Washington � General Motors Co. agreed Friday to pay a record-setting $35 million civil penalty for delaying a recall of 2.6 million older cars for ignition switch defects linked to 13 deaths and 32 crashes and has agreed to a consent order to make significant and wide-ranging changes. 
 
 Federal officials offered a scathing review of the Detroit automaker�s approach to safety, citing a 2008 presentation that encouraged employees in communications to be factual but "not fantastic" in writing about problems, including not using the words �defect,� �dangerous� and �safety related.� 
 
 Transportation Secretary Anthony Foxx said GM knew ignition switch problems would turn off the airbag as early as November 2009. 
 
 �They had the information and told no one,� Foxx said. �Literally, silence can kill. What GM did was break the law.� 
 
 Foxx said the fine should "put all automakers on notice" that there is zero tolerance for failing to recall vehicles in a timely fashion. 
 
 NHTSA Administrator David Friedman added automakers can�t overreact to safety issues. You�re going to get caught,� said Friedman, if an automaker fails to recall vehicles in a timely fashion. �You�re going to get found out.� 
 
 He also said there wasn�t just a single problem at GM. 
 
 �The (recall) process was broken,� Friedman said. 
 
 Unlike other automakers that paid maximum fines, GM admitted it broke the law. It will disclose all possible safety problems to the agency and meet with the agency on a monthly basis. It will provide biweekly reports on how many vehicles have been repaired under the ignition switch recall and must alert the agency if it changes the repair schedule. 
 
 NHTSA �ordered GM to make significant and wide-ranging internal changes to its review of safety-related issues in the United States, and to improve its ability to take into account the possible consequences of potential safety-related defects.� 
 
 The government said the agreement holds GM accountable and will �push the automaker to make needed institutional change, and ensure that replacement parts are produced quickly and recalled vehicles are repaired promptly.� 
 
 �No excuse, process or organizational structure will be allowed to stand in the way of any company meeting their obligation to quickly find and fix safety issues in a vehicle,� Friedman said. �It�s critical to the safety of the driving public that manufacturers promptly report and remedy safety-related defects that have the potential to lead to deaths or injuries on our nation�s highways.� 
 
 Foxx said the $35 million was a �rounding error� for GM and emphasized that the Obama administration wants Congress to hike maximum fines to up to $300 million. 
 
 "We will now focus on the goal of becoming an industry leader in safety,� GM CEO Mary Barra said in statement Friday. �We will emerge from this situation a stronger company. 
 
 Members of Congress also said it wasn�t enough and some suggested the cap should be lifted completely.�A penalty of $35 million is a parking ticket in comparison the toll this defect has taken on the lives of America�s families,� said Sen. Ed Markey, D-Mass. 
 
 Sen. Claire McCaskill, D-Mo., who is planning another hearing with Barra, said she didn�t believe �the $35 million fine is nearly enough for misconduct of this magnitude. Congress must consider raising or eliminating the cap on civil penalties when automakers put lives at risk.� 
 
 Sen. Richard Blumenthal, D-Conn., said Friday he plans to introduce legislation within the next few weeks that would remove the cap on the amount NHTSA can impose to automakers and make it unlimited. 
 
 In a call with reporters, Blumenthal said GM�s fine was too low. He said the company should have been fined �many multiples� of $35 million. 
 
 �It is a mockery of justice. It is less than a slap on the wrist,� Blumenthal said. �It�s a tap on the back of the hand. It�s a pittance for GM and a powerful reminder that we need legislative reform to increase the maximum penalty.� 
 
 Rep. Fred Upton, R-St. Joseph, chair of the House Energy and Commerce Committee, said his committee also plans to hold another GM hearing and is still investigating. 
 
