Regulatory Capture: NHTSA Toes GM Line on Brake Corrosion

The verdict is in from the National Highway Traffic Safety Administration (NHTSA) on General Motors’ corroding brake line problem. Despite having received thousands of complaints from motorists regarding brake failure due to brake line rust, the agency claims GM does not have higher failure rates than other manufacturers. The clear evidence to the contrary makes this a classic case of what economists call "regulatory capture." First identified by Nobel laureate George Stigler (in photo) in 1971, it's when a government agency tasked with protecting the public interest instead acts to the benefit of an industry or particular company.

In this case, it's a particular union. The ersatz GM bankruptcy and taxpayer bailout were orchestrated by the Obama Administration with the goal of preserving the political power of the United Auto Workers. Since that time the administration has sought to prop up GM in every conceivable way, with NHTSA just one cog in the operation.

On top of the brake corrosion pardon, NHTSA head Mark Rosekind went out of his way to praise GM on another front, as reported by the Detroit News. Mr. Rosekind expressed how highly he thought of the politically-favored company regarding incentives that GM offers to get owners of recalled vehicles into showrooms for repairs (and to browse some new models, of course) with the following:

"GM's got this really innovative thing now that's kind of an interesting carrot and stick model," Rosekind told reporters. "The point is we didn't tell them to do it. They came up with the idea and they are actually going to do it system wide."

Rosekind also praised GM for offering gift cards and offering other creative efforts to boost ignition switch recall completion rates. "You don't need an act of Congress or NHTSA to tell you to do it: do it," said Rosekind.

It would seem GM can do little wrong in the eyes of the agency, which now seems to be acting as promoter for GM. It took NHTSA about five years to do essentially nothing about brake failure on GM vehicles plagued with brake line corrosion. An investigation was opened in 2010 for various GM vehicles, model years 1999 to 2003. After wasting roughly five years on the investigation with no action, NHTSA has offered an advisory (to wash vehicles and inspect brake lines) for owners of GM trucks and SUVs in “Salt Belt States.” The fact that the advisory is for model years up to 2007 further brings into question NHTSA’s decision to ignore calls for an expansion of its investigation to include later model GM vehicles.

Why would NHTSA offer an advisory on GM vehicles up to model year 2007 if they never even opened an investigation on those vehicles? I find it suspicious that NHTSA did not announce that later model year GM vehicles were being looked at for brake line corrosion issues, which they obviously were since the advisory includes these model years. The decision by NHTSA to not formally expand the investigation to include newer models played right into the hands of GM, which has made a defense out of the false presumption that only older model vehicles are affected by brake line corrosion.

In May of last year, I reported on the increasing amount of complaints of brake line corrosion for later model GM vehicles. Calls for NHTSA to expand their investigation to later model years were ignored. Here are some excerpts of complaints on NHTSA’s website for newer model year GM vehicles with brake failure due to corrosion:

I WAS DRIVING MY 2007 GMC SIERRA CLASSIC 2500HD WT AND MY BRAKE LINE FAILED. I WENT THREW [sic] THE STOP SIGN OUT ONTO A MAIN ROAD AND JUST MISSED GETTING T-BONED BY A TRACTOR TRAILER. I HAD NO BRAKES AT ALL. MY BRAKES ARE ALL UP TO DATE. BRAND NEW BRAKE PADS AND ROTORS. I READ TONS OF COMPLAINTS ONLINE OF PEOPLE WITH THE SAME PROBLEM WITH GM VEHICLES BRAKE LINES RUSTING OUT PREMATURELY. MY TRUCK ONLY HAS 32,164 MILES ON IT AND IS WELL TAKEN CARE OF. …PLEASE MAKE GM DO A SAFETY RECALL ON THESE FAILING RUSTING BRAKE LINES BEFORE SOMEONE GETS KILLED. I WAS ALMOST NOT HERE TO TELL MY STORY.

And from a driver of a 2006 Chevy Silverado who crashed as a result of the brake failure:

AT THE WORST POSSIBLE TIME WITH ICY ROADS AND SNOW. I WAS ON MY DRIVEWAY TRYING TO GET TO THE TOP OFF IT WHEN I LOST TRACTION. I STOPPED AND APPLIED THE BRAKES. I STARTED TO BACK DOWN THE DRIVE WHEN THE PEDDLE FELL TO THE FLOOR CAUSING THE TRUCK TO GO VIOLENTLY OUT OF CONTROL AND CRASH DOWN OVER AN EMBANKMENT. THERE WAS NO WARNING, JUST TOTAL LOSS OF BRAKES BOTH FRONT AND REAR. MECHANIC SAYS THE LINES BLEW APART FROM RUST.

The above harrowing examples of the dangers of driving a two-ton vehicle which has just had its brake lines blow out contrasts the ruling by NHTSA which agrees with GM that a truck without brake lines can safely be brought to a stop. NHTSA’s own statement contradicts the implication that GM vehicles with brake line rust are no more dangerous than other manufacturers’ vehicles. 3,645 complaints, 107 crashes and 40 injuries were disclosed (who knows how many more go unreported?) including this one:

THE CONTACT OWNS A 2004 CHEVROLET SILVERADO 1500. THE CONTACT STATED THAT WHILE BRAKING FOR A TRAFFIC STOP, THE BRAKES ABNORMALLY TRAVELED TO THE FLOORBOARD AND THE VEHICLE DID NOT RESPOND. AS A RESULT, THE CONTACT CRASHED INTO A PEDESTRIAN. THE PEDESTRIAN WAS INJURED AND TRANSPORTED TO THE HOSPITAL. A POLICE REPORT WAS FILED OF THE INCIDENT. THE VEHICLE WAS TAKEN TO A MECHANIC, WHERE IT WAS DISCOVERED THAT THE ENTIRE BRAKE LINE WAS COMPLETELY RUSTED.

The number of cases for brake line rust on GM vehicles far exceeds that of other brands. Last year I found roughly ten times the number of complaints on NHTSA’s website for brake line rust on GM vehicles than complaints for Ford, Toyota, Chrysler and Honda combined! The only other manufacturer that had major issues with brake line corrosion was Subaru; to their credit they did the right thing and recalled the vehicles.

The latest act by NHTSA to pardon GM on the brake line rust issue is just one more example of the agency’s lack of effectiveness when it comes to protecting motorists. GM had an ongoing ignition switch defect (which is now blamed for 80 deaths) that was ignored by NHTSA for years. Another known power steering defect on GM vehicles went unaddressed by NHTSA and GM for over four years; until pressure from the National Legal and Policy Center prompted a recall.

Political cronyism was most certainly the cause of NHTSA’s failure to address safety concerns with GM vehicles. Along those lines, the Justice Department has been silent as the death toll continues to rise in the GM ignition switch recall debacle.

A dangerous precedent was set when the Obama Administration was allowed to use billions of taxpayer dollars to bail out GM and then go on to campaign on the perceived success of the company to gain a second term in office for the president. How can government agencies be trusted on to regulate crony corporations? The answer is, they can’t be.

Mark Modica is an NLPC Associate Fellow. 

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