Inside Obama's Auto Industry 'Overhaul'
DAVID GREENE, host:
From NPR News, this is ALL THINGS CONSIDERED. I'm David Greene.
ROBERT SIEGEL, host:
And I'm Robert Siegel.
Steven Rattner is the Wall Streeter President Barack Obama called in to lead his auto taskforce. Team Auto was Rattner's preferred name for the group. The media loved to call him the car czar. He didn't like that. I personally favored autocrat.
Rattner led the team at Treasury that kept GM and Chrysler alive, which was a very controversial, many said a very morally hazardous project, sustaining companies who had earned their failures fair and square.
But today, those companies are alive, and Steven Rattner and President Obama claim great success for it.
Rattner brings special experience to writing his account of the auto industry rescue in his new book "Overhaul." Before going to Wall Street, he was a reporter for the New York Times, and his book is smart and well-written and a very interesting view into decision-making in this administration. He joins us from New York. Welcome to the program.
Mr. STEVEN RATTNER (Author, "Overhaul"): Thank you.
SIEGEL: And the case for saving General Motors was much stronger than for saving Chrysler. GM's prospects were better, its collapse would have been more devastating, but a big question was: Why save Chrysler? As you describe it, the administration was divided. And describe how the decision was made.
Mr. RATTNER: The administration was divided. It was one of the most thoughtful, professional debates that I've seen in my career, and it worked its way up under Larry Summers' supervision as head of the National Economic Council, through a series of meetings in which both sides got to express all their views, most of which were very analytical and carefully thought out. And all of that culminated in a recommendation to the president that we save Chrysler, and ultimately the president made the decision he made.
SIEGEL: And at one point in preparing that recommendation for the president, there's a meeting in Larry Summers' office in the West Wing of the White House, and there's a vote. There's a vote among the people present. What would you do?
Mr. RATTNER: That's correct. Larry really did want to hear views from everybody. Larry certainly had many views of his own, but he was very open-minded, particularly to good, strong, analytical arguments.
And so there were a group of us gathered around the table, and it was at one point four to three against saving Chrysler. And then after a lot of hemming and hawing on my part, I came to the view that at this moment in the economy, staring down into the black hole of potentially an economic abyss was not the moment to let Chrysler go when it could be saved. And so I was in favor of it, and Larry in effect became the fifth vote in favor of it.
SIEGEL: You write this: The auto rescue succeeded in no small part because we did not have to deal with Congress. What did that mean?
Mr. RATTNER: What that meant was that we were able to deploy $82 billion of capital from the so-called TARP Program to save the automakers without going to Congress because it had already been appropriated at the end of the Bush administration and just before President Obama took office.
And my view is that if we had had to go to Congress and had gone through the normal legislative process that we've all now witnessed with health care, with financial regulatory reform, I think it is almost without doubt that at least one of these automakers would've collapsed, run out of money and shut their doors before Congress got around to figuring out what to do about it.
SIEGEL: On the other hand, you had encounters with members of Congress. One of them, the House majority leader, Steny Hoyer, Democrat of Maryland, did he plead with you for an hour on behalf of two dealers in his district?
Mr. RATTNER: More than for an hour because that meeting of an hour was preceded by phone calls and followed by legislative efforts on behalf of those two dealers and also on behalf of other dealers around the country.
I like Steny Hoyer. I respect him. But I found it extraordinary that with all the problems facing this country that the House of Representatives under his leadership could devote that much time and that much energy to a bunch of dealer decisions that everyone had said to us should be left to the company.
SIEGEL: Part of what you were doing here was involving the U.S. government in a huge industrial intervention while trying to limit what influence the government would have over the operations of the company, first changing that company radically but then saying it's going to be on its own.
You did something which is quite rare for any American civil servant to have done, which is you, in a sense, fired the head of General Motors, Rick Wagoner.
Mr. RATTNER: That's correct.
SIEGEL: Under orders from the White House or Larry Summers or Barack Obama or just your gut sense this guy had to go?
Mr. RATTNER: No, it was certainly not based on my gut sense. It was based on a collective decision that this guy had to go. Rick Wagoner testified that the problems of GM and the automakers were of the making of everybody except the management of GM. And we took some exception to that.
On February 17th, GM filed a so-called viability plan, which we felt was way excessively optimistic and didn't at all comport with the realities of the problems that GM was facing.
And we were looking at a massive infusion of additional government money, more than $30 billion at that moment. And it seemed obvious that it's very hard to put that amount of new money behind a CEO who's not only driven the bus off the cliff but doesn't even realize where the bottom of the cliff is and what has to be done to get back up to the top of the mesa, if you follow the analogy.
SIEGEL: You were learning, you were discovering what the corporate culture of GM was, and it was, in a word, appalling.
Mr. RATTNER: It was appalling, but it was both the culture of GM and the substance of GM. Rick Wagoner told the Congress that with another $10 or $12 billion, they could be viable again. The number ended up being $50 billion.
So the management of GM, just a few months before they went into bankruptcy, had no idea of how much capital it would take to bring the company back to a viable position.
SIEGEL: I mean, his chief financial officer didn't seem to know what the cash flow was at GM, didn't seem to know how much money they were spending.
Mr. RATTNER: GM could not tell you on any given day within $500 million how much cash they had, and the result was they had to operate with over $10 billion, sometimes $11 billion, of cash, far more than any other company of its same size or scale.
And by contrast, Ford, which is not that much smaller of a company, could operate with about $5 billion of cash on hand.
SIEGEL: You write about being vetted for government service, and to be fair, we should point out here that you're a rich man. You've gotten rich on Wall Street. So you can afford things that many other people can't.
The legal costs you incurred to get cleared for this job: $400,000?
Mr. RATTNER: That's correct, and I wouldn't as you implied, but let me be explicit not everybody who comes to government has to spend that kind of money. My finances were sufficiently complicated that I did.
And that's an example of the toll that coming to government takes on people from the private sector. There are many other forms of pain that come from coming into government from the private sector, the personal attention, the politics of personal destruction, the focus on whether people have conflicts based on some affiliation with a prior institution. And what I can say very, I think, definitively as I've been back in New York now for a while is that my friends on Wall Street, even those who have a public policy bent and have an interest in serving their country, find the prospect of doing what I did beyond the pale. They simply wouldn't do it.
And I think, while there are great people in Treasury and great people in the White House, that's a really bad outcome for the country not to attract the best and the brightest, particularly when you have an economic and a financial crisis of the sort that we were facing.
SIEGEL: Steven Rattner, thank you very much for talking with us today.
Mr. RATTNER: Thank you.
SIEGEL: Steven Rattner's book is called "Overhaul: An Insider's Account of the Obama Administration's Emergency Rescue of the Auto Industry."
NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.