Inspired By Quadrangle Scandal, Republicans Call For Investigation Into Rattner's Delphi Dealings

When former auto task force boss Steve Rattner’s former firm Quadrangle recently settled a “pay-to-play” corruption investigation, it threw Rattner under the bus, saying:

We wholly disavow the conduct engaged in by Steve Rattner, who hired the New York State Comptroller’s political consultant, Hank Morris, to arrange an investment from the New York State Common Retirement Fund. It is our understanding that Mr. Rattner also arranged a DVD distribution deal for a movie produced by the Chief Investment Officer’s brother in the middle of the investment decision-making process. That conduct was inappropriate, wrong, and unethical. Mr. Rattner is no longer with the firm and is not a part of today’s settlement. Quadrangle will fully cooperate in the Attorney General’s ongoing investigation of Mr. Rattner and others.

According to the DetN, that stinging indictment by Rattner’s former firm has inspired House Republicans to call for an investigation into whether Rattner was behind a deal in which some Delphi retirees lost their pensions while others didn’t.

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Draft Safety Legislation: $3-$9 New Car Sale Fee, Unlimited Defect Fines, Mandatory Pedal Distances, More

The Detroit Free Press got its hands on draft auto safety legislation drawn up by Senators Waxman and Rockefeller, and aimed at preventing another Toyota recall-style scandal. In addition to mandating brake override systems on all cars sold in the US, The Freep says the bill would require that

[NHTSA] come up with rules for space between the brake and accelerator pedals, gear shift designs and stop-start systems – all problems highlighted by the Toyota probe. Automakers would be required to build vehicles with event data recorders that could be easily read, a step Detroit automakers made several years ago but that Toyota and other foreign brands have resisted.

Despite the Freep’s attempt at making the bill sound like it’s only going to affect Toyota and other non-Detroit automakers, there is plenty in the proposed legislation that could hurt any automaker.

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Senate Moves On Auto Safety, NHTSA "Revolving Door" Legislation, Stands Firm On Dealer Finance Oversight

The Treasury may be standing by GM’s “payback” claims, but the Congress hasn’t exactly been looking for ways to do the auto industry any favors. In fact, a toxic brew of political fallout from the financial crisis, auto bailout, and Toyota recall scandal has seems to have inspired a backlash against the industry that came to a head this week in the US Senate. Legislation has been introduced that would prevent NHTSA officials from taking jobs with automakers for up to three years after they leave the agency, and yet more is being drafted which could require a vast array of standard safety equipment on all cars sold in the US and could even add a federal fee to new car sales. Adding insult to injury, a much-hoped for exception to dealer financing oversight in the new financial reform bill appears to have fallen victim to Senate negotiations. Did nobody tell the old guys that they’re investors in the auto industry?

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Treasury: GM "Payback" Claims Not Misleading

In response to Senator Chuck Grassley’s concern that GM’s claim to have paid back taxpayer loans was misleading, the US Treasury is now saying that it has no problem with The General’s statements. According to the Freep, a Treasury letter to Grassley explains that:

GM’s decision to pay off the loan signaled the automaker did not face “extraordinary expenses,” and that Treasury approved the loan payoff.

“The fact that GM made the determination and repaid the remaining $4.7 billion to the U.S. government now is good news for the company, our investment and the American people,” said Herbert Allison, assistant Treasury secretary for financial stability.

Strictly speaking, GM’s claim to have paid back all US Government loans is correct. The only issue is that GM’s ad touting the payback makes no reference to the fact that it still owes the Treasury upwards of $40b. If that misleads folks, well, apparently the Treasury Department isn’t going to do anything about it.

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Auto Bailout "Progress" Defined: "Only" $28b in TARP Losses

Last week’s announcement that had Chrysler turned a Q1 profit and GM had “repaid” taxpayer loans brought a flurry of political posturing about the success or lack thereof of the auto bailout. With Republicans laying into the auto bailout from several angles, President Obama dedicated his weekly address to a defense of industry assistance. Obama still frames the bailout as an unpleasant necessity, but argues that last week’s news means the chances that taxpayers will recoup their “investment” are improving. And apparently the Treasury agrees. According to the Detroit News, Treasury has revised its estimate of auto bailout losses (not counting GMAC) downwards, from $30.6b to $28b. Progress, sure, but hardly a sign that taxpayers can expect full payback from its state-owned automakers.

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GOP Reps: Did The White House Pressure State-Owned Automakers Into Accepting GHG Standards?

With Senator Chuck Grassley (R-IA) already taking the White House and Treasury to task for possibly helping GM avoid paying the “TARP Tax,” Republican representatives Darrell Issa (R-CA) and Lamar Smith (R-TX) are attacking the auto bailout from another angle, writing a letter to nine automaker CEOs requesting clarification of the negotiating process that led to recently-passed final rules on a ramp-up of greenhouse gas (GHG) emissions standards. In their press release on the issue, Issa and Smith note:

It is unclear whether the Administration used leverage created by the possibility of a taxpayer bailout of GM and Chrysler to secure their cooperation and support for new fuel economy standards. Moreover, there is reason to believe Administration officials used inappropriate tactics to ensure broad based support across the industry. Given the clear conflict-of-interest issues at play, which naturally arise when the government is in a position to pick winners and losers and impact the future viability of private entities, it was imperative that the Administration act with the utmost transparency. Instead, the White House imposed an unprecedented level of secrecy.

