Just how far does the bailout go? This article describes how GM may dodge liability for defective cars produced before the company went bankrupt. GM is trying to claim that the "New GM" is a separate legal entity from "Old GM" and as such is not liable to compensate customers (or at least the compensation should be limited) for defective ignition switches in older models.
What are your thoughts on this claim? Though it will be looked at as a legal issue, the case has strong economic implications. Would a ruling in favor of "New GM" encourage large corporations to continue to operate under the assumption of the too big to fail? Could GM create a new theory here - too big to be liable?
This is a very interesting idea of the 'too big to be liable,' but as the article mentioned I also think this a long shot. As an aside, I have an uncle that works for GM in their headquarters in Detroit and asked him about how employees felt about it. He said that while there is a lot of negative public comments being made about the company, the new CEO, Mary Barra, has done an incredible job keeping employee morale high while taking on an issue that she was not a part of.
ReplyDeleteI'm afraid GM may be off the hook. What a slick way to avoid blame!
ReplyDeletei agree with Hikaru.
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