tv MONEY With Melissa Francis FOX Business April 1, 2014 2:00pm-3:01pm EDT
we are just a few moments a way from the g. in hearing on capitol hill. our power panel will help break down every angle of what we expect to be fireworks on the hill. a huge move for airbnb as they plan to start collecting hotel taxes from users in one city. what is the biggest going on wall street right now? charlie gasparino has something to say about it. even when they say it's not it is always about money. cheryl: buckle up, everybody, it will be a bumpy ride. as automaker recalls an additional 1.5 million vehicles what can officials say to rectify what has become a deadly problem? here with me, auto pacific vice president ed kim, former
federal prosecutor, fred tecce and fox business's rich edson. rich, we want to know first what she will say thanks to you. if viewers watch fox business we knew what the statement would be. walk us through initially what she will say here, rich? >> she will say basically gm is still undergoing an investigation why they missed warning signs or proceed with a recall or fixes early on with this. these are two different companies. both are called gm but the old company is the shell that remains from the bankruptcy that happened back in 2008 and 2009. so we're dealing with two different companies. dealing with different leadership here. even show she is ceo of the new company. she apologized as she met with victim's families. they say gm cooperated with their investigation. she has done all the right things as far as that's concerned. there is still plenty of frustration what's happened here. more than a dozen deaths. possibly more than that we don't know full extent of the problems
here. she is the face of gm she will have to answer for it. cheryl: ed, in her prepared testimony she offers apologies. as rich is saying she isn't saying what the problem is but they will get to the bottom of it. ed, is that enough? she met with victim's families. there were reports that she was emotional during a meeting with the families. does this hurt or help her today on the hill? >> i think it overall helps because the way that gm and mary barra has been handling this so far is markedly different many ways when the old gm might have handled it. the old gm might have tried to allay, deny responsibility all the way up to the bitter end. this is very different for general motors. mary barra is accepting responsibility. she has apologized. she has tried to assure the public they will get to the bottom of this and, yes, that is very different from how they might have done it before. cheryl: fred, i want to get your
legal opinion on this. we heard earlier from one of the victim's family. i want to play you this emotional, emotional sound bite. i want to get your reaction on the other side, kind of get your legal opinion on this. >> fixing the problem when it was discovered save these two girls lives and lives of many others in yes. should gm be held, should gm be able to hide behind their bankruptcy and not accept the responsibility and liability of these young lives? no. please help us in standing up for what is right. gm knew it was wrong. gm hid it during the bankruptcy proceedings. gm is liable for these young deaths. cheryl: gm is liable for those young deaths, is that a problem? >> it is a hurdle. i would be lying if i thought it not. i'm a father of four boys and go of them that drive. i'm an attorney. if it bass my sons, 49 billion they got in tarps wouldn't be enough money. the problem is, as your reporter
correctly notes these are separate companies. it raises the question about who was responsible and of the people that were responsible, who is left and who you can go after. but you know, she has parsed her words very, very carefully. talking about accountability. i have not heard a single gm representative say we are responsible and accept responsibility for what happened. that is a big difference. cheryl: you know, ed, you have to wonder too, if this will be somewhat of a nail in the coffin for the company whether it is the old gm or new gm. there is lot of talk and discussion which company do we sue. i think they're both and all going to be sued as a whole. >> yeah, a big part of it will be how gm manages this going forward. we only have to look as far back as few years ago when toyota was in a lot of hot water. deaths involved there as well. toyota managed it very carefully. they did a successful job managing it. if you look at their sales the
way they recovered in terms of market share and sales, toyota is doing, you know, doing better than ever. general motors is in slightly different position in the sense that when toyota's, when toyota's scandal happened, toyota was really at top of its game. gm is right now in the position where they're still trying to regain some of the public's trust. there are some, there are some members of the public out there who are still, who still have issues with the bankruptcy. gm is still trying to reach out to those buyers and then this happens. so it is somewhat of a tougher job for gm. cheryl: real quick? >> but there's a big difference between public relations. what are their lawyers doing in courtroom across the country? are they accepting responsibility or continuing to hammer away at the plaintiffs? that is the real question. cheryl: we'll have to leave it there, guys. we'll wait to let our viewers know we're looking at a live picture on bottom corner of the screen. we're monitoring. there will be 10 minutes of opening statements. we'll monitor that.
