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.