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.