Former car czar says GM, Chrysler were on brink of death

Posted on Wednesday, October 21st, 2009 at 12:34 PM EDT.

The former head of the Obama administration’s auto task force defends the aggressive push of General Motors Corp. and Chrysler Group through bankruptcy court, saying the companies might have liquidated, costing tens of thousands of jobs, if a reluctant Congress had been in charge of approving aid, the Detroit Free Press reported.

“We imagined that the collapse of the automakers could devastate the Midwest beyond imagination,” Steven Rattner wrote in Fortune magazine, the Free Press said. “We were determined not to fail.”

Rattner wrote that task force members were appalled 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.” In the article, he defends GM Chairman Rick Wagoner’s removal and says the task force eventually gave the firms “the best possible chance to succeed,” the Free Press said.

Rattner, a private equity investor and well-connected Wall Street player, oversaw the $80-billion effort that led GM and Chrysler through bankruptcy, giving the government a 61 percent stake in GM and an 8 percent stake in Chrysler, the paper noted. While the task force had just five weeks to ramp up before a March 31 deadline, Rattner said it decided early on to remove GM Chairman and Chief Executive Officer Rick Wagoner as part of the cultural changes needed at the automaker, especially when the group found a February turnaround plan sorely lacking, the story said.

Wagoner’s departure was “a bigger part of the story than it should have been,” Rattner said in the article. “I was stunned by the suggestion that the government, GM’s only source of fresh capital, was somehow out of bounds for asking for the resignation of a CEO who had lost $13 billion of taxpayer money in three months and was now asking for more,” the story said. (Detroit Free Press)

This entry was posted on Wednesday, October 21st, 2009 at 12:34 PM EDT and is filed under Restructuring. You can follow any comments to this entry through the RSS 2.0 feed. Comments are currently closed.