GM said the recall would cover 2005-2010 Chevrolet Cobalts, 2007-10 Pontiac G5s and similar models sold in Canada and Mexico.

The National Highway Traffic Safety Agency in January had opened a probe of 905,000 Cobalts from the 2005 through 2009 model year following 1,132 complaints of power steering failures that could make the cars hard to control. The complaints included reports of 14 crashes and one injury.

“After our in-depth investigation, we found that this is a condition that takes time to develop. It tends to occur in older models out of warranty,” said Jamie Hresko, GM vice president of quality, in a statement. “Recalling these vehicles is the right thing to do for our customers’ peace of mind.

GM said even if the problem occurred, the vehicles are “safe to drive” but would require more steering effort under 15 m.p.h., with a chime and “Power Steering” warning light coming on.

The recall, the largest by GM in a number of years, comes as Congress scrutinizes the auto industry’s regulation by NHTSA following a string of Toyota recalls linked to sudden acceleration problems.

GM recalled 2.2 million vehicles in 2009, and its total number of vehicles recalled had been falling in recent years as the company said it was catching problems earlier in production.

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GMAC received two rounds of government aid totaling $13.5 billion as it struggled with losses at home-mortgage operations, which include Residential Capital LLC, known as ResCap. The primary lender to General Motors Co., its former parent, and Chrysler Group LLC is being helped by profits in auto-lending and is working to sell or restructure the ResCap unit.

“We question why GMAC needs this capital,” CreditSights Inc. analyst Adam Steer said in an interview. “If you look at where the losses are coming from, it’s not coming from the core automotive business, it’s coming from the legacy portfolio at ResCap.” Steer has called for GMAC to cut ties to the home lender or place it in bankruptcy.

GMAC would like to find a solution to ResCap by the end of the year, Chief Financial Officer Robert Hull said Nov. 4 in the company’s third-quarter earnings call. The lender reported its eighth loss in the past nine quarters in November, while the auto-finance unit had a profit.

Reviewing Operations

“We have been conducting a strategic review of our business and evaluating options to address the challenges at ResCap and at the mortgage operation,” GMAC spokeswoman Gina Proia said yesterday in an interview.

The Wall Street Journal reported yesterday that GMAC was negotiating a third aid package.

GMAC was ordered by the Federal Reserve in May to raise as much as $9.1 billion in new Tier 1 capital to withstand a possible prolonged recession, after government stress tests of finance companies. The U.S. gave the lender $3.5 billion toward that goal, leaving a capital hole as large as $5.6 billion to be filled by Nov. 9.

“As we stated on Nov. 9, Treasury is in discussions with GMAC to ensure its capital needs, as determined last May by the stress tests, are met,” Treasury Department spokesman Andrew Williams said in an interview.

New Chief Executive

GMAC asked Treasury in November to delay providing the third round of government aid as outlined in the stress tests until newly appointed Chief Executive Officer Michael Carpenter could assess the company’s needs. Carpenter replaced CEO Alvaro de Molina Nov. 16.

CreditSights’ Steer said it might make more sense for the government to make capital available to GMAC on an as-needed basis rather than forcing the lender to take more bailout funds.

“A more proactive way to deal with this is to make a capital line available to GMAC that it could draw on if it actually needs it rather than putting taxpayer money at risk right away,” Steer said.

The U.S. was considering an injection of $2.8 billion to $5.6 billion, people familiar with the matter said in October. Later that month, U.S. Treasury Secretary Timothy Geithner scaled back the estimate.

The federal government is the biggest owner of GMAC, with a 35.4 percent stake. The U.S. also controls General Motors, which holds a 9.9 percent stake. Cerberus Capital Management LP, the New York-based investment firm, holds 22 percent. GMAC doesn’t have publicly traded shares.

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The question now facing 56,000 auto workers, 3,600 GM dealers and the Obama administration: Will it work?

The government, which will own a majority of the company, is wagering upwards of $30 billion that it can return GM to profitability, reversing a decades-long decline by shearing away liabilities and creating a freshly competitive car maker by summer’s end.

And heres a new ad for Government Motors:

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5/31/09 – Michelle Malkin provided even more links to evidence of Shenanigans with the Chrysler dealership shutdowns today. First we have Zero Hedges, has info and states on the relationship between dealership survival and Clinton donor status – and the findings are significant! Doug Ross and Thomas Lamb have input.

