• Oct 21st 2009 at 3:20PM
  • 69
Steve Rattner is a man we admire but do not envy. Rattner, a former Wall Street banking type with zero experience in the automotive or manufacturing world, was tasked by President Obama with guiding General Motors and Chrysler through their restructuring efforts. Not a small job, by any means. Or one we would wish on our worst enemies. That said, it was a HUGE job, and huge jobs typically make for great stories. Rattner, in an article he penned himself for CNN's Money doesn't disappoint. At all. Allow us to tantalize you with some quotes:
When the Obama administration took office on Jan. 20, it inherited nothing in the auto area: no staff, no stacks of analyses, no plans of any kind. The Bush administration had decided in late December that GM and Chrysler were not going to go bankrupt on its watch and had shoveled $17.4 billion of TARP money into the companies to keep them afloat, but without any meaningful stab at restructuring them.
Oh snap! But really, that's not even the tip of the juicy iceberg. How about this apple, er, lack of apple:
When I asked our energetic young chief of staff, Haley Stevens, what we were going to give our visitors for lunch, she replied, "Nothing. Treasury has no budget for even bottles of water." It seemed harsh to expect our guests to go many hours without eating, so I gave Haley $100 and told her to go to a sandwich shop. That became our hospitality protocol.
Hungry for more? We haven't even scratched the surface, as our man Rattner is just getting warmed up. Here's one more for you about Rattner and friends first trip to Detroit:
What we didn't prepare for was the intense public interest in our visit to these hard-hit communities. Throngs of reporters awaited us at every stop while a news helicopter buzzed overhead. More peculiarly, the ensuing press coverage seemed wildly over-focused on our test drive of the Chevy Volt, as if the company's salvation rested on this one vehicle.
Don't tell Lutz. And hey, speaking of Maximum Bob and his pals, here's what Ratner has to say about Detroit Management:
Everyone knew Detroit's reputation for insular, slow-moving cultures. Even by that low standard, I was shocked by the stunningly poor management that we found, particularly at GM, where we encountered, among other things, perhaps the weakest finance operation any of us had ever seen in a major company.
And Mr. Rattner is just getting warmed up. Just wait 'till he gets to Wagoner. We implore you all to jump over to CNN to read the rest. Hat tip to chemistrusaz!

[Source: CNN Money | Photo by Chip Somodevilla/Getty]

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    • 1 Second Ago
      • 5 Years Ago
      Yeah, because Rattner has no vested interest in touting himself and the Obama administration as the all-hallowed saviors of the American automotive industry. You're an ass-hat for buying into this political tripe, Lieberman.
        • 5 Years Ago
        Basically anyone that's not a half wit blowhard would be a savior for GM and Chrysler. I personally plan on not buying a single GM or Chrysler vehicle till they have paid their debt to the taxpayers in full. I also know many other people feel the same way
        • 5 Years Ago
        He didn't really say much that we didn't already know. Sure, it's part PR, but what administration doesn't toot their own horn a little bit? Besides, when is posting a automotive related article in a blog "buying into this political tripe?" I don't see much of a political leaning in the blog post itself.
        • 5 Years Ago
        If Rattner and Obama believe they have "saved" the American auto industry then they are even more delusional than GM was. GM and Chrysler can be considered saved when they pay back the "loans".
        • 5 Years Ago
        They're not saved, they've ceased to be real companies. They're just zombies now on their way to liquidation, even if no one will admit it. The General Motors and Chrysler Zombie Watch continues...
      • 5 Years Ago
      "Everyone knew Detroit's reputation for insular, slow-moving cultures. Even by that low standard, I was shocked by the stunningly poor management that we found, particularly at GM, where we encountered, among other things, perhaps the weakest finance operation any of us had ever seen in a major company."

      This one paragraph says all there is to say about GM. My question is why give tax payer money to a company this inept?
        • 5 Years Ago
        Free marketeers can say "let them fail" all they want but the reality is that GM's demise -- at that time -- would have sent the United States into a colossal depression. The ripples would affect virtually every industry in our country as entire regions suffered 100% unemployment.

        Also, and just as importantly, manufacturing is a strategic industry to our economic and national security (we simply don't *make* anything anymore!). Without that part of our economy, the US would be very vulnerable to changes in global economic trends and political conditions.