 �Our investigation into how the system failed is far from over. We continue to gather documents and interview key players involved in the ignition recall to determine why it took so long to connect the dots and take action,� Upton said. �Today's record penalty sends a strong message that nothing is more important than safety. There are still many unanswered questions.� 
 
 The automaker has already appointed a new safety chief, and many top safety officials have retired, left the company or moved to new positions. The company has an internal investigation into the recall led by a former U.S. attorney in Chicago and expects to make public findings in the coming weeks. 
 
 The company said it is already working with NHTSA to review its processes and policies to avoid future recalls like the ignition switch recall. The company has created a new Global Product Integrity unit, a new employee Speak Up for Safety Initiative in which employees are encouraged to voice safety concerns and is seeking stronger requirements for its engineers. 
 
 Barra also said GM�s goal is to �produce the safest cars for our customers � they deserve no less.� 
 
 The Justice Department, two congressional committees and the Transportation Department�s inspector general are also reviewing the GM recall. The U.S. Securities and Exchange Commission and at least one state attorney general also are investigating GM. The consent order doesn�t protect GM from future criminal prosecution. 
 
 �The Center for Auto Safety calls on the Justice Department to impose a billion dollar plus fine on GM and bring individual criminal prosecutions against the responsible GM officials,� said Clarence Ditlow, the center�s executive director. �People died. Justice demands more than a $35 million slap on the wrist to a hundred billion dollar corporation like GM when it kills consumers.� 
 
 Peter Henning, a Wayne State University law professor and former SEC attorney, said GM's admission that it violated the Safety Act does not mean it had admitted fault in other criminal or civil cases. 
 
 "Telling NHTSA is not the same as a public disclosure," he said. "It's certainly embarrassing, but it doesn't mean they've admitted to a criminal violation." 
 
 GM this year has issued 24 recall campaigns totaling 12.8 million vehicles worldwide and nearly 11.2 million in the United States, up from 757,000 in the United States last year. GM has called back more vehicles in the United States this year than all other major automakers combined � and more than it did in the last six years. 
 
 Barra has repeatedly admitted the automaker made significant mistakes in its handling of the recall and complaints a decade ago, including failing to change the part number in 2006 when it redesigned the ignition switch and canceling a fix after employees said there was no �business case� to improve the switch. Company documents turned over to Congress show the fix would have cost $0.90 per car but only would have saved $.10 to $0.15 per car in warranty costs. 
 
 GM first learned of a problem with the ignition in 2001 in a preproduction Saturn Ion and then agreed to Delphi production of ignition switches that didn�t meet its own requirements. The automaker has also retained a victims compensation expert, Ken Feinberg, to determine if it should pay victims of crashes from before its June 2009 bankruptcy restructuring. 
 
 GM agreed to provide NHTSA with full access to the results of GM�s internal investigation into this recall, to take steps to ensure its employees report safety-related concerns to management, and to speed up the process for GM to decide whether to recall vehicles. GM must agree to notify NHTSA of changes to its schedule for completing production of repair parts by Oct. 4. 
 
 GM must also take steps to maximize the number of vehicle owners who bring in their vehicles for repair, including targeted outreach to non-English speakers, maintaining up-to-date information on its website, and engaging with vehicle owners through the media. The consent order requires GM to submit reports and meet with NHTSA so that the agency may monitor the progress of GM�s recall and other actions required by the consent order. 
 
 The automaker has agreed to pay the fine and make significant changes in how it approaches auto safety issues under a consent decree, people briefed on the matter said. 
 
 GM faced up to the $35 million fine under current law for failing to recall older Chevrolet Cobalt, Saturn Ion and other cars. Many officials had expected that GM would be forced to pay the maximum fine, topping the record-setting fines imposed on Toyota Motor Corp. and Ford Motor Co. for failing to recall vehicles in a timely fashion. 
 
 In March, Toyota Motor Corp. agreed to a $1.2 billion settlement to settle a four-year-investigation imposing the largest-ever fine on automaker in U.S. history. 
 
