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Senator Wants Justice Department To Require That GM Create Victims' Fund : News

A U.S. senator on Monday called on the Justice Department to require that General Motors Co. create a special fund for compensation of victims linked to deaths or injuries from its recall of 1.6 million older cars with faulty ignition switches that are linked to at least 12 deaths and 31 crashes.

U.S. Sen. Richard Blumenthal, D-Conn., asked Attorney General Eric Holder in a letter to “immediately intervene on behalf of those injured and killed, and all who suffered damages as a result of faulty ignition switches.”

He also wants the Justice Department to intervene in pending civil actions “to oppose any effort by GM to deny responsibility for consumer damages.” Finally, Blumenthal asked that the Justice Department or a federal consumer protection agency ensure all drivers are aware of potential dangers of continuing to drive the recalled cars.

As Connecticut’s Attorney General in 2009, Blumenthal led seven other state attorneys general in fighting against a bankruptcy court restructuring that shielded the “new GM” of any liability for defects in vehicles built prior to the 2009 restructuring. New GM was created by the U.S. Treasury as part of a $50 billion government bailout in 2009.

Blumenthal’s effort failed, meaning the new GM may now avoid liability for deaths caused by faulty ignition switches in the recalled cars if they occurred before GM exited bankruptcy as a new company in July 2009. Recalled models include: 2003-2007 Saturn Ion; 2005-2007 Chevy Cobalt; 2006-2007 Chevy HHR; 2006-2007 Pontiac Solstice; 2007 Pontiac G5; and 2007 Saturn Sky

“Without your active involvement, they may have no meaningful remedy,” Blumenthal wrote. “Given the crucial role the United States government played in creation of the current General Motors Corp., I believe the federal government has a moral, if not legal, obligation to take all necessary steps to protect innocent consumers.”

GM CEO Mary Barra didn’t directly comment last week on whether it would compensate owners for crashes that took place before the corporate restructuring. Safety advocates have called on GM to create a $1 billion fund to aid victims and to waive its liability shield under bankruptcy law.

GM spokesman Greg Martin said, “It is true that new GM did not assume liability for claims arising from incidents or accidents occurring prior to July 2009. Our principle throughout this process has been to the put the customer first, and that will continue to guide us.”

The Justice Department’s criminal investigation into GM’s handling of the recall is looking at whether the automaker committed bankruptcy fraud by not disclosing the defects.

Separately, Sen. Dean Heller, R-Nevada, sent a letter Monday to David Friedman, acting administrator of the National Highway Traffic and Safety Administration, asking for details of the agency’s review of complaints from older GM cars. NHTSA investigated three crashes but never opened a formal investigation.

Heller is the ranking Republican on the Senate Commerce Committee panel that plans to hold a hearing on the GM recall in April.

“Did GM report all consumer complaints related to the stalling incidents and air bag failures that it considered in the recall to NHTSA?” he wrote.

“What actions did NHTSA take based on these reports? What conclusions regarding the vehicles were made, and when were they made? Based on the information provided, why did NHTSA not identify an actionable pattern?”

Heller also wants to know if the secretary of transportation was consulted about the decision to not take further action in 2007 or 2010. “If not, was anyone in the secretary’s office consulted? Did any government official outside of the Department of Transportation consult or provide input on the decision not to move forward in 2007 or in 2010?”

Also Monday, a Texas attorney who represents the families of two Wisconsin teenagers killed in a 2006 crash of a now-recalled 2005 Chevy Cobalt — along with another teenage who was severely injured in that accident — filed an emergency motion in federal court against GM.

Attorney Bob Hilliard wants a judge to issue an injunction ordering GM to issue a “park it now” alert informing owners of the recalled cars of the dangers of driving their vehicles.

Barra last week told reporters that the vehicles are safe to drive as long as the driver removes all keys and key fobs from their key ring, leaving just the ignition key.

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