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GM to pay victims at least $400 million
(CNN) - The families of those killed and people injured in crashes involving the ignition switch can start filing for payments next month.
The problem with the ignition switch can cause the car to shut off while driving, disabling safety features such as air bags, anti-lock brakes and power steering. GM has admitted that its employees knew of the problem a decade before recalling 2.6 million cars earlier this year.
The automaker has been under fire from Congressional, Justice Department and federal safety regulators for the delay and could face criminal charges.
GM said it set aside $400 million in the second quarter to cover victims' payments. But it said Thursday in its quarterly results that because its compensation program does not have a cap, it might have to pay an additional $200 million in future quarters.
The company also set aside an additional $874 million in the quarter for the cost of repairing the record 30 million cars it has recalled so far this year.
The combined $1.3 billion in costs from recalls and victim compensation slashed company profits about 80% from a year ago. This is the second straight quarter that costs associated with recalls has essentially wiped out the company's profits.