General Motors

General Motors' Bailout Still Screwing Over Americans

|

GM's newbie CEO Mary Barra apologized to the customers of its recalled Cobalt and other cars in the USA Today this week. "We are deeply sorry for the lives lost and the lives it has affected." GM is now guided by three things, she said: "The customer is our compass, relationships matter and individual excellence is crucial.

But if she were serious about the customer part, the last thing she would be doing is trying to screw him/her over by hiding behind the liability shield that GM got from the administration as part of the bailout.

As I note in my own column in the USA Today this morning, this shield means GM is not liable for any incidents involving its vehicles prior to its bankruptcy, even though it knew that Cobalt's faulty ignition had the dangerous tendency of turning off a moving vehicle and preventing the airbags from deploying. This problem has been linked to 31 crashes and 12 deaths.Chrysler got an even sweeter deal and is not responsible for even the post-bankruptcy incidents involving any of vehicles that were on the road at the time of bankruptcy, a deal GM also wanted but was denied.

George Mason University's Todd Zywicki told me that a liability shield isn't unusual in bankruptcy cases. But what is unusual is that GM and Chrysler weren't required to put money in special trust funds for prospective victims. Instead, the corporate giants can treat injured customers as shabbily as unsecured creditors. What little compensation that is available will come from the sale of closed GM plants being held in a shell corporation.

Go here to read the whole thing, but if Barra truly cared about GM's customers, she would forego the shield and offer the plaintiffs in a class action suit filed against it last week just compensation.

Call me cynical, but somehow I'm getting the feeling that she doesn't care that much.

NEXT: A.M. Links: Putin Finalizes Crimea Annexation, Still No Sign of Malaysia Airlines Flight 370, Turkey Bans Twitter

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  1. But if she were serious about the customer part, the last thing she would be doing is trying to screw him/her over by hiding behind the liability shield that GM got from the administration as part of the bailout.

    Her first duty is to the company, not its customers. Often times the long term interests coincide, but GM isn’t known to take the long view. After all, this is the crew that embraced planned obsolescence.

    1. No, no, no! Fist – this is the NEW GM. The OLD GM embraced planned obsolescence. As did the American Public?. I’ve always believed that was was right for America was right for General Motors. And vice versa.

      ANYhoooo – hope that straightens this all out!

      OBTW, can Mary Barra or I interest you in $500 off a new Chevy or GMC Truck? to replace that piece of shit Saturn your wife totaled when her 100 lb keychain shut off the ignition and she crashed into a bridge abutment?

  2. The customer is our compass

    And they say comedy is dead.

  3. So the DoJ settles for 1.2 B from Toyota and will give GM a pass?

    I guess that’s how economic planning works in a crony captialist/socialist economy.

  4. Let’s not be too quick to judge. I’m sure they are just trying to protect the enormous profits they are making for us taxpayers.

  5. George Mason University’s Todd Zywicki told me that a liability shield isn’t unusual in bankruptcy cases.

    Which is an example of favoritism to corporate entities. Liability is not discharged in person bankruptcy and it shouldn’t be for others either.

    1. Liability is not discharged in person bankruptcy and it shouldn’t be for others either.

      Umm, all bankruptcy is about discharging liability, generally speaking.

      And, tort liability arising in the ordinary course of business isn’t normally discharged even for corporations.

      http://www.alston.com/products…..entry=4506

      In personal bankruptcies, tort liability that arises from negligence or even recklessness is ordinarily discharged.

      Because a debt arising from a medical malpractice judgment attributable to negligent or reckless conduct does not fall within the section 523(a)(6) exception, the debt is dischargeable in bankruptcy.

      http://www.finkellaw.com/CM/Pu…..-Torts.asp

      In other words, its complicated.

  6. Buying a new economy car this spring. Kia, Hyundai, Ford, and Toyota will all be considered. GM will not be.

    1. Toyota makes an economy car? 😉

      I would look at Scion. A friend of mine loves his Nissan Versa.

