Ex-DOT chief: GM bailout played no role in US oversight before recalls

Former Transportation Secretary Ray LaHood is disputing suggestions that General Motors's federal bailout played a role in the Obama administration's oversight of the automaker, including its recent recalls.

Some Republican lawmakers suggested during a pair of contentious hearings last week that the National Highway Transportation Safety Administration (NHTSA) was reluctant to crack down on GM because the federal government provided the company with a $50 billion bailout in 2008 and 2009.

GM and the Department of Transportation are under fire for failing to issue a recall of cars — from as old as 2004 to 2010 — that had a dangerous flaw with their ignition switches.

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LaHood, who was in office from 2009 until 2013, said in an interview with Washington, D.C., radio station WTOP on Monday that the bailouts played no role in the Transportation Department's approach to GM.

"Chrysler was also bailed out," LaHood said. "Did we turn a blind eye to a company that the federal government bailed out? Of course not."

Republicans on the Senate committee that met to investigate the GM recalls last week said they were not as sure as LaHood that the company's bailout did not play a role in its treatment.

Sen. Dean Heller (R-Nev.) said during an appearing on Fox Business's “Cavuto” show after the hearing that he still questioned whether the bailout caused GM to hesitate on the recall.

“I talked to them specifically about 2006, 2007, 2008,” Sen. Dean Heller (R-Nev.) said. “What was the financial health of GM at the time, and were they so unhealthy as you know, they were bailed out by the taxpayers; taxpayers did end up owning 60 percent of them, but was that the reason why they did not do the recall, because they could not live through one at that point?"

GM announced it paid back most of the money it received during the bailout shortly before it tapped Mary Barra to become its first female CEO in December of last year.

The bailouts made GM a frequent target of political attacks from conservatives, who dubbed the company “Government Motors” during the time the federal government owned a majority of its shares.

LaHood said blame should instead be placed on GM for not providing accurate information about its cars that have been recalled.

The highway safety agency has been accused by lawmakers of failing to properly oversee GM's handling of the recalls, which have been attributed to an ignition switch failure found to cause cars to shut off abruptly or have their airbags disabled.

The cars, which were first recalled in February, were mostly made during the model years 2004 to 2010. The recall has been said to have affected 1.6 million cars that are currently on the road. 

As a result of the recall delay, drivers were allowed to operate the vehicles for as long as a decade in some cases. 

LaHood said the highway safety agency he once oversaw would have acted a lot more quickly if GM had been more forthcoming about problems with the ignition switches that were reported by drivers.

"The idea that the NHTSA didn’t take [the ignition switch problems] seriously is not accurate," LaHood said. "Had GM been forthright and indicated that they knew about these mechanical problems, perhaps they would have been addressed a lot earlier, and lives and injuries would have been saved."

Current NHTSA officials have similarly placed blame on GM for the recall failure, telling lawmakers last week that the agency would have acted more quickly if the automaker had been more forthcoming.

"Our ability to find defects also requires automakers to act in good faith and provide information on time," acting NHTSA Administrator David Friedman told a Senate committee last Thursday.

"General Motors has now provided new information definitively linking air bag non-deployment to faulty ignition switches, identifying a part change, and indicating potentially critical supplier conversations on air bags," Friedman continued. "Had this information been available earlier, it would have likely changed NHTSA's approach to this issue."