        Yes, we all foot the bill but the alternative would be massive unemployment, overnight, to the tune of millions, with perhaps tens of millions more to follow. It doesn't matter what your job is, with such an economic vacuum we'd all be at risk of joining them.
        • 5 Years Ago
        Good question. Government Motors shouldn't see another dime.
        • 5 Years Ago
        @ Boxer - brilliant. Right on!
        @ Paul - you have no idea what would have happened. We will most likely experience all of those problems anyway. Keynesian economics is doomed to failure.
        • 5 Years Ago
        The same reasons we gave hundreds of billions to finance companies that were inept.

        We really need to figure out a way to prevent this from happening in the future, without restricting our GDP. How about "too big to fail= too big to have little to no regulation". If you don't like the regulations, then move to a smaller company and make THAT company more competitive.
        • 5 Years Ago
        If you like GM donate your own money to some collection, but stay out of my pocket and the pockets of our grandchildren (using government force).
        • 5 Years Ago
        i bet Matt finds some way to make this about Ford...
        • 5 Years Ago

        Yes, there would be pain associated with re-setting the american auto industry.

        THAT IS THE CONSEQUENCE OF DECADES OF WASTEFULNESS. There is no flouting that, and the government hasn't flouted that.

        The government has just postponed some of the hand-picked consequences, like closing some brands, and laying off some white collar workers, while postponing other consequences, which still leaves the companies in a compromised position.

        The other half of the compromise was un-loading some of that waste onto the back of the US taxpayer, something that is blatantly immoral, and not constitutional.

        And there is no guarantee that after such cuts, and such a tax burden, that the companies won't continue to wither and die, because the rest of the consequences WILL come due at some point, to restore economic equilibrium.

        If the companies continue to suffer, or even still collapse despite the efforts, how much taxpayer money could have been saved by doing it RIGHT the first time?

        My daddy always taught me, "you can do it right, or you can do it again."

        You can run your company right, or go bankrupt and do it again... or someone else will do it again where you failed to.

        You can take your consequences and FIX problems right, or you can half-ass the fix, and then have to FIX it again.

        Either way, this isn't fixed properly yet, and it is costing people's money and livelyhoods to be half-assing it like this, like the government always does.
        • 5 Years Ago

        The regular folks at GM, GM's customers, and now the american taxpayers, are not being well served by a company in that condition.

        Other than being smaller, I am not sure they are in that much better shape now, than they were 8 months ago.

        Even if GM and Chrysler had gone into bankruptcy, that doesn't mean the death of the US auto worker.

        The companies would have either restructured on their own, without government intervention, which is unconstitutional anyway... and been forced to shape up themselves....

        Or they would have liquidated, and sold off parts of the company, perhaps even brands that are now defunct, to other enterprises, or someone would have come in and re-built GM and/or Chrysler from the ground up.

        It is not accurate to think that the failure of a rotten-to-the-core corporate structure means the end.

        It is sometimes like a plant. Sometimes pruning off a LOT of dead material is the way to get something to start to re-grow from the root.

        US demand for automobiles, especially GOOD ones, may have taken a hit, but it is not gone by any means. People still need cars.

        The demand is what would create an opportunity for better capitalists to re-grow a healthy company in the place of the cleared out dead wood, and put those regular joe workers back to work.

        And as the new company struggled and found it's efficiency and effectiveness, it would probably have a better chance of growing stronger than GM and Chrysler do now, as they are still saddled with the same corporate structure, and the same onerous union constraints.

        A plant that needs to be pruned to the ground level to allow a new shoot to emerge is not helped by just trimming off a couple of the upper branches, but still leaving the old woody stem. That is still costing the plant energy to support, rather than using that energy to grow a whole new stem.

        That is why no company is too big to fail, and why government bail outs, to keep an old withered stem alive, actually stunts growth, and the plant continues to struggle, and is possibly still withering and dying under that old stem.

