It's official: the U.S. government is proposing to fine Toyota $16.4 million for waiting four months before notifying our safety officials about defects in its vehicles that may be responsible for episodes of unintended acceleration. Apparently that's the maximum fine that can be imposed.
It sounds like a big amount, but I expect Toyota isn't especially scared. It already spent $900 million on its recall of affected vehicles, not to mention experiencing lost sales of $155 million per week. Compared to what this fiasco has already cost the company, $16 million isn't even like adding a tip to your restaurant bill.
I guess we might as well go ahead and impose such fine as we can, but really, what is needed at Toyota, and at AIG, and was needed at Lehman Brothers, and other companies, is a culture that appropriately considers risks in giving rewards. I expect someone at Toyota decided to save a few million by not worrying about this problem, even though it posed a risk of costing the company billions. It's the same blind spot that caused far too many executives at American banks and other companies to pump up their annual numbers -- and their own bonuses -- by taking on risks that ended up bankrupting the whole firm. Somehow we need to encourage companies, in calculating how they reward executives, to consider, not only how much the company made that year, but how much risk it took on as well.