GM recall of 1.6M cars prompts lawmaker probe

General Motors faced more pressure over its handling of a deadly defect in certain compact cars Tuesday as word leaked of a criminal investigation and two congressional committees opened probes into the matter.

The Justice Department is investigating whether GM broke any laws with its slow response to a problem with ignition switches in compact cars from model years 2003 to 2007, according to a person briefed on the matter. The probe is being handled by the U.S. Attorney's Office in New York, said the person, who asked not to be identified because the investigation has not been made public.

Spokesmen for the Justice Department and GM would not comment. The investigation was first reported by Bloomberg News.

At issue is why GM waited until February to recall 1.6 million older-model compact cars worldwide (including in Canada), even though it admitted knowing about the problem for a decade. The faulty ignition switches have been linked to 31 crashes and 13 deaths. Committees in the House and Senate also want to know why the government's road safety watchdog, the National Highway Traffic Safety Administration, didn't take action sooner.

GM announced last month it will replace ignition switches that can shut off car motors unexpectedly. When that happens, drivers lose power-assisted steering and brakes and can lose control of the cars. The ignition can slip from the run position to accessory or off, due partly to heavy key chains dangling from the steering column.

Also, if the ignition switch isn't in the run position, air bags may not inflate if a crash occurs.

An Associated Press review of a NHTSA database found that drivers started submitting complaints about the problem in early 2005, shortly after the first Chevrolet Cobalt went on sale. The review of complaints about the Cobalt, GM's top-selling small car in the mid-2000s, found 173 instances of engine stalling or air bags failing to deploy, both symptoms of the ignition problem. Many drivers reported problems with keys sticking in the ignition in addition to the stalling.

Fred Upton of Western Michigan, the chairman of the House committee, said in a statement Monday that a hearing will be held in the coming weeks.

Marketing expert Ken Wong of Queen's University says the damage to GM's reputation is enormous. "[It's] catastrophic, not only because the incident occurred, but because there is substantial evidence that GM was aware of the incident long before it took any corrective action."   

Congress passed legislation in 2000 requiring automakers to report safety problems quickly to NHTSA. The laws came after an investigation into a series of Ford-Firestone tire problems.

Upton said the committee wants to know if GM or the agency missed something that could have flagged the problems sooner.

"If the answer is yes, we must learn how and why this happened, and then determine whether this system of reporting and analyzing complaints that Congress created to save lives is being implemented and working as the law intended," Upton said.

NHTSA has said the rate of problems in the GM cars was not significantly different from similar vehicles.

The prospect of congressional hearings means more bad publicity for GM, which is trying to distance itself from a reputation for building lousy cars. The company has said it's more focused on quality since emerging from bankruptcy protection in 2009.

"It's the old GM haunting the new GM," said Jake Fisher, director of auto testing at Consumer Reports magazine. "They have a lot of the old products still hanging around."

Fisher said GM's new cars and trucks will have to be better than the competition to lure back buyers who swore years ago to never again to buy a GM car.

NHTSA already has demanded information from GM about when it knew of the ignition problem. The agency could fine GM up to $35 million for a delayed response. Automakers must report safety problems to NHTSA within five days of learning about them.

GM said in a statement that it's co-operating with NHTSA and the House committee.

On Feb. 13, GM announced the recall of more than 780,000 Cobalts and Pontiac G5s (model years 2005-2007). Two weeks later it added 842,000 Saturn Ion compacts (2003-2007), and Chevrolet HHR SUVs and Pontiac Solstice and Saturn Sky sports cars (2006-2007).

GM said Monday that it has hired attorney Anton Valukas to investigate the company's actions before the recall. Valukas, who investigated the 2008 collapse of Lehman Brothers for a bankruptcy court. GM has promised an "unvarnished" investigation into the recall.

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Feta, parmesan, Gorgonzola cheese names prompt U.S.-Europe trade stink

The Associated Press Posted: Mar 12, 2014 11:35 AM ET Last Updated: Mar 12, 2014 11:50 AM ET

Errico Auricchio produced cheese with his family in Italy until he brought his trade to the United States more than 30 years ago. Now, the European Union is saying his cheese isn't authentic enough to carry a European name.

As part of trade talks, the EU wants to ban the use of names like Parmesan, feta and Gorgonzola on cheese made in the United States. The argument is that the American-made cheeses are shadows of the original European varieties and cut into sales and identity of the European cheeses.

