All right, this hearing will come to order. Today we revisit the tragic management failures at General Motors that killed people. First i want to acknowledge in my opening remarks then from my viewpoint the ceo of General Motors, mary barra, has stepped up and with courage and conviction has confronted head on the problem and the Corporate Culture that caused it. Some see the Record Number of recalls at General Motors as a problem. I see it as a good sign. Second, i want to briefly say that i think i speak on behalf of all members of congress who have asked very difficult questions surrounding these tragic events that while we are asking tough questions, we have Great Respect for the workers of General Motors. I would like to take this moment to thank the workers at General Motors. You are terrific. You build good cars. And you are also the victims of outrageously incompetent management. Management was the problem here, not the workers. The valukas report ive spent some time with. I find it thorough and damming. There was indifference, incompetence and deceit among engineers in positions of important responsibility. And second, it is very clear that the culture of lawyering up and whacamole to minimize liability in individual lawsuits killed innocent customers of General Motors. I have many questions about the failures of the Legal Department today. Im also interested today in hearing from mr. Feinberg, who has been asked to put together a plan to compensate those who have suffered from these management failures. He is here independently of the witnesses from General Motors. He is appearing independently of the witnesses of General Motors. And he will exert independence in his role as he makes decisions about compensation to the many people who have suffered. And i certainly thank him for being here today in that regard. But perhaps im even more interested today in understanding how in the aftermath of this report, how in the world in the aftermath of this report did Michael Millikin keep his job . I do not understand how the general counsel for a Litigation Department that had this massive failure of responsibility, how he would be allowed to continue in that important leadership role in this company. And the questions i ask today will be surrounding what he knew and why he didnt know it and what kind of direction did he give a Legal Department that would allow them to do nothing in the face of the evidence they were confronting over years of litigation by people who were trying to get the attention of General Motors about the fatal defect in the product they were selling. Senator heller. Chairman mccaskill, thank you. I would like to thank the witnesses who are here today for both hearings. And also thank chairman mccaskill for this second hearing on General Motors. Today based on the findings of the valukas report we can confirm that this is in fact one of the darkest chapters in the history of General Motors. An ignition switch supplied by. Due to these failures, the ignition switch would slip from run to accessory with little more than a knee hitting the key are, or the car driving over a bump. The cars power shut off, while it was being driven. Now, ive raced cars my entire life, ill tell you. Even for the most experienced drivers, there is nothing more terrifying than a loss of power while moving at high speeds. I can only imagine the sheer terror of the individual who was driving these vehicles the moment the ignition slipped into or slipped out of run. What those drivers didnt know as their cars swerved across lanes, hit walls, inclines, ravines and trees, was that the one thing that could have saved their life, the air bag, was not going to deploy, because the power to the air bag itself was shut off. If, and this is a big if, after a few crashes General Motors was able to understand the ignition switch problem, many more lives could have been saved. But as the valukas report points out, group after group, committee after committee, within gm failed to take action or acted too slowly for over a decade. Two critical factors have been identified as reasons for this. First, gm failed to understand how its cars were built. Let me repeat that. Gm failed to understand how its cars were built. Incredibly the official findings pin the blame for the delay to recall this car on the fact that gm didnt understand how its own car was built. Second, the same engineer who approved the original ignition switch changed the part in 2006 and did not inform any person at gm and did not change the part number. People died and millions more were put at risk because gm didnt understand its own car, and one engineer cut corners and then changed the torque on the part without telling anybody or, again, changing the model number. 54 frontal impact crashes and more than a dozen fatalities later, we find ourselves here this morning for a second hearing on this issue. It is truly a dark chapter in the history of General Motors. What we need to do today is to make sure the valukas report is the full story. Is the valukas report accurate . Is it the definitive account of this matter or are there missing pieces . The ceo of delphi is with us today. And it is my hope that he will help this subcommittee understand if there is Additional Information that provides us with more of a complete picture. I hope the testimony today will be forth coming, and not circle the wagons. We need to know what happened here. And delphi has a responsibility to the families and the survivors to provide a complete picture. If delphi nose more than the valukas report identified or believes there are inaccuracies, now is the time to make those known. The valukas report offers a strong timeline of the issues, but i have concerns that it may not paint the entire picture. Id like to explore whether delphi was fully cooperative. In the valukas report, it states that delphi