Once again, money talks and execs will walk

gmlogoBack in 2008, when the U.S. government decided to bail out failing automaker General Motors, I was opposed. I thought the company deserved to fail and should have been allowed to fail:

GM has been a bloated, failing corporation for decades. While Americans turned to high quality, fuel efficient, stylish foreign cars — and usually paid a premium for them — GM continued to produce giant, gas-guzzling road hogs of questionable quality. They were slow to react to public demand, slow to improve their quality, slow to produce more fuel-efficient cars. Sure, maybe their quality is better now, maybe up-to-date high-mileage cars are going to be rolling off the assembly lines next year. But it’s too little, too late. Businesses that don’t respond adequately to consumer demand and market conditions either fail outright or go into bankruptcy.

But, in its infinite wisdom, the government persisted and bailed out the company. And the GM executives took their humongous bonuses and laughed all the way to the bank.

That was in 2008. But it turns out the company is still slow to react.

What some of those executives probably knew was that since 2004 they’d been selling cars with defective ignition switches. Switches that would have cost less than $1 each to replace. But they didn’t. And people died. GM has acknowledged 13 deaths and several dozen crashes. The mother of one of the victims says she has identified at least 29 victims. Finally, under fire from lawyers and Congress, GM has recalled 1.6 million Cobalts and other small cars to fix the problem — 10 years after they first learned of it!

A different problem, airbag failures between 2003 and 2012, related to some 300 deaths, caused the company to finally recall 1.33 million SUVs earlier this year. A little slow on that one, too. Apparently they won’t move on something until lawsuits and adverse publicity force them to.

On top of all that, it turns out the company isn’t even liable for wrongful deaths that occurred before its 2009 bankruptcy settlement (one of the “beauties” of bankruptcy). USA Today explained it:

As a condition of the taxpayer-financed, government-supervised bankruptcy restructuring of GM in 2009, the automaker was given immunity from product liability or wrongful death claims arising from accidents that occurred before it exited bankruptcy on July 10, 2009.

Finally, if all that weren’t enough, they appointed their first female CEO, Mary Barra, in January — just before the shit hit the fan, just in time for her to take all the heat in the current congressional hearings. That may not be what they intended — perhaps they thought she had plausible deniability — but that’s certainly what it looks like. Put the woman out front while the rich old men (the ones at fault) run for cover.

GM should have been allowed to drown in the mess of its own making back in 2008. And some of those executives, instead of getting big fat bonuses and golden parachutes, should now be in prison. But that’s the way it goes in America, in industry after industry. Deaths, injuries, flauting of regulations, and the attendant penalties and fines — all just the cost of doing business. Why should they care? The big boys never go to jail. Money buys everything, including immunity and impunity.

 

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Categories: Law, Money

19 replies

  1. She has been in decision making positions at GM for a looong time (30 years seems to be what I heard.)
    What a scam – and the US taxpayers loosing money…and people died (collateral damage – minor issues)
    Won’t buy GM vehicles.
    Annoyed one of my young nephews works there in design (and as a new hire, he got a bonus like everyone else right after the bailout…they love the bonus – they’ve been to Hawaii one year, Paris another, Germany/Europe…thank you tax payers…sorry you can’t afford a vacation….maybe you should work for GM…then you might know which cars not to buy, too.)
    SNARL.

  2. horrible. and i think the ceo got out just in time. no coincidence in my eyes.

  3. Same Downunder. Same company, same hands out. Difference being that all anyone has to do is start bleating about JOBS FOR AUSTRALIANS to get whatever they want. This time, no. But the fact that GM is pulling out of Oz is for their own benefit, not ours.

  4. I thought that very same thing as I saw the newly appointed female CEO taking all the heat. I started out thinking it was a good thing to save all them American jobs, but this just goes to prove how very, very wrong I was….

  5. Government Motors wins again and again and again….

  6. Stockholders would be better served by corporations allowed to profit from their mistakes. Same for voters.

    As long as corporations needn’t learn because of expected government bailouts, their stockholders needn’t depend on moral corporate officers whose strategy is to build trust of its customers.

    As long as voters continue to elect Republican and Democratic politicians who support corporatism, they needn’t expect any change either. That’s why I NEVER vote for candidates from either of the big two parties.

  7. Everything you say about GM is sadly true, PT, but I think it would be a mistake not to view this in perspective. Big business is here to stay and it lives in symbiosis with national economies. It would be nice if cars and trucks were built by mom-and-pop shops where true competition reigned, but that isn’t practical. The behemoths reign, but they are supported by vast networks of small suppliers and if the giants die, so do those networks. Government is compelled to figure out how to deal with that reality, and it is doing so, even if only clumsily and tardily.

    I read recently that Toyota was fined a whopping $2 billion for transgressions similar to GM’s, a record amount, so GM is not alone in its faults. The system is working and the modern automobile is a model of comfort, safety and efficiency for the most part. Why do I think that? Because I can still remember the old cars: gas-guzzling, polluting, power-nothing, dangerous (no air bags, not even seat belts). Flats were common and carburetors and distributor points needed regular overhaul. We have come a long way with this highly-regulated industry which, for all its faults, is one of the few that still employs millions of Americans at decent wages.

    All that said, your criticisms of GM’s stale designs and policies are true and it will be a cold day down under before I buy one of their machines.

    • We do, of course, advance and acquire new knowledge and technology. Without the regulations forcing them to do so, I’ve no doubt that automakers would continue to take the cheapest route and if gas-guzzling polluters were cheaper, that’s all they’d offer. Ditto seat belts, airbags, etc. Competition also might force some changes, if anyone were forward-thinking enough to lead the pack.

      I understand that these companies are among our largest employers. That’s one reason GM was bailed out. It had nothing to do with the quality of their cars. They were “too big to fail” by virtue of the number of jobs they represented.

      There’s always a reason, isn’t there, why the big dogs never go to jail, even when their greed has cost lives. I’m thinking, too, of the energy companies (oil spills anyone?), pharmaceutical manufacturers, bankers, etc., as well as the automakers. Paying big fines when they screw up is just considered part of the cost of doing business. The cost should be higher. Somebody should be in prison. When people die because other people deliberately or negligently hid a flaw or mistake, somebody should do some time. Perhaps the threat of prison (the real thing, not a country club) would make the white collar bigwigs think twice about their actions. Obviously fines alone are not accomplishing anything.

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