Auricchio, president of Wisconsin-based BelGioioso Cheese Inc., says he has no idea what he would call his Parmesan if he had to find a new name.

"I Can't Believe It's Not Parmesan," he jokes.

The Europeans say Parmesan should only come from Parma, Italy, not from Auricchio's plant or those familiar green cylinders that American companies sell. Feta should only be from Greece, they say, even though feta isn't a place. The EU argues it "is so closely connected to Greece as to be identified as an inherently Greek product."

So, a little "hard-grated cheese" for your pasta? It doesn't have quite the same ring as Parmesan.

U.S. dairy producers, cheesemakers and food companies are all fighting the idea, which they say would hurt the $4 billion domestic cheese industry and endlessly confuse consumers.

"It's really stunning that the Europeans are trying to claw back products made popular in other countries," says Jim Mulhern, president of the National Milk Producers Federation, which represents U.S. dairy farmers.

The European Union would not say exactly what it is proposing or even whether it will be discussed this week as a new round of talks on an EU-United States free trade agreement opens in Brussels.

European Commission spokesman Roger Waite would only say that the question "is an important issue for the EU."

That's clear from recent agreements with Canada and Central America, where certain cheese names were restricted unless the cheese came from Europe. Under the Canadian agreement, for example, new feta products manufactured in Canada can only be marketed as feta-like or feta-style, and they can't use Greek letters or other symbols that evoke Greece.

Though it has not laid out a public proposal, the EU is expected to make similar attempts to restrict marketing of U.S.-made cheeses, possibly including Parmesan, Asiago, Gorgonzola, feta, fontina, grana, Muenster, Neufchatel and Romano.

And it may not be just cheese. Other products with traditional ties to European countries that could be affected include bologna, Black Forest ham, Greek yogurt, Valencia oranges and prosciutto, among other foods.

The trade negotiations are important for the EU as Europe has tried to protect its share of agricultural exports and pull itself out of recession. The ability to exclusively sell some of the continent's most famous and traditional products would prevent others from cutting into those markets.

Concerned about the possible impact of changing the labels on those popular foods, a bipartisan group of 55 senators wrote U.S. Trade Representative Michael Froman and Agriculture Secretary Tom Vilsack this week asking them not to agree to any such proposals by the EU.

Led by New York Sen. Chuck Schumer, D-N.Y., and Pennsylvania Sen. Patrick Toomey, R-Pa., the members wrote that in the states they represent, "many small- or medium-sized, family-owned businesses could have their businesses unfairly restricted" and that export businesses could be gravely hurt.

Schumer said artisanal cheese production is a growing industry across New York.

"Muenster is Muenster, no matter how you slice it," he says.

Trevor Kinkaid, a spokesman for the U.S. trade representative, said that conversations on the issue are in the early stages but that the U.S. and E.U. have "different points of view" on the topic.

The agency wouldn't disclose details of the negotiations, but Kinkaid said the U.S. government is "committed to increasing opportunity for U.S. businesses, farmers and workers through trade."

Large food companies that mass produce the cheeses are also fighting the idea. Kraft, closely identified with its grated Parmesan cheese, says the cheese names have long been considered generic in the United States.

"Such restrictions could not only be costly to food makers, but also potentially confusing for consumers if the labels of their favourite products using these generic names were required to change," says Kraft spokesman Basil Maglaris.

Jaime Castaneda works for the U.S. Dairy Export Council and is the director of a group formed to fight the EU changes, the Consortium for Common Food Names. He says the idea that great cheese can only come from Europe "is just not the case anymore."

He points out that artisanal and locally produced foods are more popular than ever here and says some consumers may actually prefer the American brands. European producers can still lay claim to more place-specific names, like Parmigiano-Reggiano, he says.

"This is about rural America and jobs," he says.

Auricchio and other producers say they are angry because it was Europeans who originally brought the cheeses here, and the American companies have made them more popular and profitable in a huge market.

"We have invested years and years making these cheeses," Auricchio says. "You cannot stop the spreading of culture, especially in the global economy."

Mar 12, 2014 4:41 PM ET Mar 12, 2014 4:34 PM ET Mar 12, 2014 4:15 PM ET Mar 12, 2014 4:34 PM ET Mar 12, 2014 4:41 PM ET

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