Five Takeaways From the GM Safety Debacle
NEW YORK ( TheStreet) -- Mary Barra, CEO of General Motors
Barra, who served as executive vice president for global product development, purchasing and supply chain until January, told members of Congress that she had no knowledge of the switch problem prior to the recent recalls.
Members of Congress were left frustrated. Neither Barra nor federal regulators provided good answers as to why the vehicles were not recalled sooner and why the faulty part continued to be installed in GM vehicles for so many years.
Here are five takeaways from the hearings and what we know so far from the actions of GM and government officials.
1. The GM bailout failed and $10 billion in taxpayer money has been squandered.
Starting in 2009, the U.S. Treasury put $51 billion into General Motors -- through loans and stock purchases -- and ultimately lost $10 billion. Part of President Obama's strategy to put GM through "quick wash" bankruptcy, this left most of the existing management in place.
Managements' mediocre commitment to quality and safety helped put GM in financial trouble a decade ago, and now we see that problem continue unabated.
Had GM been forced through conventional bankruptcy reorganization, private investors would have replaced much of the existing senior management with more customer-focused leadership. Better quality-control systems to guard against issues like the ignition switch scandal could have saved lives.
2. GM's culture is broken. The company can't make safe cars.
GM has heavily layered and highly compartmentalized management and product-design structures. Problems like the ignition switch can be discovered by GM engineers -- as the result of customer complaints or tragic accidents -- but go unnoticed by other units and senior leadership.
All this results in top management left unaware of tragic defects, and the public driving unsafe vehicles that should have never been put on the road.
3. There's not much accountability for bureaucrats at the Obama White House.
The National Highway Traffic Safety Administration was aware of the ignition switch problem as early as 2007, but took no concrete action to protect drivers and passengers.
President Obama was quick to hold investors and company officials accountable after the 2010 BP Horizon disaster , but not nearly enough happened to the government officials charged with overseeing the project and who turned a blind eye or were simply lazy.
Now, members of Congress from both parties are livid with NHSTA about its lax response to the GM ignition switch problem, but the White House is not rushing to get to the root of accountability at NHTSA or replace the administrator.