WASHINGTON (Bloomberg) -- Kenneth Feinberg, the lawyer hired by General Motors Co. to arrange compensation for victims of cars with defective ignition switches, is already hearing from people even though claims won’t be accepted until Aug. 1.
There have been some “heart-wrenching stories” including from people “who suffered horribly,” Feinberg said in an interview on Bloomberg Television’s “Political Capital with Al Hunt,” airing this weekend. He said he’s also been contacted by people whose cars aren’t part of the recall.
The primary goal is to get money to legitimate victims, especially family members of people killed or people who have been permanently disabled in crashes, Feinberg said. It’s not to punish GM. Feinberg announced the parameters of the compensation program June 30.
“At the end of the day, the only thing that matters is, did you get the money out fast and did people sign up,” he said.
At least 13 deaths in crashes have been blamed on a flawed ignition switch, which can be inadvertently shut off when jarred, cutting power to the engine and deactivating airbags. GM is limiting payments to victims of the original 2.6 million cars recalled to those specifically tied to airbags that failed, Feinberg said.
Owners of the 8.4 million older models recalled for “unintended key rotation” this week, including the 1997-2005 Chevrolet Malibu and the 2003-2014 Cadillac CTS, won’t be eligible for compensation under the program, Feinberg said.
It’s up to GM whether to expand the compensation program, he said.
Barra’s cooperation
CEO Mary Barra has been cooperative in getting the program established, Feinberg said. GM has pushed back on some requests, later agreeing after having them explained, he said. Feinberg says GM has agreed to abide by his decisions on individual claims, with no aggregate cap and granting him total independence.
“She means what she says,” Feinberg said of Barra.
Feinberg has administered funds to compensate victims of the Sept. 11, 2001, terrorist attacks, the Boston Marathon bombing and the BP oil spill.
People have until Dec. 31 to make claims related to the GM recall. Victims of accidents before GM’s 2009 bankruptcy are eligible, even if they already have been compensated, he said. Each eligible claim will be paid in 90 to 180 days from when Feinberg deems it substantially complete, he said.
Feinberg’s pay
Feinberg said he’s not inclined to extend the Dec. 31 deadline, as U.S. Sen. Richard Blumenthal, D-Conn., has suggested to give vehicle owners more time to gather evidence. Based on experience with other funds, people “will wait and wait,” Feinberg said.
“It’s better to have a deadline and force people to gather together their documentation and get the claim in,” Feinberg said.
Feinberg said he’s being paid by GM after having worked on other compensation funds pro bono. He declined to answer how much he’s being paid.
“It’s up to GM,” he said. “You ask GM.”
GM isn’t disclosing how much Feinberg is being paid, a spokesman, Greg Martin, said in an e-mail.
Feinberg has sole discretion about who is compensated, how much they’re being paid, and there’s no cap on the total amount that goes out, Martin said.
Brian Johnson, an analyst at Barclays in Chicago, estimated in March that GM might spend $3 billion in damages for faulty Chevrolet Cobalts and Saturn Ions. Blumenthal has urged the company to set aside as much as $8 billion.
GM shares and sales have held up so far even with the publicity surrounding the recalls. GM in May had its best month of U.S. auto sales since August 2008, rising 13 percent to 284,694 vehicles. In J.D. Power & Associates’ closely watched new-car quality survey, GM had more best-in-category models than any other automaker.