when we see mary barra when shet to you live. all right, guys, in all of this is happening on capitol hill. get this, in spite of gm's crisis, auto stocks are actually revving up today. we have stronger than expected car sales driving shares of auto parts-makers higher throughout the session. mark newton standing by at the new york stock exchange. those sales numbers giving a boost to those stocks, mark. >> you're absolutely right with regard to some of them but obviously gm will be under a substantial amount of pressure until we find more answers. when it rains it pours. i think u.s. justice department investigation is last thing company like gm needs to rebuild its image after the government-sponsored bankruptcy and massive amount of recalls it had. it has been down 15% or so this year. and sure we're seeing other auto related type stocks do quite well today and shares of ford in particular having a nice bump. cheryl: we've seen a lot of
these companies hitting 52-week highs today, mark. that point is certainly well-taken and good news for those holding auto stocks as we await a hearing on capitol hill. we thank you so much. >> thank you. cheryl: let's switch gears for a moment. airbnb fans, the taxman is coming. they are announcing it will collect hotel taxes in san francisco start this summer. former federal prosecutor fred tecce is still with us along with fox business's own tracy byrnes. tracy, welcome. thanks for staying with us, fred. this is a big move but can't be the last city out there, fred that will make this move against airbnb. >> no. the government will get its pound of flesh regardless who it is from. they recognized on behalf of their customers and renters they needed to do this because the problem is you leave your quote, basically customers out to dry and at the mercy of the tax collector in these cities. this is the first domino and it will come down behind them. cheryl: tracy this is one of the
hottest ipos we're waiting for. you have to ask you is $10 billion worth it when these type of issues. >> there is drop in the bucket of issues they will face eventually when they go public. this will happen, cheryl. san francisco is looking at 2$4 million in revenue. when it happens in new york, it will be another 21 million. everyone will want to want its piece of the pie. bnb has to thank barry manilow's drummer for this. so who knows how this goes down at the end. cheryl: this is interesting. here in new york, tracy, you know this, this is good question for fred, the new york attorney general is asking for data from airbnb especially here in new york city, i have a lot of friend that do do airbnb but they know they shouldn't legally be doing it according to new york city law. >> they shouldn't because they're not in the hotel business and not in the rental business. so, nothing like a grand jury
subpoena or request from the attorney general to kind of have what we call in the law a chilling effect. i leave it to the business people about you know how this will affect the ipo. this is pass-through. they will collect this money from renters and that will be end of it. and move on. >> fred, from a tax angle too, airbnb was kind of stupid that their host was report this income anyway. come on now, you are sending a w-9 to these guys? doesn't make sense. >> like the real estate version of tips in a restaurant. >> exactly. that is exactly right. >> but guess what, $200 million people will start to take a look. cheryl: san francisco is just the first city i am sure. guys, thank you so much. >> thanks for having me. cheryl: welcoming up the working wage versus living wage, one company set to spike its pay to 11 bucks an hour. should everyone else follow in their footsteps? bring in the clowns. that is what some are saying in the u.k. and wait until you hear
why. more "money" coming up. ♪ life's an adventure when you're with her. and it always has been. but your erectile dysfunction - it could be a question of blood flow. cialis tadalafil for daily use helps you be ready anytime the moment's right. you can be more confident in your ability to be ready. and the same cialis is the only daily ed tablet approved to treat ed and symptoms of bph, like needing to go frequently or urgently. tell your doctor about all your medical conditions and medications, and ask if your heart is healthy enough for sexual activity. do not take cialis if you take nitrates for chest pain, as this may cause an unsafe drop in blood pressure. do not drink alcohol in excess with cialis. side effects may include headache, upset stomach,
delayed backache or muscle ache. to avoid long-term injury, seek immediate medical help for an erection lasting more than 4 hours. if you have any sudden decrease or loss in hearing or vision, or if you have any allergic reactions such as rash, hives, swelling of the lips, tongue or throat, or difficulty breathing or swalling, stop taking cialis and get medical help right away. ask your doctor about cialis for daily use and a 30-tablet free trial.
cheryl: so turning to the wage wars we've been talking about so much. one company is paying employees much more than the $10.10 an hour discussed in washington. later this month the number will go higher. they are bumping up the current $15 an hour to 17 bucks an hour. here so discuss it is with the executive vice president and joined by jack hough and fox news contributor monica crowley. this is big jump in pay. what is behind this decision. >> thank you. you know, it has been a gradual raise for us. so we started with 12 and went to 15. and now for earth day we're going to 17. there is really two different things we're looking at. the humanitarian aspect and the business aspect. on the business side of it there is transactional costs when you have employer turnover and retention. cheryl: people are staying around longer if you pay them more? >> absolutely. my started our business in 1967.