Are Issa and Smith on to something, or is this simply a partisan dogpile on an unpopular policy? Hey, this is politics… does it even matter?

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Grassley: Was GM's "Payback" Shuffle About Avoiding The TARP Tax?

While the White House and most of the media spent the last two days parroting GM’s claim that it “paid back” taxpayers, Senator Chuck Grassley was busy writing a letter to the Secretary of the Treasury [ letter available in PDF here]. The three-page note opens:

Dear Secretary Geithner:

General Motors (GM) yesterday announced that it repaid its TARP loans. I am concerned, however, that this announcement is not what it seems. In fact, it appears to be
nothing more than an elaborate TARP money shuffle.

No surprises there: TTAC has been all over this ruse for months now. Grassley does sum the situation up nicely, stating that “A debt-for-equity swap is not a repayment,” but the most interesting part of his letter is his theory for why GM and the Administration approved the tax-money reshuffle. Thus far, we’ve assumed that PR was the driving concern in this transparent deception. According to Grassley though, there may be another reason…

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Toyota Lobbying Spend Drops During Recall Crisis
You might think that, when confronted with its first major quality crisis, Toyota would have responded by upping its spending on DC lobbying. After all, when…
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Toyota Heading For The Hill, Again

Toyota received another invitation to join a little congressional chit-chat, reports The Nikkei [sub]. On May 6th, a U.S. House panel will hold a hearing to “further examine Toyota’s inquiry into potential electronic causes of sudden unintended acceleration,” as the invitation letter from Henry Waxman to James Lentz, president of Toyota U.S. says. The presence of Lentz is requested at the hearing.

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Senator Investigating The Death Of HUMMER

HUMMER fans have a new champion in Illinois Senator Roland Burris, who has agreed to investigate GM’s shutdown of the SUV brand according to Hummerguy.net. Attempts to keep the HUMMER brand alive are being fielded by Capital & Labor International Coalition, a recently-founded fund management firm created by Thane Ritchie, founder of Ritchie Capital Management, as well as failed HUMMER bidder Raser Technologies and The Electric Motor Corporation. According to Hummerguy,

CLIC is hoping for an “acquisition by coalition,” which would involve cooperation with private capital and U.A.W. resources. Union representatives from both HUMMER production facilities were on hand to hear the plan and are running the idea up the chain of command to the International U.A.W..

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Pentagon Backs Dealer Finance Regulation,

Funny or Die’s Presidential Reunion from Will Ferrell

Remember when we reported that the cash cow known as in-house dealer finance wouldn’t be covered by the Consumer Financial Protection Act, currently making its way through congressional committees? That version of the bill passed the House Financial Services Committee (with some questionable support), but now Automotive News [sub] reports that the Senate Banking Committee has passed its own version which does make dealer finance subject to regulation by the Consumer Financial Protection Bureau. The Senate version would also make the CFPB an office of the Federal Reserve, rather than a stand-alone agency. So, should an agency set up to prevent another financial crisis extend regulation to dealer finance operations? Dealers aren’t happy about the idea, but traditional consumer advocates aren’t the only ones saying yes…

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Quote Of The Day: Live By The Politics, Die By The Politics Edition
Chrysler Group understands that the practice at this time may be a cause of concern among policymakers and among arbitrating dealers. As a measure of good fa…
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The UAW: As Green As We Need To Be

The Detroit News reports that the United Auto Workers are gearing up for battle for a surprising new cause: greenhouse gas emissions standards. Alan Reuther, Legislative Director of the newly-green union, wrote congress recently to warn against a bill authored by Sen. Lisa Murkowski which would prevent the EPA from declaring C02 a danger to public health, saying:

The UAW also is deeply concerned that overturning EPA’s endangerment finding would unravel the historic agreement on one national standard for fuel economy and greenhouse gas emissions for light-duty vehicles that was negotiated by the Obama administration last year

Not, however, because of the threat of global climate change. Who needs to worry about that when you’re health care fund is tied up in two teetering nightmares that need IPO-ing quick-fast?
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The Sikes Aftermath: Lead Balloon Boy Going Down

A few days ago, James Sikes and his runaway Prius was all over news. Until we mentioned that something is fishy. Sikes’ driving skills were put in question. Stories about a wife swapping website emerged. Stories about bankruptcy. Stories about an unpaid lease on the Prius. And sundry other stories. Quickly, Sikes turned into Balloon Boy 2.0

Michael Fumento, director of the Independent Journalism Project, went on Neil Cavuto’s show on Fox Business and said: “It appears that everybody on planet earth suspected that there was something horribly wrong with this picture – except for the national media. The real hoax wasn’t James Sikes, it was in fact our press.”

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Congress: The GMAC Bailout Might Have Been A Bad Idea

After three separate bailouts totaling over $17b, Congress is beginning to wonder if keeping auto-finance giant GMAC alive was worth it. Forbes reports that the Congressional Oversight Panel reckons at least $6.3b of that money could be gone forever, as GMAC flounders towards barely breaking even. And like the rest of the bailouts, the fundamental problem is that the influx of federal cash has allowed GMAC to pretend like it’s not struggling for survival. The panel report [ full document in PDF format here] notes [via Automotive News [sub]]

Treasury’s previous and current support is not underpinned by a mature business plan. Although GMAC and Treasury are working to produce a business plan, Treasury has already been supporting GMAC for over a year despite the plan’s absence. Given industry skepticism about GMAC’s path to profitability and the newness of the non-captive financing company model, it is critical that Treasury be given an opportunity to review concrete plans from GMAC as soon as possible.