 Toyota will face three years of federal oversight under a deferred prosecution � as it seeks to put the sudden acceleration recalls, lawsuits and investigations behind it. 
 
 "Put simply, Toyota's conduct was shameful. It showed a blatant disregard for systems and laws designed to look after the safety of consumers. By the company's own admission, it protected its brand ahead of its own customers. This constitutes a clear and reprehensible abuse of the public trust," Attorney General Eric Holder said in March. 
 
 Holder sent a warning to the auto industry: "Other car companies should not repeat Toyota's mistake: A recall may damage a company's reputation, but deceiving your customers makes that damage far more lasting," he said, declining to confirm that the government has already opened an investigation into General Motors Co. over its recall of vehicles for ignitions switch defects. 
 
 The Justice Department said Toyota had received reports of sticking accelerator pedals in Europe in 2008 and 2009 and a report of the problem in August 2009 in a Camry in the U.S. Toyota told its pedal supplier in spring 2009 to make a design change. By October � after the San Diego crash � it issued an "urgent" design change described as a major change with a new part number. Two weeks later, Toyota scrapped the design change and employees were instructed orally to cancel the project. 
 
 "They were instructed not to put anything about the cancellation in writing," the Justice Department said � and no cancellation was sent in writing to the supplier � "to prevent NHTSA from learning about the sticky pedal problem." The following month Toyota told engineers not to make design changes for any other cars in North America because they would "most likely mislead the concerned authorities and consumers and such to believe that we have admitted having defective vehicles." 
 
 NHTSA fined Toyota $66 million � the maximum possible � for delaying three separate recall campaigns. In the wake of Toyota�s problems, Congress doubled the maximum fine to $35 million. 
 
 Ford paid NHTSA a $17.35 million fine after the agency said the automaker did not notify customers of a defect in a timely manner after it recalled 423,000 2001-04 Ford Escapes and Mazda Tributes in July 2012, the maximum fine at the time. Ford did not admit any wrongdoing. ||||| General Motors Co. (GM) will pay a record $35 million fine as part of the U.S. government’s investigation into how it handled the recall of 2.59 million small cars over faulty ignition switches, the Transportation Department said. 
 
 GM’s agreement with regulators includes “significant and wide-ranging internal changes” to how it reviews safety issues and decides on recalls, the department said in a statement. 
 
 “GM did not act and did not alert us in a timely manner,” U.S. Transportation Secretary Anthony Foxx told reporters today at a news conference. “What GM did was break the law. They failed to meet their public-safety obligations.” 
 
 The National Highway Traffic Safety Administration has been investigating why it took the largest U.S. automaker years to address engineering concerns and consumer complaints about engine stalling dating from 2004. At least 13 fatalities have been linked to the defect, which can deactivate air bags. 
 
 Related: GM Recalls Bring 2014 Total to Record 11.2 Million in May 
 
 “General Motors’ decision making, structure and process stood in the way of safety at a time when air bags were failing to work properly in millions of GM products,” NHTSA Acting Administrator David Friedman said today in Washington. “Our investigation also found that General Motors was training employees in ways that could’ve compounded these problems.” 
 
 Photographer: Jeff Kowalsky/Bloomberg Keys hang from the ignition during a service recall for a General Motors Co. (GM) 2005 Saturn Ion at Liberty Chevrolet in New Hudson, Michigan. Close Keys hang from the ignition during a service recall for a General Motors Co. (GM) 2005... Read More Close Open Photographer: Jeff Kowalsky/Bloomberg Keys hang from the ignition during a service recall for a General Motors Co. (GM) 2005 Saturn Ion at Liberty Chevrolet in New Hudson, Michigan. 
 
 The record fine “was a given,” Clarence Ditlow, executive director of the Center for Auto Safety, a Washington-based advocacy group, said today in a telephone interview. “The only thing that was left to be decided was when they were going to impose the penalty.” 
 