he came to this country from greece. he didn't speak the english language. lived in homeless shelters and studied chemistry and started our country. he worked the factory lines. he knows each and every employee -- cheryl: it is great. monica, this is the exception not the rule. overall many ceos come on fox business saying hey i will have to let people go in the minimum wage federally goes higher. >> kelly, your company and family story is a great american success story and american dream and god bless you. any company can pay whatever they want to the employees as long as it meets the floor of minimum wage. god bless you if you and your employees dos that terrific. we'll look at the macro level, which is what you're talk about, cheryl it does have a discernible effect on a small business in particular in their ability to hire people and retain people. what we've seen over the last five or six years since the great recession the growth in
the economy has been among low-wage workers right. >> across the board, across every occupation the wages are actually decreasing. so what we really want here is a prosperous growing economy that lifts all boats. cheryl: well, went by a million people with the president's proposal to get this higher. >> what i'm wondering and look where your products are sold, stores like whole food. i'm familiar with the receipts from whole foods. cheryl: you gotten very healthy, jack. we should let our viewers know. >> but you do have higher income customers, do you? what i'm wondering -- >> we're the exact opposite which is something i'm proud of. you find us across all the board. higher end retailers and retailers at the low end. we got great direction in walmart and club stores like sam's and costco. we want to make green cleaning available to the masses. lowest price point and highest level of green, that is our mantra. >> for other folks selling these
products in dollar stores, at really low-cost, did they have potential to raise wages too? are there economic benefits from them? >> yes. >> you're talking about retention and things like that possible benefits to them raising wages? >> there really are. when you look at our products, the fact we can offer them at opening price point in the marketplace, when i meet opening price point i don't mean opening for green. but even conventional plans we're at -- cheryl: do you have medical coverage. >> everyone has a ppo. >> very clean clothes. >> the very clean clothes. >> the point to get every company in your position where they can pay more because you have a broader economy that is actually growing. >> absolutely. the reason we're able to do it, we're a primary manufacturer. we make everything ourselves and we make it here in america. we have manufacturing from silts to cut down shipping costs -- facilities.
we create the product to control our costs and deliver the product at a lower price point, highest level of green and pay these wages and stay profitable. >> kelly, you should write a book to let other small business owners to know what you're doing. you can afford 17 bucks an hour for employees. >> i think you get a lot of revenue after the show. cheryl: i have another series. kelly, monica, jack. i have you stick around. love you both. thank you so much for coming in. >> thank you so much for having me. i appreciate it. cheryl: great story. from the u.s. to every corner of the globe money is flying around the world today, starting in spain. where the search for the holy grail could be over. two historians claim this cup was the one used by jesus christ himself during "the last supper." people are flocking to see it. it is on display in local church. the goblet is made of gold and given to a spanish king about a thousand years ago. over to ukraine, russia is upping pressure by hike the price of natural gas. state gas company, gazprom is
stopping discount to ukraine and raising prices by 40%. ukraine is still heavily dependent on russia for most of its natural gas needs. a local workers group called clowns international has suffered a drop in membership from 1,000 in the 1980s to just 100 last year. not many young people join the ranks because they say, modern kids are just too cynical to appreciate them. we used to be scared of clowns. i guess we're not anymore. learn something every day. coming up, get this. implant that can help alcoholics curb their cravings. is that a 13th step? you have got to see it to believe it. we have medical dollars with dr. manny coming up. and do you ever have too much money? no. here's a word you should keep in mind "unbiased". some brokerage firms are but way too many aren't. why? because selling thfunds makes them more money. which makes you wonder. isn't at a conflict? search "proprietary mutual funds".
yikes!! then go to e*trade. we've got over 8,000 mutual funds and not one of them has our name on it. we're in the business of finding the right investments for u. e*trade. less for us, more for you. the fund's prospectus contains its investment objectives, risks, chargesexpenses and other importt information and should be re and considered carefully befo investing. for a current prospectus visit www.etrade.com/mutualfunds. but i didn't always watch out for myself. with so much noise about health care, i tuned it all out. with unitedhealthcare, i get information that matters... my individual health profile, not random statistics. they even reward me for addressing my health risks. so i'm doing fine... but she's still gonna give me a heart attack. innovations that work for you. that's health in numbers. unitedhealthcare.
