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Reports US

US stock market daily report (April 10, 2014, Thursday)

April 11, 2014, Friday, 05:22 GMT | 00:22 EST | 08:52 IST | 11:22 SGT
Contributed by Millennium Traders


General Motors Company (GM-NYSE) announced on Thursday that two engineers have been put on paid leave as an interim step toward getting to the bottom of the slow fix of the ignition switch problem linked to at least 13 deaths. The investigation by U.S. lawmakers are zoning in on engineers as well as others involved including knowledge of senior executives, in the slow recall of nearly 2.6 million cars.

Investigation by Congress include emails from John Hendler, an involved engineer and Lori Queen, a GM executive responsible for small car development, discussing costs of redesigning the switch. Other documents from GM under review by the House committee include the change of the switch in 2006.

During 2013, GM engineer Ray DeGiorgio testified in a deposition related to a suit against GM, that he was unaware of a change in the part although, a document turned over to Congress showed that he approved redesigning the switch in 2006. The document however, lacks a signature by a "GM Validation Engineer" which is being questioned by investigators.

Officials involved in the investigation include the House of Representatives Energy, the Commerce Committee, Senate Commerce Science and Transportation Committee. The group are requesting comments from GM people with direct knowledge of the switch defect, which can unexpectedly shut off engines, disable airbags and make steering and braking more difficult. As Congress proceeds with its investigation, they are also laying the groundwork for possible legislation during 2014 that would prevent future safety defects from going unaddressed. Democrats have already proposed legislation to increase the maximum civil penalties for violations of federal safety standards. Reporting requirements involving fatalities would be strengthened and funding would be increased for agencies who oversee the auto industry. Under the plan, consumers would have wider access to government obtained documents. Potential legislative action is expected to result in an increase by lobbyist for the auto industry.

Senator John Thune of South Dakota, senior Republican on the Senate committee said, "If you really want to get to the bottom of it you really have to talk to people who were actually there when all this was going on."

Democratic Senator Richard Blumenthal, former federal prosecutor and Connecticut state attorney general, said he wants to question lead GM engineers, but also "lower-level officials who may have knowledge about the reasons GM not only failed to correct it (the ignition switch problem), but concealed it."

Republican Senator Kelly Ayotte who serves on the Senate Commerce, Science and Transportation panel and is former New Hampshire state attorney general, feels GM's behavior may be criminal. Ayotte said, "The thing that I found most appalling is the deception here and that deception is really outrageous and totally unacceptable in terms of what they knew, when they knew it and what they told the public." Ayotte added that she "very much" wants to get testimony from former federal prosecutor Anton Valukas, who was hired by GM to conduct an internal investigation of what has become a major safety issue, as well as a public-relations nightmare for the Detroit automaker.

House Committee Chairman Fred Upton, Michigan Republican said that, while they continue to try to "connect the dots," they will "identify the problem and then come back with corrective legislation to fix it." Upton played a role in the writing of a 2000 law that arose out of a congressional investigation into problems involving Firestone tires on Ford Explorers.

On Wednesday, Greg Martin GM spokesman said GM "is taking an unsparing look at the circumstances that led to this recall" and that as facts become available, "we will not wait to take action." When Martin was asked about the possibility of Valukas testifying to lawmakers he said that Congress will receive full cooperation from GM as well as an investigation by the National Highway Traffic Safety Administration.