        An open-market economic market solution, such as bankruptcy may seem more drastic to cut the stem off, it produces a healthy plant. It chews up the old dead plant matter, and composts it, and then feeds it back to help the healthy re-growth of the plant, from the ground up.
      • 5 Years Ago
      Allowing GM and Chrysler to go bankrupt was the only proper thing to do. In fact, there was no Constitutional authority for the FEDERAL GOVERNMENT to act in such a manner - a FACT that is ignored by anyone advocating any BAILOUT.

      From my vantage point, GM likely had a plan to file for bankruptcy once it received taxpayer dollars - its actions suggest that it acted to prolong its misery long enough to get the dollars and to then file. There is no way even a poorly managed company like GM could consume and burn nearly $15 billion in less than a year WHILE cutting back on all programs - Ford which was ACCELERATING program development was only burning $1.0 to $1.2 billion a month in cash at its weakest moment during this situation, but we all know that the fruits of their efforts are coming online now and those products are vastly improved over prior offerings.

      For years GM and GMAC management have been borderline unethical and unprofessional. It was common practice at GMAC to restate financials and never to improve them - the news was always worse during the restatement which shows that the accounting practices were never improved and always questionable. So often would GMAC restate their financials and significantly worse btw, that I anticipated the revisions. The real news was always juicier than the first reported.

      Had Michigan been run by competent Governors, it would have anticipated this slide - it wasn't like it just happened. A state program to assist suppliers would have protected jobs of workers in the affected suppliers and would have stabilized the crash. Furthermore, extensions of Federal Unemployment insurance would have muted the impact still further.

      What ended up happening was this Administration saved UNION jobs and that was the singular rationale behind this all - bondholders and stockholders were screwed. So going through EXTRA-CONSTITUTIONAL means, the administration whored America for their political advantage. Again, GM bet the farm that they'd be rescued and did very little to seriously ensure their viability - they knew that they had to get rid of divisions and bankruptcy was the only option for them - and with this administration they bet they'd get funds AND bankruptcy and got BOTH.

      There is no compelling reason to purchase a GM product - none - whatsoever. Don't think this company will ever repay the $50 billion they got from the taxpayer - there is no substantive change in the way GM is managed or run now that would suggest a plan is in place to make annual payments to the Feds nor is there any evidence that GM is remotely concerned with paying back any of the money. Their latest products certainly don't raise blood pressure in anticipation and if you break down how many vehicles GM would have to sell to pay back the $50 billion over and above the price they charge for the vehicles, you would see why my account is dead on accurate and GM is lying and playing us like we are dumber than a fifth grader. There is no evidence and no MOTIVE for GM executives to find the dollars it would take to repay US at current sticker prices and at current margins. There is no way. GM also isn't going to be any more efficient in producing products and is not prepared to make tough decisions on investing in fuel efficiency. My guess is that the VOLT was another one of those GM attempts to look like they were doing something when the reality is that they could never sell enough of these EVER to make them cost-effective to buy or to turn a profit EVER without Government Subsidies.

      After studying GM for the past decade I'm not surprised by the accounts offered by the Feds. It didn't take a rocket scientist to see the only way GM was going to be profitable was through accounting gimmicks banking production on sales to dealers and then having to offer rebates in another accounting period to move the inventory all the while keeping the factories operating as they were - you have a company run and managed by deceptive and unethical men and women and they managed to con this Administration out of $50 billion!
        • 5 Years Ago
        You do realise the Founding Fathers intended the Constitution to be updated as needs arose?

        Kinda invalidates your entire point, huh?
        • 5 Years Ago
        Had Michigan been run by competent Governors, it would have anticipated this slide - it wasn't like it just happened. A state program to assist suppliers would have protected jobs of workers in the affected suppliers and would have stabilized the crash. Furthermore, extensions of Federal Unemployment insurance would have muted the impact still further. -laser

        Hey laser, I bet you are one helluva Monday Morning QB for your favorite sports team!
        Throw out some more generic "Blame the Victim"... it really shows such insight. WTF?

        Michigan's Governors have come from BOTH the RNC & DNC... so much for either party being "competent" eh? As for some sort of back up plan... Michigan had drug giant Pfizer & banking group Comerica move to cheaper states. One plan has been to encourage film & TV industries... will it fix everything? NO (but its one plan you neglected to mention...)

        The suppliers hurt from the Detroit 3 problems also supply many of the Asian & European transplants... so your grand plan to assist them would have had (& did come from) numerous other sources than just the Great Lakes State.