deirdre: we continue to monitor breaking news coming out of washington. there she is, mary barra, the ceo of general motors. she is listening to opening statements coming from the ranking member, marcia blackburn. there is henry waxman, the democrat from california. there have been opening statements. fred upton already spoke. marcia blackburn, vice-chair of tennessee. we'll take the swearing-in of mary barra, when the q&a begins, we know the prepared statement that has been released but the q&a is where the rubber hits the road. not to make a joke out of this. we'll monitor what we're seeing in washington for all of you once they get through all the procedures in the committee in the house. everyone heard of the 12 steps to stop alcoholism but a new drug therapy process claims to help really kick the habit. it is an implant. that releases slowly over time to block your craving to drink. here to talk about it, medical dollars, is dr. manny from the fox news medical a-team. this is fascinating. >> it is fascinating, yeah, i
do. the space of alcohol recovery or drug abuse rehab is huge. you're talking about billions and billions of dollars. and it is getting worse before it gets better because so many people are dependent on alcohol nowadays and of course on pills. we see all the new medications being put on the market. so we'll have a big problem moving forward. right now you either do the psychological aspect of rehab where you counsel the patient for a long period of time. and, there are sometimes the use of medication that we give patients to break away the habit. this new company, called, bio court rx basically came up with a very new concept which is to take a medication, well-known antagonist of effects opioids of alcohol. naltrexone. slowly releases medication in
continue us phase and combine with psychological training for people how to correct their lives. cheryl: you obviously have therapy along with medication. is this already approved. >> the medication is i proved. compound something approved. the way it is administered is not approved by the fda yet. cheryl: the implant part of it? >> the implant part of it. those things are easy to overcome. we put implantable medications into patients all the time talking like hormones. it takes away breakdown when you give oral medication to a patient with a habit and you don't want that to happen. you want that to be continuous. we have at love history with this medication. cheryl: is the medication effective? >> that direction sown is effective. naltrexone is effective. in alcohol it has a different effect but works at the brain level. the side-effects are manageable. so i think this is brilliant.
i think the space is huge. i think the company is within a very smart format. yes, long-term studies need to be done. to see if relapse of people once they're off the pellets after a year, this is one-year therapy. cheryl: dr. manny, very interesting. >> you got it, interesting story. we'll see what goes on there. investors are betting big on casino stocks today. nicole is behind the big gains. >> check them out. we're seeing casino stocks doing very well. many are up, 60, 70, 100% over the last 52 weeks. las vegas sand up 200%. we heard from macau gambling revenue up 13% in march and haul overall of $4.4 billion is the third highest on record. now this is obviously over when you see the chinese visitors there, there are some concerns about economic uncertainties there. there are no new casinos set for
growth in mccaw this year but macaw. however likely we'll see opening of eight new resorts the next three years in macaw. you've seen the gambling mccaw. cheryl: chinese love their gambling especially in macau. >> thanks. cheryl: before we head to break. we have to share something very exciting. dominoes taking innovation with whole new level with the edible box. it is snack packaging. the square pizza box made entirely of crust. first-of-its-kind in the world. this changes everything. tweet me what you make of all this at cheryl casone. tweet us at melissaafrancis. we want to go to washington and capitol hill. ceo mary barra is being sworn in by the committee. >> you're entitled to be advised by counsel. do you desire to be advised by counsel during today's hearing? >> no.
