When General Motors went bankrupt in 2009 and had to accept federal aid, its critics and competitors mocked it as a “government car.” “What does it mean? It is not a vibrant private sector entity that produces cars and innovates, but is the Obama administration’s bureaucracy. Managers, workers, and other stakeholders work every day, and the government is always on their shoulders. Watch them and tell them how to run the business.
Of course, the Obama administration does not micro-manage General Motors, except that it cracks down on companies and instills fears about the use of business jets. General Motors went public in the fall of 2010. Shortly thereafter, the government began selling its shares in the company. The U.S. Department of the Treasury sold the last batch of shares in December 2013 and ended the investment with a loss of 10 billion U.S. dollars.
Six years ago, the failure of GM’s financial engineering in the United States increased government supervision. Now, because of the failure of power and commercial engineering, General Motors has once again become a government car.
The issue of the ignition switch on the Chevrolet Cobalt model has been a longstanding issue, which has been a major problem for General Motors. This problem could have been avoided in an accident where the relatively small cost caused 13 deaths. The poor response also quelled the government’s anger over the company. By doing so, the government’s powerful power directly drives the company’s operations.
First, the National Highway Transportation Security Administration (NHTSA) took the toughest possible measures against General Motors on Friday. “What NHTASA has done is most likely to be done under the existing law,” said clarenceditlow director of the Center for Automotive Safety in Washington, DC The National Highway Traffic Safety Administration imposed a $35 million fine on GM’s seemingly minor penalty, but this is the hardest hit Allowed.
In general, fines and better behavioral commitments can get companies out of trouble. However, NHTSA has promised to put the agency under review by “unprecedented regulatory requirements”. The National Highway Traffic Safety Administration (NHTSA) of the United States requires GM to change the way it operates, assemble the cars together, and deal with problems and defects. In addition to fines, NHTSA “also ordered General Motors to carry out major and extensive internal reforms of its safety-related issues in the United States and to increase its ability to consider possible consequences of potential safety-related defects.” As part of the agreement signed on Friday, NHTSA will conduct micromanagement of GM’s internal investigations and recalls of the company and specify measures such as “including targeted contact with non-English speakers, keeping up-to-date on their website, and contacting the owner through the media”. . In addition, General Motors must “submit a report and meet with the NHTSA so that the agency can monitor GM’s progress. And other actions that warranted the request.”
Shareholders react calmly to this news. Last Friday, the company’s stock price had barely changed and it would be considered as an irrelevant matter.
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However, there is more to do, and GM still has a lot of concerns from the federal government. Compared to nhtsa—heavy fines, imprisonment judgments, and major plea agreement—the Justice Department has more ways to punish these companies. In March this year, GM began to investigate.
Although the judicial process of criminal proceedings against blue-chip financial companies was slow, it showed less restraint in the survey of automakers. In March this year, the Justice Department officially filed a criminal lawsuit against Toyota and was fined 1.2 billion U.S. dollars for misleading consumers on the accelerator pedal jam. The U.S. Department of Justice pointed out that this is “the biggest ticket ever written by a car company.”
In addition, GM’s investigation was led by the United States Attorney’s Office in Southern District, New York. Under the leadership of the Scourge and Prosecutor Preet Bharara on Wall Street, the Southern District had an epic unbeaten record, sued the insider trading case, and tried the high-profile defendants. (On Friday, hedge fund trader Michael Steinberg was sentenced to 3.5 years of imprisonment for insider trading.)
Therefore, when GM complies with NHTSA’s consent order, it will have to deal with expensive prosecutions. Ditlo said: “I do not believe that the judiciary will not impose more fines on Toyota and will not impose more fines on Toyota.” The real question is, to what extent will the judiciary institute criminal charges against companies or specific individuals? litigation?
In 2009 and 2010, the government provided a lot of funding for General Motors. Now you can take away a lot of oil.