4
Why gov't regulators seem unprepared
National Highway Traffic Safety Administration logo
To view this content, Javascript must be enabled and Adobe Flash Player must be installed.
TEXT OF STORY
Kai Ryssdal: I don't know that James Lentz did himself any favors on Capitol Hill today. Mr. Lentz is the president of Toyota USA. And he spent this Tuesday at the witness table in front of the House Energy and Commerce Committee, at one point saying he's not sure all of Toyota's recalls will "totally solve" the problem its cars are having.
But while that item makes its way through the news cycle, let me ask you this: Have you noticed any similarities between the financial crisis and Toyota's current problems? In both cases, we've been told that government regulators didn't fully understand the systems and industries that they were supposed to be regulating. How come?
Well that's where we call our senior business correspondent Bob Moon.
BOB MOON: In the words of that great philosopher Stevie Wonder, "When you believe in things that you don't understand, then you suffer." When Mary Schapiro led the self-regulatory arm of NASDAQ a decade ago, she vowed not to accept things at face value.
MARY SCHAPIRO: This is about enabling the regulators in particular to have the tools that they need to keep up with the rapidly growing marketplace.
Today, Schapiro heads the Securities and Exchange Commission, and she's lamented that regulators didn't keep up with financial innovation.
Which sounds a lot like complaints lawmakers have been leveling at the National Highway Traffic Safety Administration. Never mind that cars have gone computerized -- the agency concedes it doesn't employ any electrical or software engineers. And one investigator's e-mail revealed he didn't really understand Toyota's high-tech braking system.
As Wake Forest University law professor Sid Shapiro sees it, the watchdogs -- financial or automotive -- ought to be pointing right back at Congress.
SID SHAPIRO: These agencies don't have that much money. In absolute terms, of course, they have millions of dollars, and it looks pretty big to the average person. But compared to their responsibilities, they're underfunded, because Congress has been nickel and diming them.
Shapiro says the same argument that followed the financial meltdown applies to the auto regulators. The government was penny wise and pound foolish.
SHAPIRO: When we total up the amount of financial carnage this is going to cost consumers, Toyota, to say nothing of the poor people who have been injured and killed, it's hundreds of millions of dollars. And a small investment to make sure that they have the top scientists and the engineers they need strikes me as a pretty good investment.
Some experts say regulators can't be expected to predict every innovation. So, they say, it's understandable they often find themselves playing catch up.
I'm Bob Moon for Marketplace.
It is and has been GOP Party Platform and practice NOT to regulate corporations, and they did their job excellently. If you don't understand the context in which events happen, you won't understand why they happen. Politicians pay back those who pay them and the American public's tax-based salary/benefits system cannot compete with corporate funding. You don't really think the US electorate controls this faux-democracy!
Over the past 30 years, the move has been toward less regulation in/of business. The idea was that market forces would curb bad actors – if a company produced an unsafe or bad product, consumers would vote with their feet, and the company would be punished by losing market share. Regulatory agencies, as Prof. Sid Shaprio pointed out, had their budgets slashed. But we now know that by the time consumers become aware of the dangerous behavior or lethal product, it may be too late. Enron, toxic asset derivatives, faulty accelerators – all have caused millions of dollars more in damage to peoples lives and net worth than the few million it would have cost to adequately fund what regulatory agencies were still allowed to regulate. These events also prove the fallacy of the self-policing market. How many more must die or be made bankrupt before the government admits that “buyer beware†just isn’t cutting it?
While I listen to a Lexus owner tell Congress she shifted her car into Reverse, and then it accelerated to 100mph without blowing the engine apart...I wonder, why do stories such as your's, not point out how much the Bush Administration cut back on regulation?
Toyota claims go back to 2007, and its proven fact, the Bush Administration was cutting back on regulation. Even when Senator Shelby offered one regulator more money to do more regulating, he famously said, uh, no thank you, we don't want the money.
Let's take a closer look at how such deregulation is costing Toyota NOW, and maybe in future sales lost.
The two cases are also parallel examples of selective reporting. Other auto-makers, in particular those now owned by the federal government, have had much more serious safety problems recently, but those haven't prompted weeks of news coverage. And most news outlets, including your program, for the most part tried to tilt things as negatively as possible, even making up scandals out of whole cloth, whenever the Bush presidency was even tangentially involved, and are trying to tilt things as positively as possible, even papering over the most egregiously scandalous stories, whenever Obama is even remotely related to the story.
