How Can General Motors Get Congress to Shut Up?

Does GM CEO Mary Barra have a chance against the ire of the House of Representatives?

Jun 24, 2014 at 12:21PM

Barra Before Congress

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 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.

John Rosevear owns shares of Ford and General Motors. The Motley Fool recommends Ford, General Motors, and Nike and owns shares of Ford and Nike. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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