Sound familiar?

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GM Dealer Reinstatement Puts Pressure On Chrysler

GM’s recent reinstatement of 661 culled dealers has put pressure back on Chrysler to come to arrangement with the dealers it shed during last year’s bankruptcy and bailout. Rep. Chris VanHollen, the sixth ranking Democrat in the House or Representatives, tells Automotive News [sub] that with GM buckling to dealer pressure, the time has come for Chrysler to follow suit. “There’s no quicker or easier way to build this network than to reinstate its terminated car dealerships,” says VanHollen, who drafted much of congress’s dealer arbitration legislation. The Committee to Restore Dealer Rights contacted Chrysler CEO Sergio Marchionne “to discuss the reinstatement of the rejected dealers who had their franchises so abruptly taken and were unfairly terminated.” The response?

We believe that all communications concerning the subject matter of the arbitration should be between counsel and request that your clients follow this procedure in the future. Please ask them not to send such communications to Mr. Marchionne or any other Chrysler personnel.

Oh snap! Chrysler isn’t going down without a fight… even if that means taking on the representatives who have oversight of the government’s eight percent stake in the automaker.

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Toyoda Reports Back To His Prime Minister

Back from his hibachi-tour to the hill, and a trip to China, Akio Toyoda this afternoon paid his respects to Japan’s Transport Minister Seiji Maehara, to Economy Minister Masayuki Naoshima, and to the man himself, Prime Minister Yukio Hatoyama. And what a difference it was compared to the enhanced interrogation in Washington.

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Gilbert's Toyota Shenanigans Explained

This is left brain – right brain weekend. While the more image driven can submerge themselves in pictures of old car ads, the other faction can unleash their inner nerd with abandon. Yesterday, we covered how ABC had entered the grail of automotive disaster-fakery, previously populated by NBC and CBS. ABC’s smoking gun video had been torn to shreds.

Today, we turn our attention to the man who aided and abetted the tricksters: Associate professor David Gilbert of the renowned Southern Illinois University. His work has been inspected by Exponent, a research company hired by Toyota. Hired by Toyota? Well, that should discredit Exponent immediately. Not so fast.

Crash Sled thankfully has found a full copy of Exponent’s retort to Gilbert’s machinations. The report is hosted on the ABC website, so we can assume it passed ABC’s scrutiny, for what that may be worth. Let’s look at the report a little closer.

Warning: This discussion needs a basic understanding of electric circuitry. If that’s not your thing, then don’t waste you time reading further. We’ll leave you to Sunday’s pictures with the message that Gilbert is a charlatan extraordinaire, and that whoever put him on the stand to make a case against Toyota needs to have his or her head examined. However, should you own a 2010 Toyota Avalon, then you have slight cause for concern.

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Toyota Discredits Gilbert. Gawker Calls Brian Ross A Faker

Last week, Professor David W. Gilbert testified at a house hearing and said he had replicated the unintended sudden acceleration in Toyota’s vehicles. Toyota, and their testing lab Exponent tried Gilberts method and said he was right. “But Toyota said it also created the same response in vehicles made by competitors, which it said rendered Mr. Gilbert’s findings misleading,” writes the Washington Post.

In a statement, Toyota says: “The analysis of Professor’s Gilbert’s demonstration establishes that he has reengineered and rewired the signals from the accelerator pedal. This rewired circuit is highly unlikely to occur naturally and can only be contrived in a laboratory. There is no evidence to suggest that this highly unlikely scenario has ever occurred in the real world. As shown in the Exponent and Toyota evaluations, with such artificial modifications, similar results can be obtained in other vehicles. “ When Exponent applied Gilbert’s test to five models, including a Honda Accord and a BMW 325i, all five vehicles reacted similarly.

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Many NHTSA Complaints Unverifiable

Just as Paul Niedermeyer, Edmunds, Consumer Reports or anybody else who has the time to download and analyze 103.1 Mbytes worth of customer complaints to NHTSA, Toyota is pouring over the data. However, their attempts are being thoroughly frustrated.

According to The Nikkei [sub], Toyota found out that oftentimes complaints submitted to the NHTSA “either are unverifiable or lack vehicle-owner information required to facilitate follow-up.” In other words, a lot of the complaints look like they are bogus. Even if they are real, their validity cannot be ascertained.

And herein lies the rub:

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GM Reinstates 661 Culled Dealers

Apparently eager to avoid uncertainties of the Congressional-mandated arbitration, GM announced that 661 of its 1,160 terminated dealers that sought arbitration would be back in business pronto. Automotive News quotes GM North America President Mark Reuss: We are eager to restore relationships with our dealers, and get back to doing what we do best — selling cars and taking care of customers,” “The arbitration process creates uncertainty in the market. We believe issuing these Letters of Intent is good for our customers, our dealers and GM.”