had numerous documents and other relevant material that they did not supply. Chairman, im appreciative that were holding this hearing. Nevadaens and all americans deserve to know that over a decade General Motors and delphi failed to show corporate competence. There will be a discussion if changes of laws are necessary and if gm understood how their own cars worked and followed current legal obligations to report defects to nhtsa in a timely manner lives would have been saved and we would not be here today. Thank you, chairman. Thank you, senator heller. Our first witness today is in fact in our first panel conexists entirely of Kenneth Feinberg and miss barra who is in charge of the fund that will compensate many of the people who have suffered tragically as a result of gms failures and we look forward to your testimony and thank you very much for being here. Mr. Feinberg . I want to thank the chair for her vigorous leadership in this matter. I want to thank all the members of this committee, subcommittee. I particularly want to thank senator blumenthal and his staff. They provided some valuable constructive suggestions as to what this protocol should look like. And indirectly i must thank senator blunt indirectly because senator blunt was critically important and very instrumental in the design and administration of the 9 11 Victim Compensation fund, which proved to be a precedent for much of what is in this protocol. And i want to publicly thank senator blunt for his work many years ago in the drafting of the 9 11 Victim Compensation fund. Im accompanied by miss Camille Biros who over the last 35 years has worked at my side in the drafting, design, and administration of the 9 11 fund, the bp oil spill fund, one fund boston marathon, the Virginia Tech hokey spirit memorial fund, et cetera. Shes also here to answer any questions that the committee might have about the administration of this program. It is a bit premature to be talking about this program because we do not begin receiving claims until august 1st, a few weeks from now. We are right on track. This protocol will form the basis for the submission of claims. I thank lawyers around the country for their input as to what this fund might look like. I thank various nonprofit foundations interested in automotive safety for their input, and i also must say, in the line of what the chair said, i thank General Motors from the top down they have been very helpful and constructive in drafting this protocol. This compensation protocol, however, is entirely our collective responsibility. My responsibility. I dont think there is anybody who provided us input that is entirely satisfied with all aspects of the protocol. The perfect is the enemy of the good. And we will see, but i am optimistic that as the chair pointed out in her introductory comments, we will compensate the innocent victims of this tragedy. Thats the purpose of the protocol. And i am confident that it will succeed. Now, we begin august 1. Claims can be submitted for the next five months through august 31st, december 31st. We will stay in active work into 2015 processing claims that may come in late in the year. Were not going to disappear on december 31st. So well stick around. But there is some very interesting features that i can of this pretty call, of this Compensation Program, that i can highlight in one minute. It is uncapped. We will we are authorized to pay as much money as is required through the processing of eligible claims. The bankruptcy of gm is no barrier to compensation. If there were accidents that occurred before the bankruptcy, they are as eligible as accidents that occurred after the bankruptcy. There are some people who already settled their claims years ago with General Motors. And signed a release that they wont sue. They can come into this program. And if under our compensation rules they are entitled to additional compensation, they will be paid. The contributory negligence of the driver, speeding, cell phone texting while driving, intoxication, irrelevant. We are not looking at the driver or the circumstances of the drivers negligence. We are looking at the automobile. And only at the automobile to determine whether or not the defective ignition switch was the proximate cause of the accident. So you never know on these programs, we have our fingers crossed, we are very cautiously optimistic, we build on the success of past similar programs. I believe that beginning august 1 we will be ready as the chair and others have insisted to begin receiving claims, were finalizing the documentation, which we will deliver to the committee, subcommittee. We will be ready to receive claims, we will pay those claims within 90 to 180 days after the claims are deemed substantially complete. And we will be and finally, we have a very pervasive Notice Program to reach out to all eligible claimants, all those who think they might be eligible. We are determined to reach every driver or injured victim to make sure they know of this program, and we are confident that the program will work as intended. Thank you. Thank you so much, mr. Feinberg. Couple of questions. In when they hired you to administer this Compensation Program, did General Motors lay out any limitations on the programs scope . And if so, what were the limitations they laid out . The only limitation they really laid out was the limitation that only certain eligible vehicles are subject to this program. As the chair knows in bp there were limbtion limitations in m jurisdiction. In 9 11, congressman blunt and others drafted that legislation, there were limitations. The only limitation in this program that gm insisted on were that only the eligible vehicles listed on page three of the compensation protocol are eligible for consideration. Did you suggest any classes or coverage that should be included that General Motors rejected . No. Im not