Bloomberg BusinessWeek sheds a little more light on what President Obama’s Auto Industry Task Force knew about the faulty switches . . . at least according to unnamed sources:
The task force President Barack Obama set up to manage General Motors Co. (GM)’s bailout and bankruptcy in 2009 wasn’t aware of the faulty ignition switches linked to 13 deaths in small cars, said people familiar with the matter.
Had it come up, the task force would have considered setting aside more money for the GM estate left behind after the Detroit-based automaker filed for bankruptcy in June 2009, said the people, who asked not to be named because their meetings were confidential. At the time, GM’s board and the task force based their projections for product-liability claims on a report that the GM estate would face about $414 million for pre-bankruptcy crashes, according to court papers.
While members of the task force met frequently in early 2009 with GM executives to discuss product-liability claims and determine how they should be handled in bankruptcy, the ignition switches or safety problems with the Chevrolet Cobalt weren’t brought up, said the people.
The administration’s line was always likely to be, “Hey, they never told us about the faulty switches!” Of course, the job of the Auto Industry Task Force was to get an accurate understanding of the condition of GM, not just to take GM management’s word for it. Clearly some folks at GM knew about these faulty switches and the safety and liability issues they presented; they chose to not tell the Task Force. Or the public. Did anyone on the task force ever raise the question of whether GM was accurately representing the risk of product-liability claims? Did the task force talk to anyone in the engineering department? Or was the bailout thrown together as quick as possible in order to save the jobs of administration’s ally, the United Auto Workers?
Also note this:
Steven Rattner, who headed the task force for the Obama administration, declined to comment on the matter when reached by phone Wednesday.
Up until recently, Rattner was eager to tout the success of the GM bailout. Now he has nothing to say.
Even contributors to the Huffington Post are noticing that it’s a lot harder to tout the GM bailout as a success or good policy after these revelations:
What kind of company did the government save? One that waited a decade to recall millions of cars with a lethal defect that would shut down engines without warning. One that chose not to replace the defective part, an ignition switch, when it was first detected. It would have cost less than $1 a car to do so.