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Biller Secret Toyota Documents "Published Material"; Pissing Match Breaks Out In Congress

Instead of solving the truly pressing needs of the land, Republicans and Democrats are publicly squabbling over the relevance and veracity of the Biller “smoking gun” documents that claim to prove that Toyota hid safety problems. U.S. Rep. Edolphus Towns, D-N.Y., chairman of the House Oversight and Government Reform Committee, sent a letter on Feb. 26 to Yoshimi Inaba, president and chief executive officer of Toyota Motor North America Inc., that said the documents provided “evidence that Toyota deliberately withheld relevant electronic records that it was legally required to produce” in lawsuits. Towns went on to say that the documents “shed some light on Toyota’s handling of the sudden unintended acceleration problem” and “indicate a systematic disregard for the law. Not so, says U.S. Rep. Darrell Issa, R-California. And he has a smoking gun of his own:

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Dealers, Lawmakers Bash Chrysler For Opening New Stores Near Culled Dealerships

Chrysler’s troubled relations with its dealers took another turn for the nasty this week, as culled dealers teamed up with lawmakers to criticize Chrysler’s decision to open new dealerships near the sites of several culled dealers. As with GM’s dealer struggles, this latest controversy centers around Colorado, where culled dealers are protesting Chrysler’s behavior in the Denver Post. Culled dealers have seen franchises in their former areas awarded to chains like AutoNation before congressionally-mandated arbitration had even given them the opportunity to contest their culling during last year’s bankruptcy proceedings. “This is not right,” said one dealer. “We specifically asked (Chrysler) not to redistribute the franchise before our arbitration.”

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Korea: Washington Is Picking On Toyota

According to popular wisdom, the Koreans have no love lost for the Japanese. And likewise. What’s more, Koreans and Japanese car makers are bitter competitors for foreign market share. So wouldn’t it stand to reason that Korea would jump on the “down with Toyota” bandwagon with their 96 million feet? Just the opposite is true.

The Chosun Iibo, according to Wikipedia “one of the major newspapers in South Korea,” takes the position that Toyota could very well be “a scapegoat for U.S.-Japan squabbling.”

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Congress Backs Away From Biller
Yesterday I asked our Best and Brightest if congress should hear testimony from former Toyota lawyer Dimitrios Biller. The lack of unqualified endorsements m…
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The Eternal Quest To Explain The Unknown

A quiet Sunday. Time to fire up Google and put in “ Toyota AND [cause OR reason].” We come up with ample explanations why Toyota is not called Toyoda. Or why Peiping turned into Peking, and then into Beijing. What about the causes of sudden acceleration? Let’s see what we find. (If you have other things to do on a Sunday: We find a lot of questions and no answers.)

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NHTSA: Congressional Blocking Of EPA GH Gas Rules May Backfire

The Obama Administration warns that automakers could be hit with unintended acceleration of their costs if Congress succeeds in blocking EPA greenhouse gas emissions. The Detroit News reports:

In a letter to congressional leaders, the National Highway Traffic Safety Administration’s chief counsel, O. Kevin Vincent, said Congress would jeopardize a deal reached by automakers, California and the White House if it blocks the EPA from using its power to limit greenhouse gases.

California and a dozen states could go forward, each with its own rules, if Congress blocks EPA from setting national standards. That would have the impact of “creating confusion, encouraging renewed litigation, and driving up the cost of compliance to automobile manufacturers and consumers alike,” Vincent wrote.

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Barney Frank: Ed Whitacre Is Overpaid, But What Are You Gonna Do?

It’s been over ten days since GM’s Bob Lutz took to the local papers to complain that GM’s executives are “way, way, way underpaid,” and its still been less than a week since Ed Whitacre’s $9m compensation package was announced but politicians are only now starting to sit up and take notice. Barney Frank (D-MA) can usually be counted on to give greedy CEOs a good dressing-down, but at this point, Mama Frank seems to have given up on the government-owned automaker’s execs. The Detroit News reports Frank’s mild disappointment thusly:

“I don’t think Mr. Whitacre was going to go do something else” if he got paid less, Frank told reporters this afternoon after a hearing. “He’s having a good time there. I think they way overcompensate themselves.”

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An Interrogation - Tales Of Terror From Toyota City Volume 3

No politician worthy of your vote will pass up on the chance of publicly bashing the heads of foreign corporate types with deep pockets. And so, the Senate will convene its Committee on Commerce, Science and Transportation next Tuesday. They will repeat this week’s grilling until perfectly good Kobe steak is well done and reduced to dog food.

Tuesday’s cast will consist of familiar faces: Ray LaHood will again “go into the weeds” and hold Toyota’s “feet to the fire” until all cars – well, at least those of Toyota, will be “100 percent safe.”

Smooth Yoshimi Inaba, Prez. of Toyota Motor North America will bring his baritone to bear. The congress casting crew was obviously dissatisfied with Akio Toyoda playing the role of the duplicitous villain. He will not be called and can (phew…) go home to Toyota City.

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War Against Toyota Is Devouring Its Own Children

The Toyota witch hunt inquiry is beginning to show its surely unintended effects – on American jobs, businesses, and lest we forget, tax revenue.

Toyota has notified its major parts suppliers that its North American production for the February-April period is expected to reach roughly 350,000 units, around 20 percent lower than the number originally planned for in January, The Nikkei [sub] reports this morning in Tokyo.

