Justice Department investigators say they have identified criminal wrongdoing in General Motors’ failure to disclose an ignition switch defect tied to at least 104 deaths, and are therefore in the process of negotiating what is likely to be a record judgment against the automaker, according to people briefed on the inquiry. A settlement could be reached sometime this summer, and is expected to exceed the $1.2 billion paid last year by Toyota for concealing unintended acceleration problems in some of its vehicles, the sources said. That would make it the largest penalty ever levied by the Justice Department against an automaker.
GM began recalling 2.6 million Chevrolet Cobalts and other small cars in February of 2014, due to faulty ignitions that could randomly and unexpectedly turn off the vehicle’s engines, thereby disabling power steering, power brakes and air bags. This prompted a wave of additional recalls by the company, for various safety issues. GM recalled more than 30 million vehicles worldwide last year alone.
It is as yet unknown if GM will receive a deferred-prosecution agreement… as the Justice Department recently granted the Japanese automaker Toyota, or if prosecutors will force it to plead guilty to a crime. In the latter case, a guilty plea would brand General Motors as a felon.
The company has spent approximately $3 billion on recalls and other safety issues in the past year, including $600 million to compensate switch-related accident victims and their families. Moreover, GM paid a $35 million penalty to the National Highway Traffic Safety Administration for failing to report the switch issue in a timely fashion.
The United States government (also known as the U.S. taxpayers), lost $11.2 billion bailing out GM. The U.S. government (also known as the U.S. taxpayers), spent about $50 billion total in attempting to bail out GM. The company received such unearned largess as it was among those deemed “too big to fail.” Nothing is- or should be- too big to fail, as evidenced by the mastodon, the public school system, and the Soviet Union.
As a result of the company’s 2009 bankruptcy, the government’s (read taxpayer’s) “investment” was converted to a 61% equity stake in the giant, Detroit-based automaker… in addition to preferred shares and a loan. (The remaining shares were sold in December of 2013).
It’s ironic, to say the least, that taxpayers have been bailing out the government for many years, yet appear to be “granted” less and less “equity” every year.
What an amazing scam! Even for a government! First, with the country many trillions of dollars in debt and each individual taxpayer liable for $1.1 million dollars of it, the feds drop $50 billion more of their money on GM. Now, after the company was owned, operated and under that self-same government’s management for four years, they turn around and essentially sue the company for record amounts of cash. Are you following the story? The government took billions of dollars from taxpayers and gave it to a massive corporation. Then, after running that corporation for four years, they are about to sock them with a billion-dollar plus fine for mismanagement! What do you think they will do with the taxpayer’s money that they take back from GM?
It would be really humorous if the penalty levied was so high that it eventually caused GM to file for bankruptcy again, triggering another government (taxpayer) bail out!