongoing recalls, as well as for setting up a new victims’ compensation fund. Earnings before the recall-related charges would have been 58 cents a share.

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“The ignition switch put tremendous pressure on our earnings,” GM chief executive officer Mary Barray told analysts and reporters. “But nevertheless we remained profitable.”

Barra also said the sweeping recalls, which so far this year cover 29 million units, have not deterred GM from pushing ahead with its effort to improve its competitive position around the world.

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GM Recall Blitz May Be Winding Down

Biggest issues already dealt with, maker hints.

by on Jul.07, 2014

There are signs that GM CEO Mary Barra may not have to answer more questions about the company's latest recall as GM may finally be done recalling vehicles.

It has so far recalled nearly 26 million vehicles in the U.S. alone, and almost 29 million worldwide – more than any other maker in a single year. But after announcing 54 separate service actions since just the beginning of the year, GM is signaling that its recall blitz finally might be over.

Even then, the maker’s recall headaches are far from over. GM last month announced details of a new victims’ compensation fund to cover the deaths and injuries linked to a faulty ignition switch, a plan that could top $1 billion, according to some analysts. The maker also faces an assortment of legal problems, including a class action lawsuit filed in Seattle that could seek as much as $10 billion in damages. There are separate investigations underway in both houses of Congress, as well as a probe by the Justice Department. And GM has already said it expects to spend about $2.4 billion to handle all those recall during just the first half of 2014.

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But the worst, in terms of new recalls could be over, wrote JP Morgan auto analyst Ryan Brinkman, in a report last week, noting that, “GM concluded its enhanced product safety review that has led to a significantly elevated pace of vehicle recalls.” (more…)

No Cap to GM Victims’ Compensation Fund – Anyone Injured, Killed Eligible

Thousands could receive “prompt” payouts, says program’s administrator.

by on Jun.30, 2014

GM victims' fund czar Kenneth Feinberg.

There will be no limit to the amount of money available for a new victims’ compensation program set up to cover those injured or killed due to crashes caused by the faulty ignition switches in General Motors vehicles, announced Kenneth Feinberg, the new program’s administrator.

The program, to be funded by GM, will begin taking claims from victims or their families on August 1st, has been designed to deliver “prompt” payment for those considered eligible, said Feinberg during a news conference in Washington, D.C. He noted that the voluntary program will not provide for punitive damages but could still deliver compensation running up to $7 million or beyond based on a series of hypothetical situations Feinberg outlined.

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Significantly, the program will be open even to those who had previously settled a lawsuit with GM due to an ignition switch crash. And, Feinberg noted, “Any contributing negligence of the driver, intoxications, speeding, texting, will be irrelevant under this program. This is about GM and ignition switches…not anything about the driver.”

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