REACTION: What analysts, lawmakers and others are saying about GM recall findings
General Motors CEO Mary Barra used a town hall meeting with employees today to present key findings of the company's internal review into delayed recalls. A roundup of what analysts, lawmakers and others are saying about the GM report by former federal prosecutor Anton Anton Valukus:
"It will take time to scrutinize this over-300 page report, but the initial findings are deeply disturbing, suggesting that communications and management failures ran deep and wide within GM. The failure to identify red flags and conduct a recall sooner cost lives. It has been more than a decade since we put tough new standards in place so automakers and regulators could quickly spot patterns and fix safety risks, yet this devastating design flaw slipped through the cracks. It's unacceptable. The conclusion of GM’s internal investigation marks an important milestone, but our investigation continues as many questions remain for both the company and NHTSA. GM and NHTSA must continue to cooperate and provide us honest answers as we work to determine what went wrong, if there are gaps in the law that allowed the system to fail, and what legislative remedies may be necessary."
-- Rep. Fred Upton, R-Mich., chairman of the House Committee on Energy and Commerce.
“The board, like management, is committed to changing the company’s culture and processes to ensure that the problems described in the Valukas report never happen again.”
-- GM Chairman Tim Solso, as part of an announcement that GM's board has retained independent counsel to advise directors on governance and risk management related to the recall. The board is also forming a stand-alone risk committee to assist in overseeing the efforts.
“The downside is that members of Congress, the press and the public may think that the report lacks credibility if it is in an in-house investigation. His reputation is on the line with this report, so he is not likely to sacrifice that for G.M.”
-- Carl W. Tobias, a law professor at the University of Richmond, in The New York Times, on the Valukas report.
“I will be spending the next few weeks seeking advice and input from all interested parties as to the terms and conditions of such a program. I have already drafted some preliminary compensation ideas and plan to share them in confidence over the next few weeks with lawyers, public interest groups, G.M. and others interested in the compensation program.”
-- Independent attorney Kenneth Feinberg, on the status of a compensation program for recall victims that GM is developing.
"CEO Mary Barra is using (as we have advocated) the ignition switch crisis to accelerate cultural change at GM. Moreover, we are comfortable with our $2.5 billion legal cost estimate given the establishment of a victim compensation fund to directly pay for injuries/deaths and the likelihood that GM will use the bankruptcy shield to defend against the more spurious 'economic loss' class action suits ... While GM did provide some positive details around process and cultural change, we still think a stronger brand focus is needed to drive better results. Indeed, we believe GM would benefit from 1) making brand presidents more than advertising managers; 2) accelerating global product development – without compromising brand and regional needs; and 3) establishing mechanisms for faster cross-functional decision making. Execution of these initiatives, while also communicating a better long-term balance sheet strategy could help to unlock shareholder value, especially as these initiatives would provide us with better confidence in GM’s prospects for margin expansion in the coming years."
-- Barclays analyst Brian A. Johnson
“The National Highway Traffic Safety Administration has received the results of GM’s internal investigation into the Chevrolet Cobalt recall, led by former U.S. Attorney Anton Valukas. Based on the agency’s preliminary review, it appears to support the findings of NHTSA’s timeliness investigation that showed at all levels of the organization, GM’s decision-making, structure, process, and corporate culture stood in the way of safety at a time when airbags were failing to work properly in millions of GM products. This must change and NHTSA has ordered GM to make significant institutional reforms and is conducting a thorough review of the report as part of the agency’s ongoing oversight. As always, NHTSA will take appropriate action based on its findings.”
-- The National Highway Traffic Safety Administration
“The GM public relations campaign is pitching this report as an independent review. In truth, it seems like the best report money can buy. It absolves upper management, denies deliberate wrongdoing, and dismisses corporate culpability. By firing fifteen people and committing definitively to establish a compensation fund, GM has taken more steps than it has been willing to do in the past, but today’s public relations campaign continues to leave critical questions unanswered. Most significantly, CEO Mary Barra could not answer why the defective ignition switch was changed but its number was kept the same. Before accepting GM’s self-serving explanation that the cause was a failure of corporate silos or culture, rather than deliberate wrongdoing, I believe that federal investigators and law enforcement agencies must conduct an independent inquiry into GM’s conduct. The Department of Justice must pursue a timely, vigorous criminal investigation. Congress must continue its inquiry, aggressively and promptly. And NHTSA must oversee the recall process to ensure more drivers are not harmed. Moreover, GM has yet to come clean about why it disagrees with widespread reports that their defect has led to more than 13 deaths and the company has yet to set an amount for the compensation fund."
-- U.S. Senator Richard Blumenthal, D-Conn.
"Data suggests that for the most part, recalls have not discouraged Cobalt owners' loyalty to GM and Chevy. GM has done a good job communicating new car deals to affected Cobalt owners, many of whom were probably getting close to buying a new car anyway. These deals look very appealing to outgoing Cobalt owners, especially if they personally haven't had major problems with their GM vehicles in the past."
-- Edmunds.com Senior Analyst Jessica Caldwell
“I’m going to reserve judgment until I can take a closer look at the report -- which I expect to find comprehensive and thorough -- and I’m looking forward to getting a full briefing from Mr. Valukas. I won’t be letting GM leadership, or federal regulators, escape accountability for these tragedies. That’s why I’ll be holding a follow-up hearing later this summer to address unanswered questions. The families of those affected deserve no less.”
-- Democratic Sen. Claire McCaskill of Missouri, chairman of the Senate's Consumer Protection subcommittee
"[The town hall meeting] was brutally honest. It took a lot of corporate guts to be that transparent. I don't know if it will [affect sales], but ... they have the right focus, and that is making sure what happened will never happen again."
-- Doug Stanley, general manager of Prestige Cadillac in Warren, Mich.
“The Valukas report provides important new details about GM’s ignition switch defect and its tragic consequences. Its findings are consistent with what the Committee learned at our April 1 hearing: that a poor safety culture and repeated failures to identify problems within GM created this defect and prevented the company from acting sooner ... it provides important answers, but also raises new questions. It’s imperative that GM implement the recommendations of this report. But Congress needs to do its job too. We need to give NHTSA improved authority and better resources so that the next time an auto company fails to live up to its obligation to put safe cars on the road, federal officials have the tools they need to keep consumers safe.”
-- Rep. Henry A. Waxman, D-Calif.
“Despite the damaging nature of this situation, Mary Barra has handled it as well as any CEO in her position could. Her town hall speech made it clear that additional steps will be taken to punish employees who failed GM’s customers. She wants to not only change GM’s corporate culture, but to keep this incident top-of-mind going forward so the automaker won’t ever experience these failures again. Mary’s speech was a clear rallying cry to GM’s employees worldwide. Seeing the automaker through this crisis would be difficult for any CEO, but thus far Mary has shown an impressive combination of leadership, empathy and resilience.”
-- Karl Brauer, senior analyst at Kelley Blue Book
Kathleen Burke, Gabe Nelson and David Phillips contributed to this report.