GM lawsuit poses danger to future bailouts, Treasury says

WASHINGTON (Bloomberg) -- The U.S. Treasury says confidential information it received in the bailout of General Motors should stay secret, otherwise at-risk companies needing government help in the future might not be willing to share data.

The Center for Auto Safety, now researching GM's ignition-switch defects, sued in 2011 for information the government obtained before investing $49.5 billion in the automaker.

It got more than 50,000 documents and wants additional records on the U.S. role in a judge's ban on lawsuits over older GM cars.

The Treasury on Wednesday asked a judge to throw out the lawsuit.

"Disclosure of the disputed information would also impair Treasury's ability to obtain necessary information from companies in the future," the U.S. said in a filing in Washington federal court. "Treasury's ability to act as a lender would be hampered."

The government's bet on GM paid off in part. The largest U.S. automaker said operating profit in North America rose 12 percent to $2.45 billion in the third quarter. Meanwhile, the company said recall and car-loan charges for this year rose 8 percent to $2.7 billion for 32 million faulty cars.

Still, highlighting the risks, the Treasury's bailout fund lost $11.2 billion on its investment by December when it sold its remaining shares in the new GM, according to a May government report.

'Hat in hand'

Clarence Ditlow, president of the Washington-based safety center, said GM came to the U.S. "hat in hand" and was forced as a condition of getting money to produce the information that he is now seeking. Others will do the same, he said Thursday.

"Disclosure of information will not deter corporations begging for billions in taxpayer dollars from seeking bailout funds in the future," he said.

Hundreds of drivers sued GM this month, demanding $10 billion in damages for cars that they say lost value because of the recalls. A parallel suit by owners of vehicles made by so-called old GM might have to be rewritten if the bankruptcy judge renews his 2009 orders that freed new GM from its predecessor's liabilities.

GM, sued along with the Treasury by Ditlow, denies that the car prices have fallen since the recalls began in February.

ATTENTION COMMENTERS: Automotive News has monitored a significant increase in the number of personal attacks and abusive comments on our site. We encourage our readers to voice their opinions and argue their points. We expect disagreement. We do not expect our readers to turn on each other. We will be aggressively deleting all comments that personally attack another poster, or an article author, even if the comment is otherwise a well-argued observation. If we see repeated behavior, we will ban the commenter. Please help us maintain a civil level of discourse.

Email Newsletters
  • General newsletters
  • (Weekdays)
  • (Mondays)
  • (As needed)
  • Video newscasts
  • (Weekdays)
  • (Weekdays)
  • (Saturdays)
  • Special interest newsletters
  • (Thursdays)
  • (Tuesdays)
  • (Monthly)
  • (Monthly)
  • (Wednesdays)
  • (Bimonthly)
  • Special reports
  • (As needed)
  • (As needed)
  • Communication preferences
  • You can unsubscribe at any time through links in these emails. For more information, see our Privacy Policy.