Insights on the Auto-Bailouts
Steven Rattner, the administration’s auto czar, wrote an unusually frank article in Fortune about his time working on the auto bailouts and re-structurings. It’s a must read: Article Link
The President’s political advisers were as torn as his task force: Polls universally showed the public strongly opposed to the auto bailouts. At the same time, the advisers recognized the severe economic and political consequences of a Chrysler shutdown across broad swaths of the industrial Midwest. We were dazzled that chief of staff Rahm Emanuel — a former congressional leader — could identify from memory the representatives in whose districts the large Chrysler facilities lay. After about an hour, the President asked for any final comments and then said, “I’ve decided. I’m prepared to support Chrysler if we can get the Fiat alliance done on terms that make sense to us.”
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.
Certainly Rick and his team seemed to believe that virtually all of their problems could be laid at the feet of some combination of the financial crisis, oil prices, the yen-dollar exchange rate, and the UAW. It seemed completely obvious to us that any management team that had burned through $21 billion of cash in a year and another $13 billion in the first quarter of 2009 could not be allowed to continue.