>> in that case if you would please rise and raise your right hand i will swear you in. do you swear that the testimony you're about to give to the truth, whole truth and nothing but the truth? >> i do. >> thank you. miss berra, you are under oath and subject to the penalties set forth in title 18 section 001 of united states code. you may give a five-minute summary of your written statement. >> thank you, mr. chairman and committee members. >> please pull your microphone to your mouth and make sure it is on. >> can you hear me? thank you, mr. chairman and committee members. my name is mary barra and i'm the chief executive officer of general motors. i appreciate the opportunity to be here today. more than a decade ago gm embarked on a small car program. sitting here today, i can not tell you why it took so long for a safety defect to be announced for this program. but i can tell you we will find out. this is an extraordinary situation. it involves vehicles we no
longer make but it came to light on my watch so i'm responsible for resolving it. when we have answers we will be fully stance parent with you, with our regulators, and with our customers. while i can not turn back the clock, as soon ace learned about the problem we acted without hesitation. we told the world we had a problem that needed to be fixed. cheryl: okay. so willed be a about a five-minute opening state, that mary barra, the ceo of general motors. we reported extensively what she is saying. she will apologize for these next few moments and next few sentences. we'll take a quick commercial break. when the qa and begins we will listen to what the committee asks her and listen to answers on recall at gm. "money" will be right back. we asked people a question,
how much money do you think you'll need when you retire? then we gave each person a ribbon to show how many years that amount might last. i was trying to, like, pull it a little further. [ woman ] got me to 70 years old. i'm going have to rethink this thing. it's hard to imagin how much we'll need for a retirement that could last 3years or mor so maybe we need to approach things dferently, if we want to be ready for a longer retirement. ♪
to burst your bubble, predictions on what is going to pop next. andrew king says the next bubble is in student loans. also? >> student loans are amazing, $150 billion of student loans every year ended you think of education costs go up every year. much harder for people to get jobs. diane in chicago, financial capital of the world and it is hard for people to get out of school. they are hundreds of thousands of dollars in debt. if you look at this, they have three times the amount of debt anybody else, citigroup is a number 2, a fifth as many. the chart looks week. this is the next bubble to burst. this will affect home prices, trillion dollar market and people can't pay out their student loans so who has to eat it? the chinese will buy more bonds or the u.s. government.
>> that kind of talk makes me nervous. we talked about this on fox business several times. it could become a crisis. is bubble and crisis of the same thing as we talk about investing? >> if you look at the stock market the stock market goes higher, it wants to go higher and chugging along. i'm not taking up position on the overall stock market because it will continue to go higher but it is a bubble to the burst, people were buying houses with money they don't have. people who are going to school are not getting out of school and can't pay back their debt. if they come out of college with $100,000 in debt realistically getting a job paid $40,000 how long will it take to pay off? very challenging and the economy is not strong. melissa: got to let you go. we need to go back to capitol hill listening in to the general
motors hearing. we will listen in right now as the queue and a begins. >> i will be happy to answer your questions, thank you. >> i want to acknowledge the families are here today, we are -- the committee -- kelly ruddy of scranton, pennsylvania is one of those who we offer sympathy to the family, we have all of you in our hearts. our committee reviewed more the 200,000 pages of documents. what we found is as soon as the cult hit the road in 2004 drivers began immediately to complain to general motors that the car's ignition systems did not work properly. you can imagine how frightening it is to drive a car that loses power steering and power brakes. when the switch for the cobalt was built in 2002 gm knew the switch did not meet its specifications for pork. am i correct? >> yes. >> engineers looked at the
problem to figure out how to address, gm understood the pork and switches measured below its own specifications which is that correct? >> yes. practice for gm to accept a part that is not medium specifications? >> no but under the circumstances they do not meet specifications. an example would be when you are purchasing steel. you will set a specification for steel but because of the different suppliers and availability of steel to make products you will assess the performance, functionality, durability, aspect of the part or in this case steel that is necessary to live up to what the performance and durability and safety needs to be. that is an example of when you would have apart or have material that doesn't meet the spectrum set out but is
