How Can General Motors Get Congress to Shut Up?

GM CEO Mary Barra, shown here in an earlier appearance before Congress in April, was back in front of a U.S. House of Representatives panel this week. The questioning was not gentle. Source: General Motors Co.

General Motors (NYSE: GM  ) CEO Mary Barra can't catch a break. 

Back in April, she promised members of the U.S. House of Representatives that she would return with a full report of the events surrounding GM's failure to recall millions of vehicles with defective ignition switches. This past week, she returned, report in hand -- only to face tough new questions from hostile members of Congress.

As Motley Fool senior auto specialist John Rosevear points out in this video, some of those questions are good ones and deserve good answers -- answers that GM may not want to give. But John also points out that Barra may be in an impossible spot: GM has become a political football in the wake of its unpopular bailout, and there may be no answers good enough to satisfy its angry critics.

A transcript follows the video.

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John Rosevear: Hey, Fools. It's John Rosevear, senior auto specialist for fool.com. General Motors CEO Mary Barra was back before Congress this past week, appearing before a U.S. House of Representatives panel on Wednesday.

Barra appeared along with Anton Valukas, the former U.S. Attorney who was hired by GM to perform an in-depth investigation of the events surrounding GM's long-delayed recall of cars with defective ignition switches.

You may recall that Valukas issued his final report a couple of weeks back, and it was a pretty scathing indictment of Old GM's completely messed-up corporate culture -- but it absolved current and former GM executives, including Mary Barra, of responsibility for the mess around the ignition switch.

The Congresspeople were not kind to Mary Barra, and a lot of their ire had to do with that report, which, despite its appearance of extreme candor is being characterized by some as a cover-up because it doesn't implicate any senior GM leaders, past or present.

Rep. Diana DeGette, a Democrat from Colorado, summed it up when she said that "the report absolves previous CEOs, the legal department, Ms. Barra, and the GM board from knowing about the tragedy beforehand. But that is nothing to be proud of. That the most senior GM executives may not have known about a defect that caused more than a dozen deaths is, frankly, alarming."

And she's got a point.

As scathing as the Valukas report has been for GM, it really does let all the senior leadership off the hook by blaming GM's culture. But leaders set the culture, and it's their job to try to change it.

Mary Barra's predecessor as CEO, Dan Akerson, was an industry outsider who came from the private-equity world to GM, and he knew that. He knew GM's ways of doing things needed a radical overhaul. He knew that the bankruptcy did a lot to fix GM's balance sheet, but it didn't fix GM itself. And to his credit, he really tried to get the ball rolling to bring GM into the 21st century as an efficient, modern, competitive, healthy company, and then he anointed Mary Barra as his successor to try to build on that.

On the one hand, this report gives her a lot of ammo to accelerate the pace of change within GM, and I think she has been using that ammo pretty well so far. On the other hand, the Congresspeople are right: Somebody needs to own what happened here, and so far that hasn't really happened.

And they're also right when they say that it's one thing for Mary Barra to talk about change at GM; it's another thing entirely for us to all be able to see that the change has happened.

Of course, it will take time for true change to be visible, and that's got to be frustrating for Mary Barra, to know that she has set things in motion but have nothing that can be easily shown. But Barra and GM still haven't delivered the decisive actions that will make it clear to everyone that OK, they're owning this and doing the right thing here. It may be that there isn't anything they can really do to shut up their critics. GM has become such a political football because of the bailout and so forth, there will always be something for somebody to howl about.

But speaking as someone who is a GM shareholder and a reasonably sympathetic observer, it does seem like some more digging is needed here. Thanks for watching.


Read/Post Comments (3) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 24, 2014, at 2:57 PM, anindakumars wrote:

    Hello John,

    I think the title does not do justice to the well balanced article. Thanks.

  • Report this Comment On June 25, 2014, at 7:36 AM, Mathman6577 wrote:

    I think Congress needs to stay on GM's back. Who bailed out the company in 2009? Taxpayers. We want our money's worth. An inefficiently run and inept company (like GM) needs oversight. And don't forget what the problem has led to --- deaths in GM cars. That is completely unacceptable.

  • Report this Comment On June 26, 2014, at 9:03 AM, pondee619 wrote:

    " GM has become such a political football because of the bailout and so forth, there will always be something for somebody to howl about."

    GM is not a political football. GM is being harshly criticized for its failure to correct a problem it knew about for a decade, during which time, AT LEAST, 13 people DIED! GM is being harshly criticized because, as you state, no one at GM is at fault for this decade of inaction during which, AT LEAST, 13 people DIED! GM is being harshly criticized because, since the fecal material hit the fan, how many other defects have been "discovered"? Would these subsequent defects have been subject to recalls but for the current nonsense?

    GM is not a politcal football because of the bailout. GM is being rightly and harshly criticized for its systematic failure to protect the consumers of its products from its own slipshod manufacturing process.

    How anyone can, at this time, buy a GM vehicle, understanding its corporate culture of complete indifference toward its consumers health and well being is beyond me.

    People have died because GM failed to properly monitor its manufacturing process and I really don't think that they care, or cared.

    Perhaps breaking up GM into its divisions, (as independent companies) thereby increasing the competion each will face may be the only way to change this culture of mal/misfeasence.

    GM is not a political football because ot the bailout. GM is rightly and harshly being criticized for having people die in their vechicles and just not giving a damn. A person causing at least 13 deaths as a result of this kind of mal/misfeasence would be jailed. GM goes merrily along.

    "How Can General Motors Get Congress to Shut Up?"

    Maybe doing their job correctly, diligently and with a conscience. I know, I ask for too much.

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