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GM Seeks the Fast Lane On Recall

On Friday the United States Justice Department announced a fine in the amount of $35 million to be levied against General Motors. The fine comes on the heels of an admission by General Motors that the company did in fact fail to recall 2.6 million cars in a timely fashion. Evidence has been presented that the manufacturer knew of the faulty ignition switches as far back as 2001. To date 13 deaths can be attributed to the malfunction. As of May 25th, 47 frontal-impact crashes can be linked to it as well.

GM has taking a lesson learned from their slow response and, as of late, has been fast to act on additional recalls. On May 23rd the automaker recalled 500 full-sized pickup trucks, not for ignition switch malfunctions, but for faulty airbags. The recall constituted the 30th such recall in 2014 alone. Over 14 million vehicles in all have been recalled just in America.

The company seems to refuse to get behind on the recall disaster. GM has reportedly hired former U.S. Attorney, Anton Valukas, to review the communications lapse that seemed to halt the information about the malfunction being delivered to GM directors. Dependent on the findings of the counsel, further litigation may be on the horizon for negligence on behalf of the company.

Additionally, in the first quarter, the company has earmarked $1.3 billion for fines and payouts and another $400 million in anticipation for continued expenses next quarter. To date the company has received notice of 80 lawsuits with combined damages of $10 billion being sought. Since the recalls began earlier this year, the company has spent $1.7 billion in repairs.

The GM woes harken back to the 2009-2010 Toyota recall debacle, which was settled recently with the Justice Department for $1.2 billion. Toyota’s settlement ceased the litigation that was aimed at seeking criminal charges against top executives.

GM may look to take a page from the Toyota book as public distrust rises and GM stock sinks down 18%.