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Rep. Souder And The Denso Distraction

News that the FBI had raided three Japanese supplier companies in the Detroit area came in the middle of yesterday’s epic Toyota hearings, adding to the day’s chaos and misinformation. The FBI said clearly at the time that Denso, Tokai Riko and Yazaki were raided as part of an antitrust investigation, which we now know [via Reuters] involves alleged cartel activities in the wiring harness supply market, and involves European firms like France’s Leoni as well. Despite the fact that Denso and Yazaki are cooperating with investigators, and that the US raids appear to be in support of an EU investigation, Rep Mark Souder (R-IN) took the opportunity to connect the Denso raid with the Toyota recall hearings in shameless style. And all to help clear the name of the US-based supplier CTS, which has been blamed for the sticky pedal recall, which just so happens to be in Rep. Souder’s district. Full, mind-blowing quote after the jump.

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Japanese Reaction To The DC Kabuki: "Eeeh..."

Japanese reaction to the kabuki dance is muted. From the Asahi Shimbun to the Mainichi Shimbun, all papers refrain from any criticism of either side. Except for the occasional “Japan-bashing” comments by readers, officially everybody is carefully sidestepping that trap. Just as Toyoda did during yesterday’s grilling on the hill, when he said that Toyota is being treated fairly in the U.S., contrary to what his wrenching gut said.

Japan’s transport minister Seiji Maehara was likewise diplomatic. He said Thursday he is satisfied with the testimony, reports the The Nikkei [sub]: “As a Japanese and U.S. company, I hope Toyota will ensure accountability and will make efforts to regain the trust of customers.”

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Quote(s) Of The Day: Bookends Edition

QOTD is a fairly irregular exercise for us, but we’d be remiss if we didn’t dust it off for today’s marathon hearings before the House Oversight and Government Reform Committee. Needless to say, the ten-ish hour affair offered too rich a bounty of choice quotes to properly choose just one. And so we have two: the first and one of the last quotes of the day’s proceedings. The day opened with the following words from Chairman Edolphus Towns:

Good morning. I thank you all for being here. It is hard to imagine the horror of the event that took the lives of an entire family near San Diego, California on August the 28th, 2009. California highway patrolman, Mark Saylor, his wife, their 13 yr old daughter, and Mrs Saylor’s brother, Chris, were driving in a Toyota Lexus, a loaner car that the Toyota dealer provided while their car was being repaired. As they drove along the highway, suddenly the car… accelerating [sic] rapidly, he stood on the brakes, but nothing happened. No matter what he did, he could not stop the car from flying down the road, faster and faster. As this car reached top speed in just seconds, it was all he could do just to kep it under control. In a frantic call to 911, his brother-in-law, Chris, reported the gas pedal was stuck, the brakes did not work, and they were barreling down on an intersection. He yelled over the phone “hold one, hold on, hold on and pray. And those were his last words.”

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The Toyota Testimony, Day One: A Comedy In Three Parts: Part Three: The Inevitable Punchline

After a big buildup by expert witnesses, and Toyota’s Jim Lentz’s evasion of any evidence that his firm’s cars are afflicted with an untraceable electronic gremlin, the House Energy Committe turned its attention to Secretary of Transportation Ray LaHood. Because LaHood’s department falls under the congress’s oversight (and carries the government’s ultimate responsibility for the safety of American motorists), LaHood might well have been the main focus of the committee’s investigation. And indeed his last-in-line billing appears to make him the event’s headliner. Or at least it would have if his testimony didn’t make the previous several hours of Ahab-ing largely unnecessary, and possibly even highly embarrassing.

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Toyota Testimony, Day One: A Comedy In Three Parts: Act Two: The White Whale

Toyota’s Jim Lentz (who, I’m obligated to share, bears a striking resemblance to the dad from “Teen Wolf”) spent nearly two and a half hours before a committee that by then was investigating what expert witnesses described as an unknown, untraceable electronics error of nearly limitless reach. With this white whale taking the foreground of the committee’s imagination, the committee sharpened its harpoons, licked its lips and sailed out upon uncertain seas in search of its elusive quarry.

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The Toyota Testimony, Day One: A Comedy In Three Parts: Act One: The Expert Evidence

It’s been nearly a year since the automotive industry has been treated to a must-watch DC hearing. The last time around, when the executives of America’s automakers went begging to congress for multi-billion dollar bailouts, hearings were heated and combative. Though liberally sprinkled with irony and comedic ignorance, those hearings were, at their heart, a traditional partisan stand-off. But bailouts are also a relatively cut-and-dried topic: you either support them for solid political reasons, or you oppose them for equally solid, equally political reasons. But faced with a national bogeyman of legendary mystery, the lurking terror of unintended acceleration, congress’s task was more complicated than the bailout’s do-we-or-don’t-we dilemma. Tasked with uncovering the truth behind a complex technical problem, is it any wonder that yesterday’s hearings before the House Energy Committee took a turn for the strangely hilarious? [Editor’s note: full prepared statements from all witnesses are available in PDF format here full video of all of yesterday’s testimony is available at CSPAN]

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Obama Will Take Away Your Porsche, Take Two

When we reported a few days ago that Porsche would have serious trouble complying with the upcoming CAFE rules, and that the existence of Porsches on American roads may be in danger after 2016, the majority of the commentariat exploded: “Unbelievable!”

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Akio Toyoda's Prepared Statement
Toyota CEO Akio Toyoda will give the following prepared statement in his testimony before the House Oversight Committee tomorrow [via WOKV].

Thank you Chairman Towns.

