The Story of the Auto Bailout, Told by the Man Who Orchestrated It

Overhaul is an insider’s account of the auto industry bailout begun under former President Bush and completed on the Obama administration’s watch. It is a story told by the one and only man who can give such an insider’s view: Steven Rattner, President Obama’s “car czar.” In fact “car czar” was never officially Rattner’s title, and readers will discover he is not very fond of this media-induced nomenclature.

Rattner is a respectable Wall Street economist and a former New York Times financial reporter. I believe his journalism background is what allows him to take the complex inner workings of a one-of-a-kind crisis and share it in a format that is understandable to most readers. Overhaul definitely requires careful reading, and even re-reading in some spots, but it’s easy to get a grasp on the financial instruments, deal making, and other facets of the auto bailout.

Being a financial guru from the private sector, Rattner is quickly blindsided by the corporate culture of the U.S. government. The buildings are dated, dingy even. Technology and audio/visual equipment are often scarce. Just getting clearance to work in government cost Rattner a huge fortune, not to mention reams of paperwork. Entrance into public service is, inevitably, followed by the press’ ruthless reporting and criticism of Rattner’s every move thereafter.

Unyielding collective bargainers, feisty personalities, big-mouthed politicians, and inept corporate executives are just a few additional challenges Team Auto and Rattner are up against. Tight deadlines and dwindling corporate bank accounts add to the urgency and lead to late nights, weekends, and holidays of work for the task force. All the while, they toe a very fine line of avoiding the appearance of federal takeover of private industry while using government money to save private enterprise. “Government Motors” is not a term Rattner finds particularly flattering.

The story of the auto bailout is certainly a gripping one, but it is made even more so when one considers the shockwaves failure of GM and/or Chrysler could have sent through the already-damaged U.S. economy.

While Rattner gives fair treatment to many of the backroom dealings and deliberations that he and his team faced, perhaps none stuck with me more than just how close they were to letting Chrysler go. “I spent many hours revisiting our toughest decision, to save Chrysler. The company was moribund; under almost any other economic circumstances, I would have…let it go,” tells Rattner in his epilogue. I find that interesting as I personally consider Chrysler a company who's lost its brand image and creates brand confusion for consumers. I could fill another blog sharing those opinions.

Rattner concludes his insider account with some personal reflection on government and its role in a free-market society. He says the only reason Team Auto was able to achieve a largely successful bankruptcy and bailout for two of the Big Three was due to the “czar-like” status that allowed them to steer clear of Congress. Rattner spares no punches as he lambastes Congress for its gridlock, endless meetings, and lack of accomplishing work of value. He believes the federal government of today is far from what the Founding Fathers envisioned. If nothing else, his summary poses some food for thought.

Being a Buffalo-based blog, I need to mention that we also get a reference in the epilogue. On page 311, while discussing economic theory, Rattner describes creative destruction as being the “formula for extinction for Detroit and Buffalo and many other hard-hit cities.” Basically, while municipalities like New York City have reinvented themselves as their economies shifted away from manufacturing, Rattner notes that others have fallen into a downward spiral of urban decay.  Rattner argues that this is caused by trying to preserve a former economy and way of life. Even if it’s not exactly positive, hey, there’s still always a Buffalo connection.

A few other thoughtful touches Rattner includes are a table listing how the billions of auto bailout money were disbursed and a character guide. In books with a large cast coming and going, I’ve mentioned before how useful a quick-reference guide of names and titles would be. Placed at the beginning of the book, I found myself using this tool often.

Overhaul just hit bookshelves this month and therefore is extremely up to date. Progress is being made in the auto industry with GM’s initial IPO and rebounding sales of Chrysler products. GM has launched a TV spot that thanks American taxpayers for their assistance, acknowledging that “We all fall down,” and, “Thank you for helping us get back up.” However, the story of whether or not GM and Chrysler will maintain competitiveness and profitability is a chapter that remains to be written.

That said, Overhaul is complicated at times, but otherwise a fascinating story with a colorful cast of players facing an never-before-seen challenge, and ultimately, achieving success.

Thoughts on General Motors

This past week I’ve been following the news surrounding the auto industry very close. I was surprised at the forced ouster of Rick Wagoner at GM. I can’t say as I know much about him, but from recent headlines—plus an interview published in Motor Trend a couple years ago—I kind of liked the guy. I thought he understood the scope of what was going on in his company and what it needed to succeed.

I don’t know if a management change really includes a promotion for the COO/president, but hopefully Mr. Henderson can give GM what Wagoner was deemed unable to.

When I first heard the news of Wagoner’s getting the boot, followed by President Obama’s pledge to back GM warranties in the event of bankruptcy and/or failure, I immediately thought this was socialization of the automotive industry. Could GM become the new AmTrak? Would it be a government-run, money-losing, yet distinctly American venture? Would President Obama remake the company to serve his agenda: building bean-shaped, hybrid, Prius-like green cars?

After reading columnist David Broder’s take on Obama’s heavy-handed dealing with GM, I was introduced to an alternative viewpoint. By rejecting GM’s viability plan, Obama is playing hardball with the company, and namely the UAW. And while socialism is generally seen as a tenet of mainstream Democrats, union busting certainly is not.

Here are a few ideas I have on how GM can fix itself. Stop building crap. Rebadging a Daewoo (a car that failed in the U.S.) as a Chevy Aveo shows a real lack of commitment to quality. Stop marketing the same cars under 10 different nameplates. Ok a bit of an exaggeration, but the Saab 9-7x, Chevy Trailblazer, GMC Envoy, Buick Rainer, Isuzu Ascender, and Oldsmobile Bravada don’t even look remotely different. Finally, pursue the Chevy Volt. I’m not a big fan of hybrids and green cars, and I thought the Volt was stupid at first. However, there may be something useful to electric/gas technology that goes beyond traditional hybrids. Another subject for another blog…

One last thought, then I’m done. What do you figure Rick Wagoner drives? These days, even a Cadillac isn’t generally seen as all that great of a status symbol. Perhaps a Saab? (Before GM killed/sold off the brand.) Or maybe a Jeep Grand Wagoneer, kind of like his last name? Oh wait, that’d be supporting the competition. I don’t know…Wagoner’s wheels is but an interesting point to ponder…