Senator Wants Compensation Fund for Recalled GM Cars

By Richard Cowan | March 25, 2014

Pressure built on General Motors on Monday to take steps to get 1.6 million of its recalled cars off the road immediately and to establish a compensation fund for consumers affected by the company’s faulty ignition switches linked to 12 deaths.

Senator Richard Blumenthal, who characterized some GM vehicles as “lethally defective,” asked the Department of Justice to force GM to set up the fund.

In a letter to Attorney General Eric Holder, the top U.S. law enforcement official, Blumenthal wrote: “I urge that DOJ require that GM establish a fund to fully compensate consumers who suffered injury, death or damage” stemming from the malfunctioning ignition switches.

Those switches, a problem for more than a decade before recalls began last month, can cause automobile engines and safety equipment to shutdown unexpectedly.

Blumenthal is a member of the Senate Commerce Committee, which will investigate GM’s handling of the recalls for the ignition-switch problem.

Also on Monday, two GM customers asked a federal judge in Texas to force GM to advise customers to immediately stop driving the recalled cars, including the 2006 Chevrolet Cobalt model that they own, until repairs are made.

GM maintains that the cars are safe to drive if operators use only the ignition key and remove any fobs or extra items that might cause the ignition switch to move from the “run” position.

In a sign that GM was bowing to pressure from Washington lawmakers, the company promised to return a “black box” taken from a crash that killed a 21-year-old Pennsylvania woman in 2010. The vehicle’s device, like an airplane’s black box, could contain important information on how the car was functioning in the moments leading up to the crash.

Senator Pat Toomey of Pennsylvania last week wrote to GM demanding the return of the black box, complaining that the victim’s family had been unable to get the Detroit automaker to respond to their requests.

Congressional hearings into GM’s actions, as well as federal regulators’ performance, are set to begin on April 1 before a House Energy and Commerce panel. GM Chief Executive Officer Mary Barra is scheduled to testify.

A Senate committee hearing date has not yet been set but is expected in early April.


Blumenthal, in his letter to Holder, said the compensation fund could be applied even as the DOJ conducts a criminal investigation of GM.

In a telephone interview, Blumenthal, a former state attorney general, also said he wanted to hear testimony on the recalls “from GM officials who had knowledge and responsibility, which could include upper management, both current and past.”

But the decision on who will be called to testify likely will be made by Senate Commerce Committee Chairman John Rockefeller of West Virginia and Senator Claire McCaskill of Missouri, who chairs the subcommittee that will conduct the hearings.

Consumer groups already have called on GM to establish a compensation fund.

GM spokesman Jim Cain would not comment on Blumenthal’s demand.

Cain noted that the new GM, which emerged from bankruptcy, “did not assume liability for claims arising from incidents or accidents occurring prior to July 2009.”

But he also said, “Our principle throughout this process has been to put the customer first, and that will continue to guide us.”

Blumenthal also asked Holder to intervene in pending civil actions stemming from the recall “to oppose any action by GM to deny responsibility for consumer damages on grounds that those damages may have resulted from deceptive and fraudulent concealment and other misconduct by GM.”

(Additional reporting by Jessica Dye in New York and Ben Klayman in Detroit; Editing by Jonathan Oatis, David Gregorio and Lisa Shumaker)

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