Steve Rattner Overhaul: Speed Read
Steven Rattner has written a revealing memoir, Overhaul, about how he led the rescue of the auto industry. From Rahm’s cursing to Obama’s leadership, here are 8 of his surprising revelations.
How to Pass the Buck
After listening to GM’s first plea for TARP money, which they took care to point out “isn’t really a bailout, it’s a bridge loan,” [Treasury Secretary Henry] Paulson exclaimed. “This is complete bullshit!” But Rattner describes Paulson going on to say “‘I want this kept quiet and secret,’ he told [undersecretary for domestic finance] Ryan, ‘but come up with a plan in case we find out at five o’clock some afternoon that General Motors is going to file the next day. The president needs the option to prevent a very messy bankruptcy. So find out what’s the smallest amount of money we could give GM to get them to the next administration and what we get for that.’”
“Why can’t they make a Corolla?”
The week after his election, Obama sat down with his economic advisers to talk about the auto makers.
“Obama had asked, ‘Is there any way these guys are going to avoid banruptcy?’
‘Unlikely,’ he was told.
‘Why can’t they make a Corolla?’
‘We wish we knew,’ replied his advisers.” (44)
Obama’s Leadership Style
For all his own dilly-dallying, Rattner criticizes the pace at which Obama handled the bailout and suggests that billions of dollars might have been saved if he had coordinated with the Bush administration from the beginning. “Tim [Geithner] and Larry [Summers’] appointments weren’t announced until almost three weeks after the election. Much quicker action, perhaps as soon as the day after the election, would have seemed more appropriate.” (65)
“Fuck the UAW”
Rahm Emanuel has a reputation for being aggressive, brusque, and foul-mouthed. Even so, Rattner was surprised when he first broached the bailout to him. After tentatively telling Rahm that it looked increasingly “doubtful that Chrysler should be allowed to continue as an independent entity,” Rahm shot back “Why even save GM?”
Rattner continues, “Ron Boom was the first to shake off his surprise and make a counterargument. He reminded them of the tens of thousands of autoworkers’ jobs at stake. But that didn’t deter Rahm. ‘Fuck the UAW,’ he growled.” (68)
And Rattner makes clear just how tight a ship he runs at the White House, and how closely he controls those under his command. “After Tim’s [Geithner’s] rocky start as Treasury secretary—Rahm had stepped in and effectively started supervising Tim on a daily basis.” (68)
Cash for Clunkers
“ Cash for Clunkers,” one of the most successful stimulus programs, was inserted the night before Obama’s speech announcing the bailout. After meeting with members of the Senate and House, Summers decided that they needed to do something more on “the demand side” to promote the recovery of the auto industry. “Rebates suddenly seemed like a pretty good idea. ‘Let’s try it,’ Larry decided. Brian labored through the night to work out a plan and insert new language into the president’s speech, thus giving birth to Cash for Clunkers.” (140)
As the Chrysler-Fiat deal stalled, with Sergio’s [the head of Fiat] outbursts getting worse (he screamed “Do you think I’m fucking stupid” several times during negotiation), the auto team started looking at a very different alternative. Harry Wilson proposed that by letting GM take over Chrysler’s relatively successful brands—Jeep, Dodge Rams, minivans—they would lose only 60,000 jobs (35,000 more would be lost in the Fiat-Chrysler deal) while spending several billion less. Rattner says that “If Larry had been seriously interested in changing course, I would have happily seconded him,” but as it turned out, they decided to make Plan A work. (162)
For the restructuring to go through, Chrysler needed to finance ongoing sales, and so needed GMAC to take over Chrysler Financial’s lending activities. But the FDIC wouldn’t approve the deal. Why? Rattner blames political obstruction of FDIC Chairwoman Sheila Bair. “It took me a while to understand that we were caught in the web of Sheila Bair’s own agenda.” (169)
To Serve or Not to Serve?
Rattner sat on the fence for a while before signing on to Obama’s team. He came under fire from legislators—including Democrats—for his inexperience in the auto industry. He was daunted by the seemingly intractable problems facing GM and Chrysler, and even more he was hamstrung by Obama’s new strictures on conflicts-of-interest stemming from investments. Rattner drafted a long email to Larry Summers listing the reasons he ought to withdraw. Instead, he sent a shorter message offering to step aside. Summers responded with, “I am sorry that we are putting u in this position” (57). Later, as Rattner continued to dither, Summers more pointedly accused him of “doing a Judd Gregg,” a reference to the Republican senator who withdrew at the last minute from his appointment as secretary of Commerce. Rattner apologized for his hesitancy and “closed [his] eyes and jumped.” (65)