        BTW, Part of the Obama Stimulus INCLUDED extension of unemployment benefits. Even with that in place there is still record unemployment in MI. Imagine 2 out of the 3 car corps completely dead (planning or not). With the assistance GM was able to cut out dead weight. I'm far from a GM fan-boy... the company has issues, but I'm far more outrages what was given to the banks.
      • 5 Years Ago
      Wow.. that read was a eye opener. The reasoning behind Buick staying around was no surprise to me (rise in China), but GMC staying and Pontiac being nixed because GMC was known as being rugged are you KIDDING ME!! Again the article was a eye opener as its told from someone who had no auto experience.
      • 5 Years Ago
      but then again that is what is so sickening at GM, they took the Bailout money then they file for Bankrupcy a few months later. What an bunch of As*holes GM is.
      • 5 Years Ago
      No welfare for GM and Chrysler! Pull the plug NOW, the market has decided they should die and the government shouldn't be distorting the market place like the USSR did.
        • 5 Years Ago
        You talk about "the marketplace" as if it were "god" or some dark magical force. The reality is that we -- all of us -- would face a depression if we didn't prevent an "economic shock" such as our manufacturing base's collapse.

        Costly? Sure. But what would the cost to America be if we had 35% unemployment, negative wage growth, deflation, and slashing of education, health and infrastructure budgets?

        The cost of their bailout was truly a tiny drop in the bucket compared to the consequences of their failure.

        • 5 Years Ago
        Paul, we're going to end up in a massive depression anyway. We're all being propped up on a bunch of funny money printed by the FED and the Chinese. What happens when the government bubble pops? Who will bail out Uncle Sugar, Paul?
        • 5 Years Ago
        Brian 3:30PM (10/21/2009)

        "No welfare for GM and Chrysler! Pull the plug NOW, the market has decided they should die and the government shouldn't be distorting the market place like the USSR did. "

        It's the so-called Patriots and 'freedom lovers' that will bring this country to its knees.
        You somehow believed Bill O, or some other self-proclaimed 'market expert'-GOPer on television, that any government intervention is bad?

        If the White House didn't step in to prevent the disappearance of the US auto industry, it's not only GM that would suffer, it's over 200,000 manufacturing jobs lost in an already bad economy.

        Put it this way, you would now be on welfare and be very happy that Uncle Sam's taking care of your sorry butt. GM has a chance of flourishing again.
      • 5 Years Ago
      don' leave out this gem, a couple billion were spent on that last minute thought...

      In response to Larry's concern, Brian reminded Larry of the idea and worked through the night to insert new language into the President's Monday speech, thereby giving birth to "cash for clunkers."
      • 5 Years Ago
      I read the article - absolutely fascinating. Then I read the comments - absolutely underwhelming.

      I wish I worked with people like Rattner: He might be a touch self-aggrandizing (and what truly successful person in his industry isn't) but hes very succinct in discussing the relationships and dramas we have not been privy to during the auto restructuring.

      Whats really interesting here is the point-blank cluelessness GM and Chryslers execs, (and chysler's bond holders) exhibited in the face of this all. They really believed they were doing great work, yet seemed like children in the face of the restructuring.

      Its as if Rick and the rest were living their own Lord of the Flies.

      Its a shame however that they didnt push the management structure at GM harder though. The very eloquent description of the insular world of GM executive management - far removed from day to day workings of the company - probably hasn't changed. It might not be any easier to reach Jonathan Ive and Steve Jobs if you work at 1 Infinite Loop, but theres a much shorter path to their doors in Cupertino than there must be at the Renaissance Center.
      • 5 Years Ago
      I still laugh at people when they say "stop giving them my money" like if it was your money to begin with.....
        • 5 Years Ago
        BoxerFanatic done kicked Level's ass and schooled him in some Austrian Economics.
        • 5 Years Ago
        Are you insane?

        Last sentence first... NO, the government is not funded by taxes... that is why there is more debt and deficit spending, and more un-funded liabilities, and broke programs... They are spending money that doesn't yet exist.

        "base money" The government and the FED have "BASE MONEY"?