an automotive engineer. I asked General Motors what are the what are the vehicles. What is the definition of an eligible vehicle that could give rise to a valid claim. And this was their response, which is reflected expressly in the protocol. So if the air bags didnt deploy, but should have, if there is any evidence that the seat belt pretensioner worked as designed, under your protocol, the victim is not eligible. Thats right. The victim is not eligible if the power was on, and the air bag did deploy. If the air bag deployed and the seat belts were working, then the likelihood that the ignition switch could have been in the off position causing the accident is not possible. So we concluded, and i concluded that air bag deployment renders the claim ineligible. Air bag nondeployment or a claim in which the victim or his family or her family say we dont know whether the air bag deployed or not, eligible. File the claim, and well work with the claimant in that regard. So let me make sure i understand. If the air bag did not deploy, you are eligible if you are in one of the cars on the list . Exactly. Regardless of the seat belt. Exactly. Okay. So the the total decision here is what car it is, and whether or not the air bags deployed. And or whether the seat belts deployed. It is the same issue. If the seat belts deployed, the power is on im confused about the seat belt deployed. Are you talking about whether the seat belt is on . Would you explain for the record, miss biros . It is not the see belts per se, it is the pretensioners which are electrically controlled. If they were operational, it is unlikely that the cause of the accident was the ignition switch. So what youre saying is if the pretensioners are working, that is an indication that there was not a shutdown of the electrical system, or the power system, that would have prevented the air bags from deploying. Thats correct. What if the air bags what if you have a situation where the air bag, there is a frontal crash and the air bag doesnt deploy, and in seconds later, there is a rear crash and the air bag does deploy . File the claim. If there is a frontal crash and the air bag didnt deploy, we want to look into that claim. Okay. So youre not you are open to looking at each situation. So that would be a situation where the air bag did deploy, but not until the second crash and so i want to make sure that everyone is clear that even if your air bag didnt deploy, it could depend, even if your air bag did deploy it could depend on the facts of your case. Thats an interesting hypothetical, but i would like to look at that claim. I think there is one. Well, we would like to take a look at it. Because this is the issue, this switch goes off and on easily. Right . It slides to off easily. It slides back. Because there is not appropriate torque in it. And so things that bump it move it. So just as easily as a riding off the road could bump it and it could go off, a frontal crash could move it from off to on, correct . We looked at that problem. I think theoretically you are correct. I have two answers to your hypothetical. First, it is highly unlikely that that circumstance that you just posed occurs. I guess it could. It is highly unlikely. What i want to avoid with this program is being inundated by thousands of claims with the air bag deployed, making it extremely unlikely that it was the ignition switch causing delay in getting money out the door to the vast number of claimants which clearly can demonstrate air bag nondeployment through police reports, photographs, et cetera. And the whole key to this program, as you and others have pointed out, is getting money out the door as fast as possible to eligible claimants. Thats why the air bag deployment provision in the protocol is designed, frankly, to discourage thousands of people from filing a claim when in the overwhelming number of cases, i mean, overwhelming number of cases, air bag nondeployment is a certain step in the direction of finding eligibility. Right. Well, i have questions about the amount of money that you have to spend and also about punitive damages. I have a feeling my colleagues will handle those questions before we finish all the questions of this panel. Ill leave those questions to my colleagues and turn it over to senator heller. Thank you, madam chairman. And, again, thanks for being here. I dont know that it is premature to have this discussion. I think this is the perfect time to have this discussion before this Program Moves forward. I want to go back to what the chairman was asking you. Youre saying that there is no scenario where the key could have gone from run to accessory, have an accident occur, and still have the air bag deploy . Thats right. There may be no, senator mccaskill raises the hypothetical situation. But it is not the type of situation that is all likely that would justify drafting a Compensation Program that would invite anybody with air bag deploy to file a claim. So took ten years to figure out what the problem was and youre telling me that scenario can happen. It is so rare, you dont want to discourage claims from being filed by the overwhelming cases where air bag nondeployment is a major step in the direction of finding eligibility. You said youre going to compensate all innocent victims. Let me give you a scenario, since were scenarios is preliminary. Suppose im driving a cobalt, and air bag doesnt deploy and key goes from run to accessory, and i walk away unscathed. But i destroy the car. Am i compensated . Thats a litigation matter. Youre not compensated under a protocol that is limited to death and physical injury. You may very well be compensated and i think there are thousands of lawsuits pending on economic damage to the car, diminished value of the car, but thats not the scope of this death and physical injury program. Why would you stop there . Isnt a loss a loss .