"We're not finished with Toyota," the federal transportation secretary said today, prompting a Wall Street Journal article reporting that "The Obama administration toughened its stance toward Toyota Motor Corp. on Tuesday, saying it is still reviewing possible safety defects in the company's vehicles and weighing other actions," including imposing civil penalties in connection with the supposed sudden acceleration problem. This is a perfect example of why it is a bad idea for the government to own or loan money to individual automakers. With Uncle Sam owning 60% of General Motors and also having loaned billions of dollars more to Tesla, Nissan, Ford and Fisker — all to compete with Toyota and its industry-leading hybrid motors — is the transportation secretary advancing a consumer safety interest or a government financial outcome interest? How can anyone know with any confidence? It's certainly a murky area. Some disclosures: I drive a Toyota not affected by the recall. I used to own some Toyota stock (the American Depositary Receipts traded on the New York Stock Exchange) but sold it a couple years back taking a small profit. I'm toying with the idea of buying some more of the stock if the scare associated with the recall drives the price down low enough, but it's not quite there yet. My parents drive a Toyota that is one of the models affected by the recall and have been driving it around without the "fix" installed, including, this past weekend, with my two kids in the back seat. I was an observer from a distance of the scare over sudden acceleration by Audis back in the late 1980s and tend to agree with Peter Huber that it was a phenomenon largely driven by the lead foot on the pedal being pressed by class-action trial lawyers.
Obama and Toyota