Toyota's electronics

I imagine that there are different possible ways of transliterating Japanese characters into the Western alphabet, and that at some point in recent history the "Toyoda" family went one way while the company that shares their name, "Toyota," went the other. Here's what a blogger says, but of course you will take it with the proverbial grain of salt.

At any rate, the testimony of Akio Toyodo, and of other high-ranking Toyota execs, was the center ring of yesterday's Congressional circus. This isn't a policy inquiry: more like a public shaming.

I have to say that, in accord with some of the members of the House committee involved, I have some curiosity as to whether this is a software problem. Toyota seems convinced it is a mechanical matter -- sticky gas pedals and so forth. But there is a lot of software involved in cars nowadays, and in particular there is a lot involved in the act of braking a hybrid.

There is (a) the software that does the pumping for you, making for anti-lock brakes, and (b) the software involved in converting the energy exerted in braking into electrical energy, thus re-charging the batteries, and (c) the software involved in the anti-slip. I suspect it is possible that these systems are interacting in some unexpected way in the few cases that have caused all the furor.

In the House of Representatives

The House Financial Services Committee voted 43 to 26 Thursday in favor of a measure sponsored by Ron Paul (R-TX) that would expand Congressional oversight authority vis-a-vis the Federal Reserve.

As the Wall Street Journal rightly noted yesterday in a front page story, this vote was part of a general backlash of "populist anger that Wall Street was bailed out while the public was not." Actually, I think (and hope) that there was more to it than that, but I approve of the backlash, however defined, and so I'm inclined to be happy about this vote.

The problem with central banking isn't the opacity of the bank's operations vis-a-vis politicians or their constituents. The problem with central banking is ... central banking. As an institution, it is inherently misguided. Even if Paul's bill should pass, it will amount to little more than some additional work for the GAO in auditing the Fed. Still, one has to approve of the sentiment.

Greed is not always good, greed does not always work. And the way to limit the dysfunctional consequences of greed is through keeping money real.

Separately, the House this week has amended a bill under consideration designed to reduce the systemic risk that accompanies the failure of large financial institutions. Like, just for instance, Lehman Brothers. The bill at issue is the Financial Stability Improvement Act (FSIA or HR 3996). One of the themes of the bill is the creation of a sort of polluter-pays system for the unwinding of large banks. The cost of the orderly unwind is supposed to fall upon the shareholders and unsecured creditors of the bank, not the taxpayers.

The amendment adopted Wednesday, sponsored by Representatives Miller and Moore (Democrats from North Carolina and Kansas, respectively) is designed to ensure that even the secured creditors of such institutions take a hit. If you follow that link you'll find that this amendment takes up only a page and a half, so it would be easy enough to read through if it were not written in legalistic jargon. The gist of it is that secured creditors of a bank that fails and ends up in receivership will take a haircut, in that in the discretion of the Receiver up to 20% of the secureds claim could be turned into an unsecured claim "as necessary to satisfy any amounts owed to the United States or to the [polluter-pays Fund]."

An intense quarrel has broken out over this amendment in the financial blogosphere. Felix Salmon, for example, weighs in here.