GM to Set Aside $3 Billion for Claims on Ignition Flaw?

General Motors Co. appears likely to create a fund of as much as $3 billion to pay claims generated by its belated recall of nearly 2.6 million cars to replace defective ignition switches, according to Bloomberg News, which cites analysts.

The recall covers cars dating as far back as the 2003 model year. But GM is shielded by court order from product liabilities incurred before July 10, 2009, the day the current company was created out of the bankruptcy of "old" GM.

But many analysts say that, for the sake of its image and reputation, GM has little choice but to compensate all affected customers. The company has signaled a willingness to do so, stating earlier that in spite of the court shield, "Our principle has been to put the customer first."

Bloomberg says some analysts predict GM will announce a compensation fund ahead of testimony by CEO Mary Barra before Congressional committees on April 1 and 2.

GM has acknowledged it knew as early as 2001 that the switches could be jostled out of the "on" position by a bump in the road, a heavy keychain or contact with the driver's knee. But the company declined to issue a recall to fix the switch, which has been linked to 12 fatalities, until two months ago.