Behind the Wheel with Phil Lebeau

Proposed law tougher on botched auto recalls

In a move that is sure to be fought by the auto industry, Senator Claire McCaskill (D-Mo.) has introduced a bill that would call for much stiffer penalties for auto executives and companies that delay recalls. In one case, executives who fail to immediately initiate recalls that ended with fatal accidents could face up to life in prison.

"Painful recent examples at Toyota and GM have shown us we also must make it easier to hold accountable those who jeopardize consumers' safety," McCaskill said in a statement announcing a new automotive and highway safety bill. "With millions of Americans behind the wheel every day, and more than 33,000 killed on our roads each year, we've got to do more to keep our cars and the roads we drive them on safe."

Senator Claire McCaskill, a Democrat from Missouri, makes an opening statement during a Senate Consumer Protection, Product Safety, and Insurance subcommittee hearing with Mary Barra, chief executive officer of General Motors Co. (GM), not pictured, in Washington, D.C.
Andrew Harrer | Bloomberg | Getty Images

In addition to a possible life sentence for those cases of delayed recalls leading to a fatality, the bill would set a penalty of up to 15 years in prison for recalls that lead to serious bodily injury and up to five years for other cases.

Read MoreGM sued over deaths linked to ignition switch

The fine for auto companies delaying recalls would no longer be capped at a maximum of $35 million. Instead the potential fine would be raised from $5,000 to $25,000 for every vehicle involved in a delayed recall.

The Senate bill, which also calls for doubling the funding for the National Highway Traffic Safety Administration, is far from getting passed. Still, the call for auto executives to spend time in jail if they fail to move quickly initiating recalls is a move that will be hotly debated.

McCaskill led two senate hearings investigating the failure of General Motors to initiate recalls of 2.6 million vehicles. That recall of faulty ignition switches in six GM models has been linked with the death of at least 13 people and 54 accidents.

Read MoreDocuments show General Motors kept silent on fatal crashes

GM CFO: No cap on compensation program

The bill was introduced on the same day the GM victim compensation fund started accepting claims from those injured or the families of those killed in accidents involving GM models recalled for faulty ignition switches. The fund will be overseen by attorney Ken Feinberg and hopes to process claims in 90-180 days.

"This program is designed to provide swift compensation to eligible victims of ignition switch defects in certain GM vehicles," said Feinberg. "We will work closely with all individual claimants and their lawyers in evaluating individual claims and reaching a determination as to eligibility and value as soon as possible."

— By CNBC's Phil LeBeau

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