Financial News

  • 2 April 2014, 8:37

GM Hires Attorney To Advise On Recall Victims

General Motors has hired attorney Kenneth Feinberg to explore ways to compensate victims of accidents connected to defective ignition switches in its small cars.

Mr Feinberg handled the September 11 Victim Compensation Fund as well as funds for victims of the Boston Marathon bombing and the BP oil spill.

GM CEO Mary Barra announced Mr Feinberg's hiring during a House subcommittee hearing on Tuesday.

The move comes after GM issued recalls for 2.6 million cars for defective ignition switches, which have been linked to 13 deaths and dozens of accidents.

Members of the House Energy and Commerce Committee say GM failed to act despite knowing about the cases, some of which date back to 2003.

The subcommittee is trying to establish why GM took so long to address the problem.

Ms Barra, who took over GM in January, said: "Sitting here today, I cannot tell you why it took so long for a safety defect to be announced for this programme, but I can tell you we will find out."

Ahead of Tuesday's hearing, House Democrats said GM has failed to report the "vast majority" of 133 cases of safety concerns linked to the defective ignition switches.

Among those present at the hearing were several family members of crash victims.

Some wore blue shirts featuring a photo of 16-year-old Amber Marie Rose, who was killed in a 2005 Chevy Cobalt crash.

Relatives displayed photographs of lost loved ones along the back wall during the hearing.

GM has tried to show regulators and consumers that it is more focused on safety, announcing the recall of another 1.5 million vehicles on Monday.

But the head of the nation's auto safety watchdog is blaming the company for a failure to act sooner to warn consumers of the defect that has been linked to the deaths.

In written testimony released ahead of the hearing, acting NHTSA chief David Friedman said GM had information connecting defective ignition switches to the non-deployment of air bags, but did not share it until last month.

Mr Friedman also is expected to testify before the subcommittee.

A separate hearing is held on Wednesday before a Senate subcommittee.