acceptable from a safety, functionary prospective performance as well. >> is that which exceptional? >> i am sorry. >> is this which acceptable? >> at what time period? >> they didn't meet the specs for gm. is that what you consider acceptable? >> as we know today is not. >> in 2006 gm changed its ignition switch and the supply increase the torque. >> i didn't hear the last part. >> gm switched apart, delphi put in a new spring to increase the torque. >> there was a new part. >> in that binder next to you turn to pad 25, this is an e-mail exchange between delphi employees in 2005 discussing the changes to the ignition switch. the e-mail note the gm engineers asking for information about the ignition switch because, quote, cobalt is blowing up in their face in regards to triggering
the call with the driver's need. if this was a big problem why didn't gm release the ignition switch with cars already on the road? cars where the torque fell below specifications? >> what you just said does not match under tab 25. >> the bottom of the page. just note what i said. i apologize for that. there was a statement that cobalt is blowing up in their face. >> there were a lot of things that happened. a lot of statements made as it relates. i hired lucas to do in investigation of this process. we are spending a decade. >> you don't know why they didn't just replace the switch? >> i do not know the answers to that and that is why we're doing this investigation. >> given the complaints about ignitions turned off while driving why wasn't this identified as a safety issue? >> i can't answer specific questions at that point, that is
why we are doing a full and complete investigation. >> in the chronology being submitted gm's stated didn't make the connection between the ignition switch problems and the air bag not the glove and problems and to 2013 so my question is when gm decided to switch the ignition in 2006 did the company examine how a faulty ignition switch could affect other vehicle systems like the air bags? >> that is part of the investigation. >> should they? >> should we understand -- >> should they look at how it affected the vehicle systems? >> yes. >> let me ask another question. when gm concluded and you heard from my opening statement that the tooling costs and price pieces are too high what does that mean? >> i find that statement to be very disturbing as we do this investigation and understand it in the context of the whole time line. if that was the reason the decision was made that is unacceptable, that is not the way we do business in today's gm. >> how does gm balance costs and
safety? >> we don't. today if there is a safety issue we take action. if we know there is a defect in our vehicle we do not look at the cost associated with it. we look at the speech in which we can fix the issue. >> was there a culture in p.m. at the time that they would have put cost over safety? >> doing the complete investigation, i would say in general we have moved from a cost culture after the bankruptcy to a customer culture. we trained thousands of people want putting the customer first, we have gone without side training, part of our core value and it is one of the most important cultural changes we are driving in general motors today. >> we are asking about then. i am out of time. you are recognized for five minutes. >> as far as gm knew about the ignition switch the effect in 2001, 13 years before the recall, correct?
>> well -- >> yes or no work. >> the investigation will tell us that. >> you don't know when gm knew about the defect? >> i will -- >> look at tab 7 in your notebook. >> this is a gm document. what this gm document talks about is this switch -- it says teardown evaluation on this which revealed two causes of failure, low contact force and low plunger force. to you recognize that document? >> this is the first i have seen this document. >> so you don't know how long gm knew about this? >> that is why i am doing an investigation. >> delphi, the manufacturer of the ignition switch informed gm in 2002 that the switch was
supposed to be 15 minimum torque specification but these were between 4 and 10. >> the specification is correct but it was supposed to be 20 plus or minus 5. >> these whiches were between 4 and 10. yes or no work. >> we know that now. >> and gm was notified by delphi of this. yes or no. >> i am not aware of being notified. can i also correct? >> i need a yes or no. i only have five minutes. as far back as 2004, ten years ago, gm conduct a problem resolution tracking system after it learned of an incident with the run condition and in 2005 chevrolet kobold. is this correct? >> again, you are relating specific incidents. >> you don't know? if you don't know about that? take a look at tab 8 please.
by the way, i am getting this information from the chronologies that gm provided to ntsa so let me ask you again, as far back as 2004, gm conduct a problem resolution tracking system inquiry after it learned of an incident where they moved out of the condition. thank you. >> yes. >> after the p r t s in one eng further action because there was, quote, note acceptable business case to provide the resolution and the pr t s was closed. >> of that is true that is a disturbing fact. that is not the way we make decisions. >> in 2005 gm received more reports of engine stopping when the keys were jerked out of the run condition. further investigations were conducted and engineers proposed changes.
