Civil Penalties For General Motors Capped At $35 Million For Defective Ignition Switches

800px-Chevrolet_Cobalt_LT_sedan150px-General_Motors.svgI previously wrote about the growing controversy over the delay of General Motors in dealing with its defective ignition switches — a defect that appears to have caused multiple deaths. Now the company has agreed to pay a $35 million civil penalty for delays in responding to defect. If this seems ridiculously small, it is. The fine is the largest that can be imposed by the National Highway Traffic Safety Administration (NHTSA) under a federal law protecting companies from higher penalties. The Administration is trying to get Congress to approve the Grow America Act, which contains an increase of fines for the most serious violations from $35 million to $300 million.

GM admits to knowing about the potentially lethal defect for over a decade. It will face some additional fines, but this “maximum” fine is trivial in comparison to the horrific costs imposed on individuals and families by the decision of GM to do nothing in the face of mounting evidence of a lethal defect.

The question is why federal law would cap the fines at such a low level in a field where companies make billions in profits. The obvious answer seems to be the power, again, of lobbyists in Washington is leaving “penalties” in laws while reducing their actual bite for the industry.

In light of the federal law, the torts system again seems the only effective deterrent in terms of real damages for companies. While many members love to rail against the tort system, they simultaneously work (or remain silent) for different corporate shields and caps like this one. The result is uncertainty by a company like GM as to whether (and to what extent) it will be forced to internalize or assume the true costs of a defect. This problem is more severe where the company believes that bankruptcy will protect it from civil lawsuit, as we previously discussed. Thus, GM can use one law to cap fines and use another law to negate judgments. That is one heck of a one-two punch for families who lost loved ones in these defective cars.

Even if the company succeeded in blocking civil damages, a government fine would presumably not be able to be blocked through bankruptcy — further supporting the need to increase the potential fine under federal law. The proposed act however includes other items that may lead to a stall in Congress. It would seem warranted to have a stand alone bill that only addresses this one fix if Congress is serious about addressing this controversy.

Source: Washington Post

46 thoughts on “Civil Penalties For General Motors Capped At $35 Million For Defective Ignition Switches

  1. Well, isn’t that nice of them! If a person murdered 13 people would that person get off with a fine?

    It doesn’t just “seem ridiculously small” it IS RIDICULOUSLY SMALL!

    Corporations and their CEOs can lie, cheat, steal and kill and our government lets them AGREE to pay a fine. I guess now that bribery, sorry, lobbying is legal we should not be surprised about anything corporations are allowed to do.

    You know in China when a CEO screws up and people die, the CEO often goes to prison for a long time or worse. Could we outsource this case to China, please? Of course I am not serious but……

  2. Lobbyists write the tax code to get deals for their clients, why shouldn’t they write laws to protect their clients from fines. In this case, Government Motors is costing us more than we are getting back in fines.

  3. In 1977 I last purchased a GM product. In 1983 I made my last purchase from Sears. I seldom walk into a Pennys store. Lowe’s is on that same list. The answer to this outrage is to boycott!

  4. If you want to penalize them buy a jap car. Send the jobs overseas. We don’t need no jobs in America. The ignition thing can be fixed. I “hotwire” the car that I drive. But that is for other reasons. How many complainers on the blog here own an American made car? Detroit went to hell in a handbasket and the handbasket is coming to a town near you.

  5. Al, Japan brought quality and innovation that Detroit did not. You do believe in Darwinism, don’t you?

  6. Al – those Jap cars are made in the good ole US of A.. I have one foreign car (by name) and two American cars. But the foreign car was actually built in the USA. It is a global market these days.

  7. Nick – that 35 mill is not profit, but gross revenue, right? If they were making that kind of profit they could have paid the American people back at full value plus interest.

  8. What do you expect in a country with two choices, one more than a dictatorship and run by oligarchs: Koch brothers, NRA, and anyone else with enough money to purchase and pull the strings of the politicians. When will the US evolve into the democracy of which it boasts? Every other advanced democracy has at least four parties, four opinions, four choices. We are the least democratically structured nation. No wonder half the voters are republican.

  9. isaac – first you have to get over the idea that we are a democracy. We are a republic. How much money do you think George Soros spends every year through his various foundations to control the press, fund candidates and causes? The Koch Bros are small potatoes compared to Georgie boy. But Soros never seems to come up in the conversation when Democrats or progressives are talking? Bloomberg says he is willing to spend $50 million this year on gun control. Are you against that?

    You are aware that we were not designed to have parties. It just kind of happened. We had Federalist and Anti-Federalist when they were ratifying the Constitution. Everybody agreed on George Washington for President. It was after he decided to step down (not run again) that things suddenly got messy.