      1. Pssst. Scion = Toyota.

        (or maybe you were being sarcastic. I’m too tired to tell sarcasm this morning)

    2. Hyundai and Kia have gotten a lot better about their product quality the last few years, but honestly the only real reason to look at them is the awesome basic warranty. That said, the Kia Soul is supposed to be pretty nice for a compact if you get the manual transmission.

    3. If you buy a Hyundai, plan for a new transmission around the 100k mark.

      1. I would prefer a manual but my wife and daughter are resisting. As long as it goes before 100k, I wouldn’t care thanks to their warranty.

        1. I would prefer a manual but my wife and daughter are resisting.

          If it’s because they don’t know how to operate one, tell them now is a perfect time to learn. Honestly, once they get the feel down, the only really difficult trick after that is learning how to engage from a stop while on a hill.

          Manuals will probably be dinosaurs in about 5 years or less because the mileage difference no longer exists while the new autos offer much better HPs and torque in general–but that doesn’t mean it’s not valuable to know how to operate one. Plus, I find they’re a lot more fun to drive as long as it’s not a road trip.

          It’s funny that automakers almost always put manual trannys in their least desireable models and then complain that manuals don’t sell. They’d probably be surprised if they offered it as an option on their upper-scale models.

    4. Honda Fit? I have two.

    5. Ya, I just swore off any care made in Detroit. Maybe not forever. But at least for the rest of this car and the next one.

  7. “But if she were serious about the customer part, the last thing she would be doing is trying to screw him/her over by hiding behind the liability shield that GM got from the administration as part of the bailout.”

    I will never stop hating GM for what they did to the American taxpayers.

    Watching an American by a GM car is like watching battered wife waltz back to her abusive husband, go into the refrigerator, and get him a beer.

    Last I checked, the UAW still owned 39% of GM (came right out of my future paychecks, and I still haven’t gotten my thank you note, UAW), and you can add to that 39%–whatever debt GM has taken on to fund the UAWs ongoing bloat.

    Being forced as a taxpayer to pay for the UAW, its bloat, and its disgusting activities is like living in a communist country. They should be ashamed of what they’ve done to the state of Michigan, the country, and the American taxpayer–but they’re proud of it!

    I hope all the UAW members out there starve to death.

    1. Agree with all except the “like”.

    2. My continued question for all those that claim the bailout worked – did it work if GM is back in DC with their hands out during the next recession?

  8. They should just go ahead and pay out whatever they can to the victims. It’s not like they wouldn’t just get bailed out for that money anwyays.

    1. Barack Obama used TARP money to bailout GM under the justification that GMAC Finance was technically a financial services company–so the bank bailout applied to them, too.

      Obama couldn’t have gotten that money out of Congress back then–if Bush hadn’t already put it in place by way of TARP. There’s no way–post Tea Party–that Obama could get that money appropriated now.

      And, besides, the first time GM was bailed out, the UAW didn’t own almost 40% of the shares. That happened because of the bailout. Now any money that gets paid out is coming out of the UAW’s cash!

      There’s no way they’re going to do that voluntarily.

      1. Obama couldn’t have gotten that money out of Congress back then

        You don’t think Obama would have gotten an auto/UAW bailout from the Congress that passed ObamaCare?

        Suuure.

        1. No!

          I don’t think so.

          Promising people free shit?

          Sure!

          What does the average American get out of a UAW bailout?

          No way those politicians are going on record specifically to bail out the UAW.

  9. So, they think they can bypass states’ successor liability and the due process of future claimants?

    I’m not a big fan of strict liability, but I really don’t think this is the type of case you want to set precedent.

    This is, however, an excellent example of how things get fucked up when the government gets involved. We all know the government is going to have to “absorb” some of the liability.

    http://goo.gl/KzZvtb

  10. GM should have failed a long time ago. I used to “buy American auto’s, parts (if available), etc. no more. Eff them and what they and the govt did to the extorted people (taxpayers).

    There are far better looking, and performing cars out there. Infiniti, Audi, Hyundai, Scion, Merkedis and so on.

    Have you driven a ford lately? Hell no, but I’ve bitten a ford owner lately.

    (Music playing in the background) See the USA in your chevrolet.

    Hellz no. All I see is communism in a chevrolet.

Please to post comments

Comments are closed.