* U.S. Senate announces its own probe of GM, NHTSA over
* Senate, House say criminal investigation could complicate
* Faulty ignition switches linked to 12 deaths
* Hit to GM stock "overdone" -analyst
By Ben Klayman, Richard Cowan and Eric Beech
DETROIT/WASHINGTON, March 12 General Motors Co
said on Wednesday that even after the vehicles in its
ignition-switch recall are repaired, owners should avoid
weighing down their key rings with anything more than the key
Also on Wednesday, U.S. Senator Claire McCaskill said a
Senate subcommittee plans to hold a hearing in early April on
GM's recall last month of more than 1.6 million vehicles with
the faulty ignition switches which have been linked to 12
deaths. Most of the affected cars were sold in the United
GM became aware of the problem a decade ago.
"We have to get to the bottom of this," said McCaskill, a
Missouri Democrat. "We need to find out who dropped ball and put
millions of Americans at risk."
GM has been telling owners affected by the recall that until
the repairs are made only the key should be on the key ring.
That remains largely the case after the fix as well, according
to a document filed with U.S. safety regulators.
"We recommend that customers only utilize the key, key ring
and key fob (if equipped) that came with the vehicle," GM said
in the document filed with the National Highway Traffic Safety
Administration. That was in response to a question about whether
customers can put their heavy key ring back on after the repair
A GM spokesman said after the repair is completed, there is
no danger of the problem reoccurring. Asked why GM made this
recommendation, he added that no ignition switch is safe from
being moved from the "run" position if the key chains are too
heavy or bulky.
Automotive research firm Edmunds.com said while there is
anecdotal evidence owners should avoid too much weight on their
key rings, there is no industry standard language on that
The Detroit automaker also said in the filing that it will
offer loaner cars in some cases and a $500 cash allowance to
unhappy owners affected by the recall.
The problems in the affected vehicles in some instances
allowed the engine and other components, including front
airbags, to turn off while the vehicle was traveling at high
speed. GM previously had said there were 13 deaths linked to the
faulty ignition switch, but revised that to 12 on Tuesday
because it had double-counted one incident.
The failure is believed to be caused when weight on the
ignition key, road conditions or some other jarring event causes
the ignition switch to move out of the "run" position, turning
off the engine and most of the car's electrical components
mid-drive, with sometimes catastrophic results.
GM said in the NHTSA document on Wednesday that it is
providing rental or loaner vehicles in some cases.
The company also said it is not buying back affected
vehicles if owners ask for that, but is offering a $500 special
cash allowance, through April 30, to buy a 2013, 2014 or 2015
On Tuesday, a source said federal prosecutors have opened a
probe of GM, examining whether the company is criminally liable
for failing to properly disclose problems with some of its
vehicles that led to the recall.
The New York office of the Federal Bureau of Investigation
is involved in the probe, a source familiar with the matter told
Reuters on Wednesday.
The federal probe by the FBI and the U.S. attorney in
Manhattan adds to a growing list of U.S. authorities examining
the recall, which GM announced in February. NHTSA previously
opened an investigation into whether GM reacted swiftly enough
in its recall.
McCaskill said the Senate Commerce Committee's consumer
protection subcommittee will examine the responses of GM and
NHTSA to the discovery of faulty ignition switches. She told
Reuters that the congressional probe is "more challenging" now
that the Justice Department also has opened its own
"While we would like to get as much information as possible
and have General Motors as witnesses," McCaskill said her
panel's review is "really about how NHTSA has handled this and
what are the challenges that NHTSA faces in being an effective
cop on the beat."
She said she has concerns about whether NHTSA had
insufficient expertise and also about a lack of transparency at
the agency. She did not know which GM executives would be called
Safety advocates have criticized NHTSA for failing to catch
the GM issue and failing to demand a recall despite tracking the
problems at different points over the past decade.
Kelley Blue Book senior analyst Karl Brauer said NHTSA's
lack of action suggests the agency's own review process may be
ineffective despite changes made after the high-profile
Ford-Firestone tire recall in 2000.
However, NHTSA's chief said U.S. auto-safety regulators did
not force GM to recall the cars sooner because the connection
between defective ignition switches and failing airbags was not
"If we had that information, if GM had provided us with
timely information, we would have been able to take a different
course with this," David Friedman, acting administrator for
NHTSA, told Bloomberg on Wednesday in Washington.
Transportation Secretary Anthony Foxx told reporters in
Washington on Wednesday that he had a "high level of confidence"
in NHTSA, "but we'll continue watching as facts unfold and see
where we are."
Foxx said his department is having a "dialogue" with the
U.S. Department of Justice about the GM recall. "They're looking
at the same information we're looking at. They will make that
The U.S. House Energy and Commerce Committee also has
ordered GM and NHTSA to turn over information about the
automaker's ignition-switch problems. A House
committee aide said on Wednesday that while the Justice probe
may complicate what information can be received, the committee
expects NHTSA and GM to comply with information requests.
GM has declined to comment on news of the criminal probe,
but has said it is cooperating on all the various probes.
"We are fully cooperating with NHTSA and will do so with the
Congress, too," GM spokesman Greg Martin said in an email on
Wednesday. "We welcome the opportunity to help both parties have
a full understanding of the facts."
The automaker is also conducting an internal investigation
into the matter.
GM faces a fine of up to $35 million from NHTSA, and several
analysts have estimated the recall could cost the company $70
million to $280 million.
The automaker has not disclosed what the recall will cost.
Analysts agreed that the biggest costs could come from lawsuits
likely to result from the recall and probe.
Barclays analyst Brian Johnson said in a research note that
Tuesday's 5 percent stock decline was "overdone" as the $3.2
billion hit to the company's market cap was likely well above
any potential settlements with the U.S. Department of Justice,
state attorneys general and plaintiffs' lawyers.
However, Johnson added that it was unclear what might make
the stock rise in coming months as continued media headlines
were likely to weigh heavily on GM shares.
GM shares fell 0.9 percent to close at $34.86 on the New
York Stock Exchange on Wednesday.