  10. Dredd – some of those people in the concentration camps (not prison camps) were not ‘true Americans.’ At the end of the war a certain amount of the population returned to Japan. And this was not symbolic racism, this was blatant racism.

  11. Had we been operating in a Capitalist economy, GM would have been liquidated and those with cash would have purchased the remaining valuable assets for pennies on the dollar. It’s Capitalism – Naturalism. The predators and scavengers make good use of carcasses. Life goes on without the artificial interferrence of elite intellectual know-it-alls who, as it turns out, know nothing, especially about unintended consequences. Competitors would have assimilated those salvaged segments and the industry would have moved forward vigorously. Who propped this corporation up? Certainly and absolutely NOT Capitalists. Could it have been the collectivist elites who think they know more than Mr. Market? Chrysler, GM and likely Ford would have been museum pieces by now but for the collectivists (i.e. UAW, teacher, union thugs in a collectivist thugocracy). Long live the Dictatorship of the Proletariat! Hear, hear, Comrades!

  12. John – you have to protect the unions if you are a Democrat. Remember they hire minimum wage protesters to front for them. They are helping the economy.

  13. All the Japanese in the lower 48 were interned, no? Was that justified? Some Germans were also arrested and interned. And to add insult to injury, some of those interned Germans were also Jews.

  14. Annie – they were not all interned. There is a line drawn somewhere in Arizona, if you lived West of that line you were interned, if you lived East, you stayed in your home. Many of the Germans in WI were interned and were held longer than the Japanese. There were also Italians interned. Surprisingly, no Japanese on Hawaii, where there were actual Japanese spies were interned.

  15. A good read is the book, Saboteurs: The Nazi Raid on America. There was a strong network of both Japanese and German Americans who were traitors during WW2. But, govt. is always stupid and inefficient. The network of traitors remained free. The aforementioned book details these saboteurs coming ashore and making contacts w/ these German American traitors. Ironically, one of the saboteurs had family members who were traitors living in the Chicago neighborhood where I lived in the 80’s. It’s still German and a couple of the old man bars seemed a little Nazi like. There is something to learn about what swift justice looked like back then. These German saboteurs had a trial and were executed within a few months! They did inter some Italians but Lucky Luciano helped stem that. Italian Americans loved the US. Luciano allowed the FBI to ignore the docks on the eastern seaboard, freeing them up to do other work. The mob controlled all the docks and policed them for saboteurs. But, when they found saboteurs there was no trial. They were simply no longer seen again.

  16. In return Luciano was returned to Sicily at the end of the war. Although he did sneak back into the US.

  17. One question and two observations:
    1.) Does the government fine and consent decree override and eliminate any private rights of action (lawsuits), or can the decree be cited as evidence of wanton negligence in private lawsuits?

    2.) GM is owned by the UAW with managers employed by the UAW and its workers are solely dues-paying members of the UAW. What do you expect?

    3.) Isaac says, “Every other advanced democracy has at least four parties, four opinions, four choices. We are the least democratically structured nation. No wonder half the voters are republican.”
    a.) Most “every other advanced democracy” is in the EU so they are superseded in law and regulation by unelected civil servants in Brussels and not at all “democracies.”
    b.) We are not, and do not claim to be a “democracy.” That’s a so-called goal of the Democrat Party. Democracy means “majority rule” and if you look at the IQ Bell Curve, you will see the majority is dumber than IQ 101.
    c.) Switzerland (non-EU) offers truer democracy and every male citizen there possesses a firearm.

  18. I wonder what it would actually take for a corporation to have its charter revoked. Killing people does not seem to be enough. Spoiling the ecology and economy of the Gulf Coast is not enough. Crashing the economy with your bank is not enough. Anyone want to speculate what would be enough?

  19. I am not sure a charter for a corporation can be revoked as long as it keeps within its stated purpose and pays its fees, taxes and makes its yearly reports.

  20. old fox33

    2.) GM is owned by the UAW with managers employed by the UAW and its workers are solely dues-paying members of the UAW.

    did it hurt when you pulled that one out of your a$$?

  21. I have deleted an uncivil and profane comment from Melanie. I have also deleted comments from RTC and Feynman again. If you engage in name calling or uncivil comments in a comments, I am not going to edit out the personal attacks. At some point, if you cannot comply with our civility rule, you will have to be suspended. I have no dog in this fight. I do not care how each of you feel about the others or the sources or viewpoints that the others espouse. If you cannot discuss a subject without name calling or personal attacks, we ask you again to move on to another blog where such biting comments are not just tolerated but welcomed. If you believe someone is beneath contempt than ignore them. I am perfectly willing to reduce the comment section 99 percent to avoid this type of juvenile discourse.