I am Akio Toyoda of Toyota Motor Corporation. I would first like to state that I love cars as much as anyone, and I love Toyota as much as anyone. I take the utmost pleasure in offering vehicles that our customers love, and I know that Toyota’s 200,000 team members, dealers, and suppliers across America feel the same way. However, in the past few months, our customers have started to feel uncertain about the safety of Toyota’s vehicles, and I take full responsibility for that. Today, I would like to explain to the American people, as well as our customers in the U.S. and around the world, how seriously Toyota takes the quality and safety of its vehicles. I would like to express my appreciation to Chairman Towns and Ranking Member Issa, as well as the members of the House Oversight and Government Reform Committee, for giving me this opportunity to express my thoughts today.

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Toyota Hearings Begin Today
The House Energy and Commerce Committee kicks off the week’s Toyota-related festivities on Capitol Hill today, with the first round of hearings schedul…
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Leaked Toyota Documents Ensure Feisty Congressional Hearings

Ah, political spectacle. When Detroit’s CEOs took the stand at congressional hearings over a year ago, the main browbeating bullet point wasn’t the decades of mismanagement and greed, but the fact that Messrs. Wagoner, Mullaly and Nardelli had taken separate corporate jets to the festivities. The lesson: convenient focal points for anger always trump the complexity of a substantive dressing-down. And as congress gears up to grill Toyota’s CEO, the Japanese automaker has given congress just the thing to sharpen its collective knife against: an honest opinion. One document [via Politico PDF here] briefing Toyota USA boss Yoshi Inaba for the hearings, reveals that Toyota believe the current administration is “activist” and that “not industry-friendly.” True or false, this document sets up an adversarial relationship between Toyota and the majority party going into the hearings. Which would be bad enough if Toyota hadn’t also handed over evidence, already leaked by the Oversight committee, indicating that it balances recall costs against risks and lobbies the government in its own interest. On its own, this evidence might be merely embarrassing, but having slighted the Democrats, news that Toyota treats recalls like a business has become prima facie evidence in the (increasingly political) case against the Japanese automaker.

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Toyota: New State Farm Disclosures Trigger Accusations Of Lackadaisical NHTSA

Akio Toyoda is spending the weekend in Japan, being prepped for his appearance in front of the modern day version of the tribunal of the Spanish Inquisition, better known as a Congressional Hearing.

According to Reuters, and as suggested by TTAC, Toyoda “is likely to undergo intense preparation. Toyota may hire lawyers to drill him with mock questions, one consultant said. A company source said it had not yet been decided whether Toyoda would speak in Japanese or English, but the company has already contacted some translation companies.”

The weekend drill was interrupted by the news that State Farm had informed the NHTSA as early as February 27, 2004, that the insurance company had five claims of unwanted acceleration in the 2002 Lexus ES 300 during the previous 12 months. Reuters broke the story, writing “the insurer said earlier this month it had contacted the National Highway Traffic Safety Administration in late 2007. However, prompted by the public interest in Toyota, the insurer reviewed its records again and has now found that it contacted safety regulators initially in 2004.” All hell broke loose …

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Recipes For The Toyota Grill Party On Capitol Hill

Akio Toyoda is getting a crash course in cross-cultural studies, while he is preparing for his appearance on The Hill this coming Wednesday. Toyota already uncovered the time-tested Washington axiom: “We will fight it tooth and nail, but if we can’t stop it, we might as well dress for it.”

Saturday morning’s Nikkei [sub] greets its readers with the message that “Akio Toyoda’s appearance before Congress on Wednesday could be a chance for the embattled automaker to win back consumer trust in the U.S.”

Hedging a risky bet, the Nikkei adds: “But a poor performance could further undermine its reputation.” To avoid the latter, Toyoda is preparing to counter a three-pronged attack.

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Honestly Now: Mr. Toyoda Goes To Washington. So Will Biller And His Files

This was a rough night and day for Akio Toyoda, chief of the fishtailing Toyota. At around midnight, Tokyo time, the news reached Toyoda-sama that the Honorable Edolphus Towns (D., N.Y.), chairman of the House Oversight and Government Reform Committee, had formally invited him for a visit on the hill.

This had followed a Japanese version of the “he loves me – he loves me not – he loves me.” It was made even more interesting by the botanical truism that the cherry blossom only has five petals to pick. Here, the chronicle of the deflowering …

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Quote Of The Day: Or Else… Edition

There is widespread public concern regarding reports of sudden unintended acceleration in Toyota motor vehicles. There appears to be growing public confusion regarding which vehicles may be affected and how people should respond. In short, the public is unsure as to what exactly the problem is, whether it is safe to drive their cars, or what they should do about it. To help clarify this situation, I am inviting you to testify…

House Oversight Committee Chair Edolphus Towns invites Akio Toyoda down to DC for an evening of under-oath testimony and light refreshments. According to the NY Times, Toyoda has said he “would consider” dancing the Potomac two-step “if he receives a formal invitation, which none of the committees have issued.” Consider yourself officially invited, Mr Toyoda. We’ll start making the popcorn.

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Outrage! NHTSA, Republicans And Gore Family Revealed As Closet Prius Drivers

Everybody promised this would not be a repeat of the Japan bashing of the 80s. But when the DetN starts outing lawmakers and administrators in DC for driving Toyotas, then it’s open season. Let them dawgs out …

“The vaunted Toyota Prius is everywhere in Washington,” reports the breathless Detroit News after exhaustive traffic analysis.

