Government fines GM maximum $35M in safety case

U.S. safety regulators have fined General Motors $35 million for delays in recalling small cars with faulty ignition switches that are linked to at least 13 deaths.

It's the maximum penalty that the government can impose and the first time an automaker has been fined that much. But the amount is less than a day's revenue for GM, based on the $37.4 billion it took in during the first quarter.

As part of an agreement announced Friday by the Transportation Department and National Highway Traffic Safety Administration, GM also has agreed to government oversight on safety issues, and to report safety problems much faster than in the past.

NHTSA has been investigating GM's delayed recall of older small cars with defective ignition switches. GM has acknowledged knowing about the problem for at least a decade, but it didn't start recalling the cars until February of this year. The department said in a statement that GM agreed that it was slow to report the problems.

The company says at least 13 people have died in crashes linked to the problem, but trial lawyers suing the company say the death toll is at least 53. Ignition switches on Chevrolet Cobalts and Saturn Ions can slip out of the "run" position and shut off the engine. That cuts off the power steering and brakes, potentially causing drivers to lose control. It also disables the car's air bags.

Transportation Secretary Anthony Foxx, at a morning news conference in Washington, said the government will not accept a company failing to notify regulators about safety defects.

"Literally silence can kill," he said. "GM did not act and did not alert us in a timely manner. What GM did was break the law."

Acting NHTSA Administrator David Friedman said that a previously undisclosed 2009 memo from a parts supplier to GM clearly stated that the ignition switch problem could disable the small cars' air bags, which clearly is a safety problem.

"This is information that General Motors had from their supplier that General Motors never shared with us," he said.

Had the government possessed this information, it would have sought a recall at that time, Friedman said. The safety agency has been criticized for not requiring GM to recall the small cars despite numerous complaints from owners.

The $35 million penalty was doubled from last year. But Foxx still urged Congress to pass legislation that would raise the fine to $300 million.

Automakers are required to report safety defects within five days of discovering them.

Under the agreement, GM will have to make "significant and wide-ranging internal changes" to its safety review process, the government said. The company also has to pay added penalties for failing to meet NHTSA's deadline to answer questions about the ignition switches.

NHTSA began fining GM $7,000 per day in early April after it missed the deadline.

In a separate statement announcing the agreement, GM CEO Mary Barra said, "GM's ultimate goal is to create an exemplary process and produce the safest cars for our customers - they deserve no less."

In addition to NHTSA, two congressional committees and the Justice Department also are investigating GM. The Justice Department could bring a much larger penalty and possible criminal charges. Earlier this year it made Toyota pay $1.2 billion for concealing unintended acceleration problems from NHTSA.

Clarence Ditlow, executive director of the nonprofit Center for Auto Safety, said it was inevitable that GM would be fined $35 million. The big issue now, he said, is what the Justice Department will do.

Ditlow wants Justice to impose a fine of $1 billion or more and bring individual criminal charges against GM engineers and their superiors.

"That's the only way you're going to change GM's behavior," he said.