is that correct? >> that is part of our investigation to get the complete time line. >> much of this i am taking from the time line gm has already done. >> which is a summary. >> as a result of the investigation it technical service bulletin was issued to dealers that if car owners complained they should be warned of this risk and advised to take nonessential items from the key chain but this recommendation was not made to the public. no public statements reissued, no recalls, is that correct? >> that is my understanding. >> in 2006 gm contract did to redesign the ignition switch to use a new plunger and spring that would increase torque force in the switch. is that correct? >> yes. >> for some reason the new switch was not given up part number and instead shared a number with the original defective switch. is that correct? >> yes. >> this new switch did not meet
gm's minimum torque specifications either, this one was in the range of 10-15 and it really should have been 15 at a minimum. is that correct? >> i have not seen the test results from that. >> despite these facts gm continues to manufacture cars with the same ignition switches for model years 2008-2011. is that correct? >> yes. >> between 2004-2014, no public noticees were issued as a result of gm acknowledge of these facts and no recalls for the of the 2.5 million vehicles manufactured with these defective ignition switches. is that correct? >> yes. >> three recalls were made this year, 200014, two in february and one last february. is that right? >> related to this ignition switch? >> a couple more questions. the first question i have, gm is
intending to replace all the switches for those cars beginning april 7th. is that right? >> we will begin shipping -- >> i you going to completely redesign switch or put the old switches from 2006? >> will be a switch that -- >> is it going to be newly redesigned switch or is it going to be the old switch from 2006? >> field design that meets the performance required. >> i have more questions. >> you are saying there is an ongoing investigation, you cannot comment yet. are you getting a date on a regular basis this is going on? from anybody in the company regarding these proceedings? are you getting updates? >> yes i am. >> to the chairman of the full committee, mr. upton five minutes. >> for being here this afternoon, i want to make sure
we asked similar questions of both you and of ntsa, want to learn about the documents that were submitted in a timely and appropriate basis and what did they do with that information? the documents we have looked at produced to show that gm received complaints about its cobalt emissions whiches for two years that ultimately resulted in a redesigned ignition switch in 2006. who within gm would have known about those specific complaints. what was the process back then? >> i was not a part of that organization. that is why i am doing the investigation to understand that. >> you don't know the folks it would have been reported to? >> the people who would have been handling this issue at that point. >> but you are getting updates. what is supposed to happen? looking back what should have happened? >> in general when you have an
issue, a product issue, safety issue, any type of issue that comes in you have a team of engineers that are the most knowledgeable that work on that. if they see there is an issue they elevated to a cross functional team that looks at it and it goes to a group for decisions. >> we know that the ignition switch was redesigned because it didn't meet the specs that were there. >> yes. >> i would guess engineering 101 would normally require that when you assign a new part or replace a new part or replace apart with a new part, that that newly redesigned part in fact should have a different number on it? >> that is correct. >> that didn't happen. did not happen. who within ibm made the decision to move forward with that
redesigned switch without a new part number. you know that is? >> i do not know the name of the individual. >> can you find that out? >> yes i will. >> we give the name to the committee? >> i will provide that. >> is it likely that same person was the one who decided not to recall the defective version? where in the time line is that? >> i don't know that that is part of the investigation we are doing. >> do you know when it was that it was discovered, what year, where in the timeline that it was discovered that in fact a new part number was not assigned? >> i became aware of that, the timeline was put together. >> that was in the last month or so. >> that is what i became aware. >> when did gm realized the new part number had been designed? >> that is part of my investigation. i want to know that as much as you because that is an unacceptable practice, not the
way we do business. >> you stated publicly that something went wrong with a process? how is the process supposed to work. how are you redesigning a process to ensure it should work the way it needs to work. one >> we are doing the investigation, some early findings, as we look across the company it appears with information in one part of the company, another part of the company didn't have access to that. they didn't care information just by course of process for recognize the information would be valuable to another area of the company. we have announced the vice president of global vehicle safety, all of this will report to him, additional staff and the ability to cut across the
organization and have the right functional leadership that understands what is going on in different areas. that is the fix we already made and he is operating that way today. >> so when gm received complaints about the ignition switches for a number of years and ended up resulting in the redesigned ignition switch in 2006, link of the ignition switch problems to look at the cobalt airbags not deploying. was it about the same time or later? what is the time line? >> that is something i want to understand, but we are doing an investigation that spans over a decade. is important because designing a vehicle is a very complex process, we get a detailed understanding of exactly what happened if that is the only way we can know we can fix processes to make sure it never happens again. >> when was it that gm informed
ntsa that in fact did gm in form ntsa that it had been redesigned? >> i yield back. >> recognize the full committee, mr. waxman for five minutes. >> we heard about how in 2002, faulty ignition switches and cobalt and ions and other cars and that led to many problems that led to the recall the cars for model years 2003-2007. new ignition switches were designed in general motors. these switches that were used in model years 2008-2010. is that sound right to you? am i correct in what i am
saying? >> a couple statements that i don't know to be true. >> in 2002, and gm approved the use of what is faulty ignition switches. >> there were cars that went into 2003 in the earliest model. >> the tests were done in 2002 but 2003-2007, a recall of those cars and there was a new ignition switch designed and approved for gm. 2008-2010 kobolds and i ons. >> that is the knowledge. >> in a briefing last week, delphi told committee staff these new switches did not meet gm's specifications, these
switches for about two thirds of what gm said it should be. they were provided to the committee also confirmed top officials were confirmed without specs which is in 2008-2002 vehicles in december of 2013. there is a document if you want to look at 39, page 6 of your binder. there was the december presentation for gm's high-level executive field action decision committee and that bent meeting, the performance measurement for almost half of the 2008 -- 2008-2010 model year vehicles, ignition switches were below the minimum gm required specifications. my question to you is are you concerned that many 2008-2010
model year cars have switchedes that do not meet the company's specifications? >> as we assess the situation, i understand there was work going on to look that the switches, looking at just because any generic part doesn't meet specification does not mean it is a defective part as the analysis was going on. we want to make sure we get all the spare parts and recognize the score with spare parts have been sold to third parties with no fracking, and all of those vehicles. >> all of these cars, model years have switches just as the effective as 2003-2007 cars. those cars were recalled but you didn't recall the model year 2008-2011 vehicles until a month later.