 ‘Stronger Company’ 
 
 GM confirmed in an e-mailed statement that it had reached an agreement with NHTSA and said it has begun working with the agency to review processes and policies to avoid future recalls of this nature. 
 
 “We have learned a great deal from this recall,” Chief Executive Officer Mary Barra said today in a statement. “We will now focus on the goal of becoming an industry leader in safety. We will emerge from this situation a stronger company.” 
 
 GM has said heavy key rings or jarring can cause ignition switches on some cars to slip out of the “on” position, cutting off power and deactivating air bags. 
 
 GM shares slid 1 percent to $34 at the close in New York. They have dropped 17 percent this year. 
 
 GM hasn’t fully complied with an extensive request for information by the regulator. Since April 3, the company has been accruing fines of $7,000 per day. GM said it was waiting for an internal investigation to be complete before answering some of NHTSA’s questions. 
 
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 Forced Changes 
 
 In addition to the fine, the regulators are requiring changes to GM’s culture that led to questions about its handling of the recall, which is still the subject of investigations by Congress and the U.S. Justice Department. 
 
 While Friedman said he didn’t have any records of Barra being briefed on the ignition-switch issues, other company executives and employees were aware: Some were notified by a supplier in 2009, and by 2012 communication among the automaker’s staff was “very explicit about an unreasonable risk to safety.” 
 
 GM’s slow reaction to the safety complaints reflected systemic failures throughout the company, from its organization to the sharing of information, Friedman said. 
 
 “GM engineers knew about the defect, GM investigators knew about the defect, GM lawyers knew about the defect, but GM did not act to protect Americans from that defect,” Friedman said. “The fact that GM took so long to report this defect says something was very wrong with the company’s values.” 
 
 ‘Defect, Dangerous’ 
 
 GM’s training materials “explicitly discouraged” employees from using words like “defect, dangerous, safety related and many more essential terms for engineers and investigators to clearly communicate up the chain when they suspect a problem,” Friedman said. 
 
 Even before the ignition-switch recall, some within NHTSA were complaining about GM dragging its heels responding to safety concerns. Documents released in April by a congressional panel reviewing the recall pointed to a history of contentiousness between GM and its regulator that continued beyond the automaker’s bailout by U.S. taxpayers. 
 
 In July 2013, less than a year before GM’s recall, the head of NHTSA’s Office of Defects Investigation, Frank Borris, complained to Carmen Benavides, who was then GM’s director of product investigations. “The general perception is that GM is slow to communicate, slow to act, and, at times, requires additional effort of ODI that we do not feel is necessary with some of your peers,” Borris said. 
 
 Consent Order 
 
 The consent order that GM agreed to laid out a list of things the company must do from submitting a written list each month of every vehicle-safety issue under consideration to monthly meetings with the agency for a year. GM also agreed to quarterly meetings to discuss the implementation of the requirements of the agreement. Jeff Boyer, as the vice president of global vehicle safety, and other named executives are to be there unless there are “compelling circumstances.” 
 
 GM agreed to improve its analytics to better identify safety issues, to establish a way for employees to quickly report concerns, and to change its training to “disavow statements diluting the safety message.” GM also agreed to give NHTSA by June 30 a “full and complete copy of the report” that GM expects Jenner & Block LLC Chairman Anton Valukas to complete on his investigation. 
 
 Record Fine 
 
 The $35 million fine is the largest ever paid by an automaker in the U.S. for delays in issuing a safety recall. Ford Motor Co. (F) and Toyota Motor Corp. previously paid $17.4 million, the maximum allowable at the time. 
 
 Congress has since changed the maximum NHTSA fine to $35 million. Regulators are pushing lawmakers to approve fines of as much as $300 million for a bigger deterrent effect, the Transportation Department said. 
 
 “It’s disappointing that there’s no criminal prosecution,” Ditlow said. “This shows how hand-tied the Department of Transportation is under the Safety Act: The fine is too small, but that’s the maximum.” 
 
