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Richmond, Virginia

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Michael Phelan
Michael Phelan
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Bravo Mary Barra

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There are several ways that General Motors could have handled the news that it failed for ten years to fix faulty ignition switches that it knew existed.  GM could have gone into denial mode- a strategy often employed by manufacturers of defective products.  It could have played the cronyism game, enlisting friendly members of Congress to enact legislation granting GM immunity from lawsuits arising out of the twelve deaths linked to the faulty ignition switches.  GM could have sought another round of  corporate welfare, asking the tax payers to shoulder the burden in the form of another bailout.  Instead, GM’s new CEO, Mary Barra, stood before reporters this week to discuss the GM recall of 1.6 million cars, and she told the truth and accepted responsibility.

Ms. Barra admitted the she learned in late December that internal safety committees were analyzing defects in the Chevrolet Cobalt.  This was more than a month before the company decided to issue its recall and earlier than the company first said that Ms. Barra was told.  Ms. Barra’s explanation for the discrepancy is that she did not understand the serious nature of the defects until January 31, when she was informed that two GM safety committees had concluded that a recall was necessary.  Ms. Barra has been GM’s CEO for barely two months.  Given the fact that she has so far adopted a policy of transparency over obfuscation (the standard tact in such situations), I believe that she is entitled to the benefit of the doubt with regard to her explanation about when she first learned of the defect.  The bigger issue is what was going on inside GM for the past ten years while it sat on knowledge about faulty ignition switches.

If GM intends to see this new strategy through, it should quickly compensate the families of the twelve people who died in their faulty vehicles.  This is how efficient markets should work.  This approach does not involve lobbyists or government.  If GM chooses to resort to a strategy designed to avoid responsibility, the recourse for the families of the twelve victims is set forth in the Seventh Amendment to the Constitution.  For now, let’s give Ms. Barra a chance to follow up on her choice to own and hopefully to resolve the problem.

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    Michael has is exactly right! Hit the pause button … and allow time for this to develop. He says is well with this: “Given the fact that she has so far adopted a policy of transparency over obfuscation (the standard tact in such situations), I believe that she is entitled to the benefit of the doubt with regard to her explanation about when she first learned of the defect. The bigger issue is what was going on inside GM for the past ten years while it sat on knowledge about faulty ignition switches.”