on march 28th. why did the company delay calling these newer vehicles? >> the company was looking, the company was assessing those whiches but in parallel they looking at the spare parts issue and the spare parts issue can't be clear, we wanted to give all those vehicles because we couldn't identify which vehicles may have had a spare part put in them. they recall the entire population. >> you recall those vehicles later. there is a problem. the recall of these later vehicles did not mention faulty switch is that were installed, they mention only, quote, faulty switches may have been used to repair the vehicles. why did the company not announce the some parts whiches may have been installed in those vehicles in the first place? >> there was an assessment going on, the specification and parts performance was adequate. >> wasn't it misleading to say
the company didn't tell them some par switches may have been installed in the first place? what if i owned a later model car with its original ignition switch? do you recall that? i don't do anything but my car might still have a some parts which. your company conduct a detailed analysis of these late model vehicles and determine if they are safe? will you provide the committee with warranty reports and other information so we can do our analysis? >> i believe we are recalling all those parts. all of those vehicles are being recalled. >> they are all being recall. imus say in conclusion mr. chairman, i am concerned, you have taken this job in an inauspicious time and trying to clean up a mess that was left behind for you by your predecessors, but i have one last question. how can she assure its customers that new switch is reinstalled
beginning april 7th will finally meet gm's requirements? >> we are working very closely with our suppliers, our executive director responsible for switches is personally looking at the performance of the new switches. we do end blind testing to make sure the performance, safety, functionality of the switches are safe. >> the gentleman's time is expired. i want to be clear. did you review the document gm submitted to the committee? >> no i did not. there were 200,000 pages. >> the document mr. waxman is talking about, did you review that? >> this page right here? i actually saw this for the very first time a day ago. >> thank you. now recognize miss blackman for five minutes. >> thank you, mr. chairman. you have mentioned several times in your comments today's gm. my assumption is that you are
going to run gm in a different manner than it has been run in the past. and that you are making some changes. i want to ask you just a little bit about timeline, helping us to get our hands around this because this is the first investigation we are going to do. we are going to have others and continue to look at this to get answers and figure out what has happened here between you and ntsa and what happened at gm. so you mentioned in your testimony this just came to light on your watch. so i am assuming there was no widespread knowledge in gm about this issue until you became ceo. am i correct on that. >> at the senior level of the company we learned of this after the recall decision was made on january 31st. i was aware in late december there was analysis going on on
the coal balls issue but had no more information than that but as soon as we understood the senior leadership understood this issue and that recall decision had been made we acted without hesitation. >> how did you find out about it? was it through someone bringing the issue to you to say we have a real problem here? >> the committee made a decision on january 31st who notified marquis who picked up the phone and called me. >> could you submit to was the members of that leadership committee that made those recommendations? and was your predecessor -- melissa: we have been watching mary bara getting grilled over the massive recall and faulty ignition switches linked to 13 deaths. let's bring in liz claman will
pick it up from here to take us through the next hour on count down. liz: recalled vehicles, people left behind when it got into what was supposed to be a safe car. mail culpa, angry questions on capitol hill over the worst scandal ever to hit gm. ceo mary bararea faces congress on the bottom line, the reputation and how the company could possibly make a come back. gm recall prices not slowing down the automaker's rivals. the best in eight years. chrysler sales jumping 13% on the back of strong jeep and ram pickup sales, gm struggles, this success. taking the cake. dunkin donuts sink its teeth into a new online cakes strategy that will make ordering one as easy as pie. the ceo is with us exclusively. "countdown t