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Japan's Ambassador Asks LaHood For "Level Headed Response"

Public and politicians in Japan are not enthused about Toyota’s latest utterings, especially at yesterday’s news conference. “At home, fiercely loyal Japanese drivers are wondering how a firm with a deserved reputation for quality and reliability could allow substandard vehicles to slip through its vaunted quality-control apparatus,” reports the Christian Science Monitor from Toyko. The natives are getting restless …

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Akio Toyoda Getting Ready For A DC Grilling

Toyota’s president Akio Toyoda was already getting ready to “visit the United States over massive recalls of its vehicles,” reported the Nikkei [sub]. Japan’s transport minister Seiji Maehara told U.S. Ambassador to Japan John Roos that Toyoda would be dispatched to DC. There, he would be ready to “explain the recall problems to the U.S. Congress if asked.”

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Toyota Hearing Delayed As Investigation Widens
The House Oversight and Government Reform Committee will have to wait two more weeks to gets its claws into Toyota, as heavy weather has postponed hearings s…
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As Hearings Loom, Toyota And Congress Gear Up For Battle

Toyota heads up to Capital Hill tomorrow to face the ire of the U.S. House Committee on Oversight and Government Reform in a hearing that’s been subtly named “Toyota Gas Pedals: Is the Public at Risk?” A memo by committee staff [via the WSJ] sets a paranoid tone for the hearing, as the NHTSA investigation widens beyond gas pedals alone:

Attention is now being focused on the electronic throttle control system (ETC) to determine whether sudden acceleration may be attributable to a software design problem or perhaps to electromagnetic interference. The committee staff found numerous complaints made to NHTSA describing sudden acceleration that was not caused by either floor mats or sticky pedals.

Toyota’s Yoshi Inaba will face the brunt of the questioning, although Transportation Secretary Ray LaHood and NHTSA administrator David Strickland will surely face questions about their oversight of Toyota (or lack thereof).

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Quote Of The Day: "We're Not Finished With Toyota."

“We’re not finished with Toyota,” said Transportation Secretary Ray LaHood in an e-mailed statement to Reuters. Bad choice of words? Doesn’t that sound a tad vengeful? If a 900 lbs gorilla barks “I’m not through with you” at me, then I’m very afraid. Toyota should be too.

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House Launches Toyota Investigation, Hearings Scheduled

Staff from the House Energy and Commerce Committee met with representatives from Toyota yesterday, reports Automotive News [sub], as Congress wades into the Toyota recall debacle. According to a letter from the Energy and Commerce Committee to NHTSA administrator David Strickland and Toyota North America Boss Yoshimi Inaba [letters available in PDF format here], the discussions with Toyota were characterized as “helpful,” but that “it left important questions unanswered, including when Toyota learned about this serious safety defect and what actions the company took to investigate and resolve the hazard.” Hearings have been scheduled for February 25, and the Committee’s letter to Inaba requests disclosure of all internal communication related to to the production shutdown, among other company documents.

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Congressional Oversight Panel: Why Did We Bail Out GMAC Again?

The TARP bailout of GM finance partner GMAC is being criticized by a congressional oversight panel [full report in PDF format here], reports the Detroit Free Press. The panel alleges that the Treasury

has not yet articulated a specific and convincing reason to support the company… It has never stated that a GMAC failure would result in substantial negative consequences for the national economy. If Treasury has made such a determination, then it should say so publicly.

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Is A Gas Tax Hike Coming?

Ray LaHood seems to think so. He tells the Dallas-Fort Worth Star-Telegram:

The problem we have is, Congress wants to pass a very robust transportation bill in the neighborhood of $400 billion or $500 billion, and we know the highway trust fund is just deficient in its ability to fund those kinds of projects. The highway trust fund was substantial at one time but now with people driving less, and driving more fuel-efficient cars, it has become deficient. To index the federal fuel tax, that’s something Congress is going to have to decide. As we get into the reauthorization bill, the debate will be how we fund all the things we want to do. You can raise a lot of money with tolling. Another means of funding can be the infrastructural bank. You can sell bonds and set aside money for big projects, multibillion-dollar projects. Another way is (charging a fee to motorists for) vehicle miles traveled. The idea of indexing the taxes that are collected at the gas pump is something I believe Congress will debate. When the gas tax was raised in 1992 or 1993, in the Clinton administration, there was a big debate whether it should be indexed. At that time, they thought there’d be a sufficient amount of money collected. Now we know that isn’t the case. That is one way to keep up with the decline in driving, and more fuel-efficient cars.

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GM, Chrysler Agree To Reconsider Dealer Cull

Bowing to legislative pressure, GM and Chrysler have announced today that they will initiate reviews of the dealer cull undertaken during bankruptcy. GM is announcing a “Comprehensive Plan To Address Dealer Concerns,” while Chrysler characterizes its agreement as a “Binding Independent Review Process for Discontinued Dealers.” Both firms take pains to thank Senator Dick Durban and Rep Steny Hoyer for their leadership in preparing the non-legislative conclusion of months of bitter acrimony. Culled GM and Chrysler dealers, you know who to make your campaign donations to… unless you’re a member of the dissident group the Committee To Restore Dealer Rights. According to Automotive News [sub], the group says the new plans will only allow “between 39 and 51” culled GM dealers to be reinstated. “The GM proposal guarantees that they would win every arbitration,” says one member of the committee, who alleges that the new process is based on the same allegedly flawed data the initial cull was based on. Hit the jump for the plan outlines.