  22. Sergeant Shulte(s),


    Hell, I haven’t gotten over the Civil War! You know what they say. The biological bipeds of identical plumages are gregarious. That seems axiomatic to me. I’d have to postulate the you who commingle are the deviant physical anomalies.

    Did you ever see that Twilight Zone episode in which the protagonist, a hospitalized patient, was head-bandaged until his countenance would be revealed at the end? The busy doctors and staff were all literally pigs and normal. When the patient was unmasked, he looked gross, unbearably ugly and completely repulsive; he looked like a human.

    To suggest there is something untoward when birds of a feather flock together is twisted somehow.

  23. Desperate times call for desperate measures.

    The African Tribal Chiefs sold their tribal members into slavery, the king needed cash (see, slavery was just a simple little wage dispute from beginning to end – kind of like indentured servitude).

    The Mayans cut the hearts out of thousands of citizens in one day (their deity was in dire need of some appeasing – Geez, I would have rather been a slave).

    The Israelites killed every living thing in Jericho in order to prevent an attack from the rear as they moved into the promised land.

    The British tarred, feathered and hung Captain Kidd on the Thames for all the departing ship crews to see and remember. Traitors and insurrectionists were drawn and quartered through the 17th century.

    How about that Vlad the Impaler??? Desperate times manifested themselves as a need for defensive terror tactics so he showed his enemies thousands of people alive and impaled on stakes (that would have scared the be-heysoos out of me!).

    Etc., etc. Things are tough all over.

  24. Nick,

    An American, W. Edwards Demming, taught the Japanese how to produce that quality:

    He is best known for his work with Japanese after WWII, particularly his work with the leaders of Japanese industry which began in August 1950 at the Hakone Convention Center in Tokyo with a now seminal speech on what he called Statistical Product Quality Administration, which many in Japan credit with being the inspiration for what has become known as the Japanese Miracle of 1950 to 1960, rising from the ashes of war to become the second most powerful economy in the world in less than a decade, founded on the ideas first taught to them by Dr Deming:

  25. I threw the J word up there to open a discussion on slurs on American Indians. I am part Osage. I lived in Washington DC for a short internment and was annoyed by the Washington Redskins name. Its a slur. I think it should be banned along with Japs. But, I don’t take shots at other commenters here and did not mean to stir up apCray. But I do reserve the right to call bad cops “igPays”. If Jonathan wants to throw us all off or just me then I guess he will let me know. He does have a dog in this fight and its name is Luna and we all like the dog.

  26. I have absolutely no idea of what I wrote that was uncivil. It is not my practice to call people names. Did I? Is it objectionable to point out the political affiliation of a source? My two comments here consist of about 10 words regarding Soros and the use of the slur ‘jap’. There is no indication of a confrontational exchange. The short length of the thread is illustrative.

    It’s as if you have given an exam with 100 questions, posted the grades on a bulletin board but neglect to return the exam for our review.

    How can one learn the rules with such a system?

  27. Two words a foreigner living in Japan learns pretty quickly are baka (stupid) and gaijin (foreigner).

    Oh yeah. Those friendly little Japanese didn’t bomb Pearl Harbor, murder POW’s on the Bataan “Death March” or atrociously torture prisoners.

    But, hey! That doesn’t make them bad people.

    We’re all innocent! It was a gross miscarriage of justice!

  28. John – other than you turned on your thesaurus on your computer, I have no idea what your point was or what you were referring to. You are going to have to make a more specific reference if you would like them to respond.

  29. John – most scholars think the Maya sacrificed either slaves or war prisoners or both. There may have been some child sacrifice for building foundations and the source of the children is unknown.

  30. John – the Japanese were not signatories of the Geneva Convention. To them surrendering, as did the US force on Corrigidor and Bataan, meant the prisoners where less than human. Hence the inhumane treatment. This attitude of no surrender became more and more off a problem as we attempted to take islands closer to the homeland. On the last few islands were were having to kill all of the Japanese, there were no or very few surrenders.

    On the flip side, I am sure Curtis LeMay did not firebomb the wooden and paper cities of Japan causing hundreds of thousands of civilian deaths.

  31. I see Govt. Motors recalled another 3 million cars today. Why not just recall every freakin’ car they made!

  32. Nick – they probably will but they cannot repair them all at once, so they have to recall them in stages.

  33. John, “I object! This is a travesty. It’s a travesty of a mockery of a sham of a mockery of a travesty of two mockeries of a sham.”

  34. John:

    You also have a comment deleted which was entirely committed to insulting another poster.

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