General Motors Is Stalling: Buy or Sell?

Tickers in this article: GM

NEW YORK (TheStreet) -- On Tuesday, shares of General Motors were drilled, falling more than 5% on reports that the U.S. Attorney General will investigate the company's massive recall of 1.6 million vehicles. In mid-day trading, shares changed hands a $34.80, down about 1%.

The federal investigation follows a similar investigation by the National Highway Transportation Administration into GM's handling of the recalls. 

The enormous recall and ensuing investigations stem from an ignition switch issue, where the car's key is at risk of turning off, shutting down the engine and disengaging power throughout the car -- including airbags. 

As of now, there have been 13 reported deaths due to this issue.

However, the problem isn't that General Motors had an ignition switch issue. It's that this information was known as early as 2004. It was again brought to its attention in 2007, this time by a "federal safety official," according to a USA Today report

After all of these reports and these types of headlines, it's not surprising that shares of General Motors got whacked yesterday. In fact, it was the worst day for the stock in two years. Again, not all that surprising really. 

So what should General Motors do?

The fact that the company recently named Mary Barra as the new CEO is a good thing in this situation. I mean, I think it's a great thing that she was named CEO in the first place. But in this case, I also view it as a positive. Let me explain why.

Because Barra was not the CEO when these ignition switch issues were first brought up -- and subsequently handled in settlements with undisclosed amounts early on -- she's not tied to any of it.