UPDATE 2-U.S. transportation chief pledges hard look at GM recall
* Consumer groups seek $1 billion victims' fund
* Senator Murray asks why so long before government acted
WASHINGTON, March 13 (Reuters) - U.S. Transportation Secretary Anthony Foxx on Thursday promised an "aggressive investigation" into whether General Motors was slow to report to the federal government problems with ignition switches in its autos, which have led to 12 deaths.
"The questions we are asking are whether there was a timeliness issue with GM's bringing to our attention the issues regarding this ignition switch," Foxx told a Senate panel.
"Had we known there was an issue, that might have changed the outcome of those initial crash investigations" by the government, Foxx said.
GM is recalling 1.6 million of its vehicles following problems with ignition switches that unexpectedly turn off during operation, sometimes at high speeds.
The problem with older model cars results in engines shutting down and other electrical equipment, including air bags, not functioning.
Foxx said if there are delays in industry reporting problems to the National Highway Traffic Safety Administration, the Transportation Department will respond in a "very, very tough" manner.
NHTSA's probe is one of many investigations into how GM handled reports of ignition switch problems that first came to light at least 10 years ago. The U.S. attorney in Manhattan has opened a criminal probe, and House and Senate committees have pledged to hold hearings about GM and NHTSA's behavior.
GM is also facing pressure from safety advocates. On Wednesday, two U.S. consumer watchdog groups called on GM to establish a $1 billion fund to compensate victims of the company's faulty ignition switches.
STATUTE OF LIMITATIONS
The Center for Auto Safety and Public Citizen, in a letter to GM Chief Executive Officer Mary Barra, complained that a combination of a statute of limitations and rules under which a reorganized GM operates could prevent victims from pursuing legal action against the automaker.
"By concealing the ignition key defect for at least 10 years, GM created more victims and then robbed them of their legal rights through the passage of time," wrote Clarence Ditlow, executive director of the Center for Auto Safety, and Joan Claybrook, president emeritus of Public Citizen.
GM spokesman Greg Martin did not rule out the possibility of a victims' fund, saying in a statement: "Our principle throughout this process has been to put the customer first and that will continue to guide us."
Senate Commerce Committee Chairman Jay Rockefeller, asked by Reuters whether he supports the creation of a victims' fund, responded: "I can't answer that out of the blind, but generally speaking I'm all for establishing funds taking care of people."
Rockefeller's panel is expected to hold hearings early next month on the GM recall and federal regulators' role.
Democratic Senator Patty Murray, who chairs a Senate appropriations panel with oversight of transportation funding, asked Foxx why it took almost a decade for GM to report safety problems and whether the government must do more to bring about a better industry performance.
Foxx said the administration was conducting an "aggressive investigation."
But early warning signals, years ago, did not point to the need for a full-blown government probe, Foxx said.
"Despite three crash investigations and other research, the data was inconclusive," he said. "It just didn't point to an investigation" by NHTSA initially.
The GM recalls cover car models of varying ages, including some nearly 10 years old.
In response to consumer complaints several years ago about unintended acceleration in some Toyota vehicles, the U.S. government toughened penalties for inadequate reporting by industry.