Doug Ross releases the gory details, and it exposes Obama and his Chicago thug style politics being heaped on the auto industry. Heres what Ross wrote:

I took all dealer owners whose names appeared more than once in the list. And, of those who contributed to political campaigns, every single one had donated almost exclusively to GOP candidates. While this isn’t an exhaustive review, it does have some ominous implications if it can be verified.

Consider the partial list of Chrysler dealership owners, listed below. You’ll notice that all were opponents of Barack Obama, most through sponsorship of GOP candidates and organizations, but a handful through Barack’s Democrat rivals (Hillary Clinton and John Edwards in 2008, for example).

• Vernon G. Buchanan: $147,450 to GOP candidates and organizations
• Wallace D. Alley and Family: $4,500 to GOP.
• Robert Archer: $4,600 to GOP and conservative causes.
• Homer S. Higginbotham and Family: $2950 to GOP.
• James Auffenberg and Family: $28,000 to GOP; $6,000 to one Democrat candidate.
• Michael Maroone and Family: $60,000 to GOP; $8,500 to two Democrat candidates.
• Jerome Fader: $6,500 to Democrats; $2,500 to Independent Joe Lieberman.
• Stephen Fay and Family: $13,500 to GOP.
• William Numrich: $20,000 to GOP.
• Robert Carver: $10,000 to Democrats including $1,950 to Hillary Clinton, nothing to Barack Obama.

• Robert and Linda Rohrman: $24,000 to GOP.
• Frank Boucher, Jr. and Family: $18,000 to GOP, $1,000 to one Democrat candidate.
• Scott Bossier: $4,300 to GOP.
• Todd Reardon: $17,000 to GOP; $2,000 to one Democrat candidate.
• Russ Darrow and Family: $78,000 to GOP.
• Bradford Deery and Family: $24,700 to GOP.
• Charles Gabus and Family: $30,000 to GOP.
• Brian Smith: $15,500 to GOP.
• Michael Schlossman: $14,000 to GOP; $14,000 to three Democrats ($12,500 to Sen. Russ Feingold).
• Don Hill: $11,000 to GOP; $12,800 to conservative incumbent Rep. Heath Shuler.

• Don Miller: $2,000 to GOP; $1,000 to Feingold.
• Eddie Cordes: $2,150 to GOP.
• Robert Edwards: $1,100 to GOP.
• James Crowley: $19,100 to GOP.
• Stanley Graff: $2,200 to John Edwards (2008 Presidential Run); $500 to GOP.
• John Stewart: $10,500 to GOP.
• John Fitzgerald and Family: $4,600 to John McCain (2008); $2,000 to Hillary Clinton (2008); nothing to Barack Obama.
• William Churchill and Family: $3,500 to GOP.
• Thomas Ganley: $9.450 to GOP.
• Gary Miller: $20,000 to GOP.

• Kevin and Gene Beltz: $18,500 to GOP.
• Arthur Grayson: $14,000 to GOP.
• Eric Grubbs and Family: $26,000 to GOP.
• Michael Leep and Family: $19,500 to GOP; $4,800 to three Democrats including Sen. Evan Bayh.
• Harry Green, Jr.: $10,000 to GOP.
• Ronald Hoover: $5,250 to GOP.
• Ray Huffines and Family: $18,500 to GOP.
• John O. Stevenson: $1,500 to GOP.
• James Marsh: $8,200 to GOP.
• Max Pearson and Family: $112,000 to GOP.

Be sure to also check out Joey Smith and Free Republic and Red State regarding this.

Still not convinced that something is fishy? Gateway Pundit has even more on this. A Big Democrate Donor Group was ALLOWED to Keep Their 6 Chrysler Dealerships Open AND Their Local Competitors Eliminated!!

RLJ-McLarty-Landers is owned by three men.
One was the former Chief of Staff for President Clinton.
One is the founder of Black Entertainment Television and a huge Obama supporter.

More at Chrysler Dealership Shutdown site.

Update 5/27/2009 – WTF is going on here? After closing 789 Chrysler dealerships, now Automotive News is reporting that Chrysler is already looking to open new franchises after closing 789 dealerships. (h/t Gateway Pundit).

Furor grows over partisan car dealer closings by Mark Tapscott of the Washington Examiner

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