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Dealer Cull Fallout Swirls

As congress nears the end of the 2009 legislative session, culled GM and Chrysler dealers are pushing hard for the rapid passage of the Automobile Dealer Economic Rights Restoration Act. Meanwhile, nearly two dozen members of the Senate Commerce Committee from both parties are calling on GM and Chrysler to resolve outstanding disputes with culled dealers in hopes of defusing the situation by non-legislative means.

Given the federal government’s ownership stake in Chrysler and GM, it is our shared obligation to ensure all impacted dealers are treated as fairly as possible. We continue to urge you to take all actions necessary to uphold the assurances you provided earlier, as well as to achieve a mutually agreeable and timely outcome to the negotiations between Chrysler, GM and the dealers. Chrysler and GM’s unprecedented bankruptcy has greatly impacted dealers, consumers, employees, small businesses, and communities across the country. It is crucial that outstanding issues be resolved as expeditiously and efficiently as possible to provide the least amount of hardship to Chrysler, GM and the dealers.

GM’s response to the senatorial call out? “Those discussions are still underway,” according to spokespeople, who refused to characterize the discussions for Reuters. Meanwhile, two examples of possible mitigating action by GM and Chrysler are not off to good starts.

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Under Congressional Pressure, GM Hints At Dealer Restoration

The recent revelation that congresspeople have been successful in coercing GM to rescind dealer closures in their districts, has the rest of our elected representatives (not to mention GM itself) sitting up and taking notice. In a conference call with Michigan’s congressional delegation, Fritz Henderson said GM was close to a deal which would restore a number of “mistakenly” closed dealerships. But GM hasn’t met with rejected dealers in weeks, and the Committee To Restore Dealer Rights is unaware of any such agreement. “[Henderson] was very vague, and the plan sounded inadequate to me,” Michigan Republican Hoekstra tells Automotive News [sub]. “He explained, for instance, that they might reopen some franchises if they found errors, but he didn’t say what those errors might be.” Henderson also rejected the dealer demand for compensation of $3,000 per vehicle sold in 2006, 2007 and 2008, further supporting suspicions that GM doesn’t have a deal at all. So what is happening?

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Car Dealers Exempted From Consumer Financial Protection Act


The Detroit News reports that car dealers are trustworthy enough (or, more likely, influential enough) to be exempted from the House Financial Services Committee’s recently-passed version of the Consumer Financial Protection Act. The bill, intended to prevent another credit crisis through federal regulation, would have made dealers subject to Consumer Financial Protection Agency oversight had Rep John Campbell (R-CA) not introduced an amendment [ PDF] exempting them. David Westcott, chairman of National Automobile Dealers Association’s government affairs committee applauded the move

It makes sense to exclude dealers. Dealers had absolutely nothing to do with the credit crisis. The overwhelming majority of committee members clearly understand that CFPA jurisdiction over dealers is unnecessary and that increased uncertainty in the auto marketplace would limit consumer finance options and increase car buyers’ costs

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Secretary LaHood Personally Guarantees Clunker Deals Through Tuesday
Secretary LaHood Personally Guarantees Clunker Deals Through Tuesday
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Even More Clunker Confusion: Gray Market Madness
Even More Clunker Confusion: Gray Market Madness
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House Passes Dealer Restoration

Your automotive industry bailout probably just became a little more expensive. Automotive News [sub] reports that the House of Representatives has passed a spending bill including provisions to reinstate dealers culled during GM and Chrysler’s restructuring. The measure now moves to the Senate, where 24 co-sponsors of a similar bill should have little problem rounding up votes (although Senate Majority Leader Harry Reid tells the NYT that the bill is not at “the top of the agenda in the Senate at this time”). The problem is that President Obama has urged congress to dump the reinstatement bill, indicating that he will almost certainly veto it. Meanwhile, a non-legislative “solution” to dealer grievances is still being touted as the ideal solution. Which indicates that GM and Chrysler will have to pay off dealers, a move that would likely cost taxpayers even more money.

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  • 1995 SC At least you can still get one. There isn't much for Ford folks to be happy about nowadays, but the existence of the Mustang and the fact that the lessons from back in the 90s when Ford tried to kill it and replace it with the then flavor of the day seem to have been learned (the only lessons they seem to remember) are a win not only for Ford folks but for car people in general. One day my Super Coupe will pop its headgaskets (I know it will...I read it on the Internet). I hope I will still be physically up to dropping the supercharged Terminator Cobra motor into it. in all seriousness, The Mustang is a.win for car guys.
  • Lorenzo Heh. The major powers, military or economic, set up these regulators for the smaller countries - the big guys do what they want, and always have. Are the Chinese that unaware?
  • Lorenzo The original 4-Runner, by its very name, promised something different in the future. What happened?
  • Lorenzo At my age, excitement is dangerous. one thing to note: the older models being displayed are more stylish than their current versions, and the old Subaru Forester looks more utilitarian than the current version. I thought the annual model change was dead.
  • Lorenzo Well, it was never an off-roader, much less a military vehicle, so let the people with too much money play make believe.