        I think you are confusing line-item and baseline budgeting with monetary theory. They are not the same thing.

        the BUDGET may have a base line, and increase here, or there, or whatever. But the MONEY IN THE BUDGET HAS TO COME FROM SOMEWHERE.

        You can budget whatever you want, but it has to MEET your household income, otherwise it is unbalanced, and problematic. YOU STILL HAVE TO EARN YOUR INCOME, regardless of what you decide to budget that money toward.

        The government STILL HAS TO TAX their money into their budget. And their revenue falls when fewer people make less of a good living, and pay less taxes. That is why lowering taxes increases tax revenue.

        Even if the government PRINTS the money, the gross domestic product of ALL americans, and foreign contributors to america, is the VALUE on which that money is based. Adding more dollars just cuts each representation thinner, within that pool of value. They are banking on decades of future GDP with their debt levels.

        Just because the government makes up a number out of thin air, doesn't make the VALUE of it exist.

        Do I really have to repeat myself, that money is a symbol of sweat equity? Time, talent, effort and experience to generate VALUE for trade, or equity building.

        A piece of paper with George Washington's face on it, might as well be monopoly money, if there is nothing to back it up with. The term LEGAL TENDER means something, it means that the worthless paper is agreed to carry the value of someone's time, talent, effort, and equity.

        The government generates no value. the government is a VALUE PARASITE, and a necessary cost. That is why government was intended to be LIMITED by our founding documents. To keep that necessary cost to a MINIMUM, and to allow the american people to keep as much of their freedom, including their ECONOMIC freedom, to themselves, and to trade amongst themselves.

        The VALUE of this economy is NEVER, EVER, EVEREVEREVEREVEREVEREVER generated by the government, or their budget.

        The government can only seize, steal, sap, and suck monetary VALUE out of the hands of the people that produce it, the citizenry, the TAXPAYER.

        LEARN ECONOMICS before you start lecturing people on it. I ACED economics classes. And I practice economics every single day, as does anyone who works, spends, saves, or trades anything.
        • 5 Years Ago
        and just for shitzzz and giggles to stir the pot even further....That the notion that the bailout money is at the taxpayers expense is an illusion within itself because In reality, the bailout money is paid for with newly issued treasury securities, not taxpayer money. The two my friend are not the same. Did they teach you that in economics class?? or just mascaraing like you know??? since you are the "ace"

        Go ahead and sit there and tell me that the your taxes paid for GM.......

        btw I won't lecture, I'll school you......
        • 5 Years Ago
        1st man you deserve a cookie, you just spent a good amount of time explaining what the symbol of "money" is lol are you f-ing kidding me lol, and if I might add in a very emotional state lol, grow a pair.....who the hell is talking about what the symbol of money means....

        2nd who the hell is talking about budgets???? get back on point; we are talking about where the money came from, good? great!

        now back to the point, going to quote you:

        "Last sentence first... NO, the government is not funded by taxes... that is why there is more debt and deficit spending, and more un-funded liabilities, and broke programs... They are spending money that doesn't yet exist."

        BINGO!!! I'm glad you answered the question of the century, your income tax from 2008/09 did not fund this..it wasn't your money that funded it all! great we are starting to see eye to eye...

        next Whether you like how the monetary system is run in this country or not that's a different subject to debate about...but this is the system we live in which is the best one around????Did you forget whos the dominating power in this world???? we did not get there by living in an utopia you prob dream about every night....

        as for Brian sit your ass down and go to the corner cuz you don't know jack from shhhh

        and as for learn economics??? "government is a VALUE PARASITE" "The government can only seize, steal, sap, and suck monetary VALUE out of the hands of the people that produce it, the citizenry, the TAXPAYER." are you f-ink kidding ME? lmfao you obviously have issues with how the system runs but word of advice separate your personal beliefs next time around...
        • 5 Years Ago

