WASHINGTON´S BUNGLING AUTO ENGINEERS / THE WALL STREET JOURNAL OP EDITORIAL ( RECOMMENDED READING )

OPINION

MAY 13, 2010.

Washington's Bungling Auto Engineers

Congress is designing everything from the braking system in your next car to the loan with which you'll finance it. Be very afraid.

By PAUL INGRASSIA

Having spent more than $100 billion to rescue the American auto industry, Congress now seems intent to destroy what it saved. I'm not sure what to call this, but maybe the best term is vehicular homicide.

Exhibit A, already in place, is the new Corporate Average Fuel Economy (CAFE) standard requiring new cars to average 35.5 miles per gallon by 2016, an increase of nearly 30%. If gas prices drop by then, or even if they remain at current levels, this will force car companies to make products Americans don't want to buy.

In most businesses that's a recipe for losing money. But if it happens to the car companies, well, Congress can always mount another bailout.

Exhibit B is the proposed Wall Street reform that would add another regulatory layer on top of the multiple agencies that already regulate dealer-originated financing of their customers' vehicles. The redundancy will add complexity and costs to making car loans. The irony is that auto lending was a victim of the financial crisis, not a cause.

At the height of the housing bubble, GMAC was requiring tighter standards for car loans than for the subprime and Alt-A home mortgages that it sold. The only people whom the proposed regulations won't burden are the well-off 6% or so of car buyers who pay cash.

Now comes Exhibit C, the proposed new car-safety law sponsored by Sen. Jay Rockefeller (D., W. Va.) and Rep. Henry Waxman (D., Calif.). The legislation is prompted by the fast-fading furor over unintended acceleration in Toyotas. It's about as necessary as a law protecting people from elephant stampedes in Central Park.

Toyota's most serious safety problem was floor mats that slipped loose from their moorings. They got tangled in the floor pedals and caused the accelerator to be depressed when drivers thought they were hitting the brakes. The mats are being replaced by Toyota.

Beyond that, Toyota has had all of 13 reports of "sticky" gas pedals, none of which actually stuck to the floor and none of which caused accidents. For that the company has recalled 2.3 million vehicles to install a mechanical "shim" that makes the gas pedal spring back faster.

Fueling the outcry over unintended acceleration were a couple of well-publicized incidents in California. One was a genuine and terrible tragedy, related to the floor mats, in which four people died. Another was an apparent hoax staged in a Toyota Prius that hit 95 miles per hour on the freeway.

But when you live to regulate, no excuse is too flimsy and no cost too high. Consider some of the provisions of the proposed new car-safety law.

Sophisticated electronic data recorders, or "black boxes," must be installed in all new cars within two years. Many cars on the road, including virtually all Toyotas, already have such devices, though they're not as elaborate and expensive as the ones the new law would require.

CEOs must certify that the information their companies provide federal safety regulators is complete and accurate, or face fines up to $250 million and potential imprisonment. Auto makers employ thousands of engineers to provide reams of detailed data to safety regulators. To expect a CEO to review it all personally or face potential financial ruin and jail time is ridiculous. Any rational CEO would choose a safer line of work, like peddling derivatives.

There's a lot more in the pending safety bills (the Senate and House versions differ slightly at this stage)—including new standards for designing automotive transmissions, a standard stopping distance after a car's brakes are applied, and an electronic brake override that would ensure the brakes can overpower the accelerator. Some of this might sound reasonable until you think about it for a minute.

Do you really want your car's transmission designed in Washington? How would a standard stopping distance have prevented the Toyota floor-mat incidents? (It wouldn't have.) And aren't car companies now rushing to put electronic brake override on new cars? (In fact, many cars already have it.)

Thinking about it, however, seems too much to ask of Washington, as does connecting the dots. Has anyone there thought about the cumulative effects—and the huge costs—of the new CAFE requirements, the proposed new regulations on auto lending and now the sweeping new car-safety bill? Piling on gets penalized in football, but not in the nation's capital.

It's hard to escape the conclusion that what's going on is a power grab or a headline grab, or perhaps both. And that there's a rush to enact the laws quickly before the scary headlines fade away or the Democrats' congressional majorities evaporate.

But perhaps there's a more generous explanation: that these sweeping and costly new laws are grounded in altruistic motives that are founded in a faulty assumption. The assumption is that government is inherently fairer, more decent and more compassionate to its citizens than private enterprise is to its customers. Why? Because private enterprise is tainted by the profit motive.

Radio commentator Michael Medved puts that theory into perspective with a simple question. Where were you treated better: at your latest trip to your state's motor-vehicle department or at your latest visit to Starbucks?

Mr. Ingrassia, this newspaper's former Detroit bureau chief, is the author of "Crash Course: The American Automobile Industry's Road from Glory to Disaster," published recently by Random House.

Copyright 2009 Dow Jones & Company, Inc. All Rights Reserved