Remember how Congress gave birth to the CPSIA way back in 2008? A couple big companies goofed up big time on toy safety, in case you forgot. Of course, everyone remembers Mattel, but then there's RC2 and its lead paint-laden Thomas The Tank Engine wooden trains. Yes, these are the folks who offered a reward for consumers returning recalled iconic wooden toys slathered in lead paint, only to have to recall the free gift trains because they TOO were covered in lead paint. Ouch! This boneheaded move was significantly responsible for the drive to enact the CPSIA. Thanks, RC2!
RC2 paid mightily for its errors. I previously published an analysis of the costs of their missteps, which added up to about $60 million. That's real money, folks. They later raised about $60 million in an equity offering, so they were financially sound despite these extraordinary losses. Bully for them.
Of course, the rest of us were screwed because the CPSIA crunched us. Isn't it a little ironic that RC2 was largely unscathed?
Ah, but there's a happy ending! RC2 was sold today to Tomy Co., a large Japanese toy company that shares elements of the Thomas brand with RC2. Tomy is paying $640 million for RC2. Sweet! And it's really nice to know that the CPSIA has been so effective in stopping the people responsible for the bad acts that supposedly endangered children in the Year of the Recall. They'll never profit from their misdeeds . . . .
Now I understand why people get so pissed about big bonuses being paid at bailed out banks. Hmmm. Is there anything to learn here?
Nah. . . .