 GM earned $5.3 billion last year and has more than $37 billion in available liquidity on its balance sheet at the end of the first quarter, according to a company web presentation. Its first quarter profit fell 82 percent with the cost of recalls rising to $1.3 billion during the period. 
 
 “Today was just a show,” Robert Hilliard, a Corpus Christi, Texas-based lawyer, representing families in lawsuits against GM over the ignition-switch recall, said today in an interview. “It was taking GM to an artificial woodshed and pretending as if GM will now become responsible.” 
 
 He reiterated his recommendation that the government should’ve forced GM to park the effective vehicles. “$35 million is a complete win for GM,” he said. 
 
 GM Changes 
 
 Even before today’s announcement, Barra, in response to the recall crisis, has been making changes at GM. She named Boyer vice president for global vehicle safety in March, and he’s part of a newly aligned engineering department aimed at reducing compartmentalization and catching future safety issues. 
 
 Many of Barra’s changes inside GM are focused on resolving safety reviews more quickly. 
 
 John Calabrese, vice president of global vehicle engineering, is retiring and his department is being split into two parts with new executives overseeing the units. The Global Product Integrity division has been given about 35 new safety investigators to speed up reviews. 
 
 Boyer said in an interview this week that his team has been focusing swift resolution of ongoing reviews. 
 
 “We also want to make sure we expedite any new issues that we need to take appropriate action on, and we’re doing that promptly as well,” he said. “We’re not waiting for trends to emerge.” 
 
 Valukas Investigation 
 
 Barra has asked Valukas, who served as the Justice Department’s examiner of the downfall of Lehman Brothers Holdings Inc., to help lead the automaker’s internal probe of the recall along with GM General Counsel Michael Millikin. She’s also asked for a review by lawyer Kenneth Feinberg, who determined compensation for survivors of the Sept. 11 and Boston Marathon terrorist attacks, to make recommendations on what GM should do for victims of the crashes. 
 
 The agreement follows yesterday’s announcement by GM of five new recalls totaling 2.7 million in the U.S. that increases the total number of vehicles called back for fixes this year so far to a record of 11.2 million. The 2014 total through mid-May is more than GM recalled during the previous six years combined, according to NHTSA records. The company’s previous peak year for recalls in the U.S. was 10.7 million in 2004, according to NHTSA records. 
 
 “The recent ignition recall has lead us to reexamine really every part of our business to make sure our customers and their safety are at the heart of everything we do,” Boyer said this week. “As part of that, we’ve made some changes in our overall recall process and these changes, I’m sure that you’ve seen, have resulted in a much larger than normal number of GM vehicle recalls since the beginning of the year.” 
 
 To contact the reporters on this story: Jeff Plungis in Washington at jplungis@bloomberg.net; Tim Higgins in Southfield, Michigan, at thiggins21@bloomberg.net 
 
 To contact the editors responsible for this story: Bernard Kohn at bkohn2@bloomberg.net; Jamie Butters at jbutters@bloomberg.net Jamie Butters
– The US government is fining General Motors $35 million for delays in recalling small cars with faulty ignition switches. The government also says that GM will report safety issues faster in the future. The fine is the maximum allowed by law and a record at that, the Detroit News reports, but it's only a fraction (a hair under 1%) of the $3.8 billion GM made last year. The National Highway Traffic Safety Administration also ordered GM to implement "significant and wide-ranging internal changes to its review of safety-related issues." The government boasted that the fine "puts all manufacturers on notice that they will be held accountable" if they fail to report defects—as GM allegedly did for at least a decade. Automakers are required to report safety defects within five days of discovering them. GM's stock rose slightly on the announcement, Bloomberg reports. The fine is the highest ever because the max fine has increased since Toyota and Ford were each fined $17.4 million in 2012 and 2013, respectively. Regulators have asked Congress to drastically increase the cap to $300 million.