General Motors and CEO Barra in Hot Water Over Recalls

General Motors

General Motors (NYSE: GM) has had a fairly consistent string of bad news coming out since the beginning of 2014. Almost 4 million cars have been recalled over ignition switch troubles which resulted in the deaths of at least 13 people. CEO Mary Barra has found herself in hot water over the recalls, and share prices of General Motors are suffering as well. GM has also encountered transmission problems and deadly fuel leaks this year. Even their Chevy Cruz line was halted before shipping without an explanation.

The ignition switch in question can slip out of the “on” position and into the “off” position when bumped. Naturally, this can easily lead to a loss of vehicle control while driving. To make matters worse, this problem also disables the car’s air bags.

A congressional committee grilled CEO Bara on Tuesday over the ignition switch. It seems that the automaker has known about the defective ignition switches for 10 years, but U.S. regulators and GM both failed to correct the problem. Senator Kelly Ayotte called the failure to rectify the issue “criminal deception.”

Senator Ayotte is not alone in the opinion that the company did something horribly wrong. Senator Richard Blumental voiced a similar opinion, and mentioned that the auto manufacturer could very well face charges of criminal liability.

Ceo Barra spent most of her time apologizing for General Motors on Tuesday, but the hot water she’s in over the ignition switch recalls remained scalding. The Inspector General of the Transportation Department, Calvin Scovel, said he is not at liberty to discuss whether or not GM is under criminal investigation.

Barra has been CEO of the Detroit-based company for less than three months at this point. It would seem that she was thrust into the spotlight at one of the worst times possible. Senator Barbara Boxer told Barra that she is “very disappointed.” Boxer later said to Barra, “You don’t know anything about anything,” and added, “If this is the new GM leadership, it’s pretty lacking.”

The committee demanded that Barra release documents pertaining to a GM internal investigation of the switch problem. She refused to produce the documents on the basis that it would reduce the company’s competitiveness with other automobile manufacturers. When asked about how many employees had been fired over the ignition switch dilemma, Barra also refused to produce any figures.

Near the end of the meeting, some members of the panel expressed the idea that the ignition switch problems could be intentional, and that someone within the company might be responsible. Barra explained that the specific details that the committee was looking for will surface during her internal investigation. Barra assured the panel that safety will be her number one priority at this point.

The automaker’s stock has stayed relatively flat this week, hovering just above the $34.00 level. The hot water that CEO Barra and General Motors are in over the recalls has sent the price down over 5 points since the beginning of the year. Most analysts are skeptical about the stock’s ability to climb back up in the face of the recalls and compounding safety issues.

By Luke Sargent

In The Capital

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