Rattner recounts auto bailout, was "shocked" and "stunned" at condition of GM, Chrysler
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:
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: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.
Don't tell Lutz. And hey, speaking of Maximum Bob and his pals, here's what Ratner has to say about Detroit Management: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.
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!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.
[Source: CNN Money | Photo by Chip Somodevilla/Getty]
Reader Comments (Page 1 of 5)
Throwback 3:25PM (10/21/2009)
"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?
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Brian 3:30PM (10/21/2009)
Good question. Government Motors shouldn't see another dime.
DesiAuto 3:36PM (10/21/2009)
if not for regular folks working at GM, i would've supported it's liquidation.
more interesting question is, has GM's culture changed or are they still the same pathetic.
audi_arena 3:38PM (10/21/2009)
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.
Brian 3:40PM (10/21/2009)
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).
C.W. 3:44PM (10/21/2009)
i bet Matt finds some way to make this about Ford...
Polly Prissy Pants 3:48PM (10/21/2009)
The problem is that when execs screw up royal, as was the case here, it's not the execs who pay the price. On the contrary, they get to keep their millions and retire to the cottage. It's the poor working shlub who merely wants to keep his family in Spaghetti O's and blue jeans who always gets the shaft. If you could figure out a way to recoup all of those ill-gotten gains from the execs then maybe milking the taxpyers wouldn't be necessary. Until then you'll have to pay up.
geo.stewart 3:50PM (10/21/2009)
Gee, everyone is talking about this like it is news instead of a marketing fluff piece.
This a guy with an admittedly hard job, and probably thankless at the end of the day, that is writing about it. Of course, he is going to make it sound as bad as possible. its a kind of sandbagging. if he is successful, he is a genius. if he doesnt, well, it wasnt for lack of trying, just look at what he was up against.
i'll grant he is a priest of the church of Obama-lama and thus must be given much fanfare but let's consider the source of the article before he treat it as unbiased news report.
I could rewrite the whole article as him bitching about how hard everything is, when most could be written away as duh. e.g. Of course Bush did not do a lot. oh wait, did I say bush? I meant the Democratic Congress that was in control during Bush's last two years...
BoxerFanatic 3:50PM (10/21/2009)
@desi
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.
zamafir 4:10PM (10/21/2009)
Cool, so all those years we've (I’ve) been saying GM's being run but idiots it turns out we were right and the fanbois were wrong, great. Now here's hoping the government can succeed where private industry failed so miserably. Good old Boys and Glad Handing FTL.
Paul 4:23PM (10/21/2009)
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.
TonyInMI 4:50PM (10/21/2009)
From many accounts I have heard, first had from employees, there has been little if any change. Nearly everyone above the salaried worker gets a PEP car to drive and free gas. Still multiple levels of matrix management to deal with.
BoxerFanatic 5:02PM (10/21/2009)
@paul.
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.
TonyInMI 5:07PM (10/21/2009)
@ 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.
Stuka 3:28PM (10/21/2009)
Somehow, I am not surprised about what he said in relation to GM. And it does make me wonder why we put money into this company.
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Rich 6:58PM (10/21/2009)
Read it. He says why. Duh.
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.
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Paul 4:32PM (10/21/2009)
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.
Brian 4:35PM (10/21/2009)
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?
Nick 10:19PM (10/21/2009)
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.