        relax bud, stop scaring people into dooms day scenarios, we are no longer in the gold-based system since we adopted the worthless piece of paper system like BoxerFanatic mention b4 he went into conspiracy theories..The difference is now we control the money with the price of credit...to a certain point there is no requirement of government debt to be paid off only the individual securities when they mature..The debt can be rolled with new securities...You have to look at the government as an entity that manages wealth in the US, right now it redistributed wealth to the private sector...The government hasn't printed money to spend if I can recall since the 50's when they split..the debt that is paid off merely transfers dollars from taxpayers to bond holders..as for inflation which is a 1 year topic to discuss in short that it's controlled by the feds interest rate to lend money..with that 17% figure you mentioned Like I stated before it's a false premise that the national debt must be paid off by the private sector some day in the form of taxes...The government itself pays to redeem its debt securities as they mature, using funds obtained by selling new securities this can continue indefinitely...recycling money and redistribution of financial assets which is what government spending is at its core....The government will be collecting the same amount of taxes but the difference will be collected from the loans they have issued, and not just bail out money but from what the banks lend in the private sector as well...People have to stop being hypocrites because every single person that has bought something on credit in this economy is using the system....right now you assume there is inflation yet there is a high demand for the dollar since it is not being spent by individuals and that is what is sucking the economy down and loosing jobs, if wealth is not being redistributed by the private sector which is me you and everyone else in the form of buying goods and services; thats where the Government stepped in and redistribute wealth which was "force too" ...the notion of insecurity in peoples minds...and theses doomsday scenarios ain't helping the cause either...
        • 5 Years Ago
        Level it IS our money if you pay taxes. Or are you a welfare parasite?
        • 5 Years Ago
        I'm not going to sit here and teach economy and finances 101....

        but here is a brief summary on how sh*t works....

        The government spends it's own base money and uses Taxes, loans, and sales of Bonds to recapture the money back....The Treasury pays the government’s bills out of its account at the Fed. Those payments inject new deposits and reserves of base money into the banking system. When tax revenues do not fully recapture government spending, the Treasury recaptures the excess with the net sale of its securities. As it spends, the Treasury replenishes its Fed account with equal transfers from its commercial bank accounts...Base money underlies the money supply of the private sector, which consists mainly of bank deposits..Treasury simply recycles base money previously created by the Fed. Its outflows and inflows move bank deposits and reserves around the banking system without changing the total on average. Deficit spending increases the net financial wealth of the private sector in the form of Treasury securities, not money. Every dollar the Treasury spends is money previously created by the Fed. The Treasury simply recycles the money it acquires from taxes and the sale of securities. In the aggregate, the public pays for Treasury securities out of the funds acquired from the deficit spending itself. The government itself pays to redeem its debt securities as they mature, using funds obtained by selling new securities to the public. This "rolling over" of the national debt can be continued indefinitely, since the government can pay whatever interest rate the market demands for its securities. This is based on the false premise that the national debt must be paid off.."

        forget what you heard!

        If you honestly think taxes a lone pay for everything in this country lol what a laugh, The government is in the business of lending money and recapture interest, Taxes only pay a small portion of the governments overhead....silly kids....
        • 5 Years Ago

        You really believe that at some point the tax payer doesn't foot the bill?

        "Taxes only pay a small portion of the governments overhead" What? Really?

        Take a look at Table S–1. Budget Totals and then take a look at Table S–9. Receipts by Source


        The tax payer is - by a vast margin - the primary source of revenue for the government spending.

        And, as for debt...

        At some point, the debt has to be repayed. The good ole US of A can't continue to print funny money forever without serious inflationary repercussions. As a self-professed economics wiz you should be aware of this. The debt service is staggering, nearly 17% of annual tax revenues are used to pay interest on the money the US Gov't borrowed.

      • 5 Years Ago
      Yeah I guess GM was not "with-it" enough for Rattner the rat faced crook. After years of producing exactly nothing as a social parasite, he had come to expect a proper kickback from GM.

      • 5 Years Ago
      Great article in Money. You can tell that many who posted comments here, didn't bother reading it.
      • 5 Years Ago
      Here's a question for the folks who say GM and Chrysler should have been let go.
      How many of you can honestly say that you would hold to this view if you knew that you would have lost your job as a result?

      I'm not asking this simply to be argumentative. I really want to know whose opposition to the bailout is based on principle (meaning you believe in the principle even when adhering to it hurts you) and whose opposition is based on the notion that they wouldn't be hurt (no job loss, no income loss, no negative side effects for you of any kind from the largest industrial liquidation in history).
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