Switchgate Update: GM On Trial & On Capitol Hill

March 25, 2014

If you follow the news, you've heard about General Motors' current recall fiasco -- the one dubbed "Switchgate" in the media because of the faulty Chevrolet, Pontiac, and Saturn ignition switches that have been linked to at least 31 accidents and 12 deaths. On the off-chance that you expected Switchgate to fade quietly from the headlines like most recalls, think again. 

If anything, the media frenzy around Switchgate is intensifying, fueled by newly emerged details about the ignition switch problem and strident calls by legislators to find out what GM knew and when the company knew it. To keep you up to speed, we've pulled together a few of the biggest headlines from the past 24 hours:

GM sued for wrongful death
In 2006, a Chevrolet Cobalt crashed in Minnnesota when the car's ignition turned off, shutting down power to the steering, braking, and safety systems. The Cobalt veered off the road, killing two of its three teenage passengers: Amy Rademaker (15) and Natasha Weigel (18). A third -- Megan Phillips (19) -- was severely injured.

In the first wrongful death suit to emerge from Switchgate, Phillips and the families of Rademaker and Weigel are each seeking awards of more than $50,000. Whether GM will be held liable for the accident is another matter, since it occurred on "Old GM's" watch, but the question could be complicated because...

U.S. investigates whether GM hid switch problems during bankruptcy
GM has handed over reams of documents to the Justice Department, which is conducting a probe to determine if the automaker hid details about the ignition switch problems during its 2009 restructuring process. If so, GM could be found guilty of bankruptcy fraud, which could, in theory, allow plaintiffs to sue "New GM" for accidents and deaths that occurred before the restructuring was finalized.

There's no word on how the probe is proceeding, but it's being handled by the same folks who led the Toyota investigation that resulted in last week's record-breaking $1.2 billion settlement. And FYI, this investigation is separate from the one that's looking at whether GM lied to federal regulators about its knowledge of ignition switch problems, which continues when...

GM CEO Mary Barra set to testify on Capitol Hill next week
On Tuesday, April 1, Barra will testify in Washington, D.C., before the House Energy and Commerce Committee. She'll likely be grilled in great detail about the timeline of the Switchgate problem and the long-delayed recall. (As you might remember, initial reports indicated that problems with Chevrolet, Pontiac, and Saturn ignition switches began surfacing in 2004, a full ten years before the Switchgate recall. More recently, however, GM says that it knew there might have been problems as early as 2001, long before the first recalled vehicles rolled into showrooms.) 

The following day, on April 2, Barra will speak to the U.S. Senate Commerce Committee’s Consumer Protection panel, where she'll be joined by the head of the National Highway Traffic Safety Administration. And that's where things could get interesting because...

Senator wants to create compensation funds for owners of recalled cars
Senator Richard Blumenthal (D-CT), who sits on the Commerce Committee, has sent a letter to U.S. Attorney General Eric Holder. The letter says, in part, "I urge that DOJ require that GM establish a fund to fully compensate consumers who suffered injury, death or damage" as a result of ignition switch problems affecting 1.37 million U.S. vehicles. Blumenthal didn't put a dollar amount on his proposed fund, but it would likely be very, very big -- and it could get even bigger because...

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