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30 Issues in 30 Days: Auto Bailout

True/False: What’s Good For The GM Bailout Is Good For America

Wednesday, September 22, 2010

Steven Rattner, President Obama's former car czar and author of Overhaul: An Insider’s Account of the Obama Administration’s Emergency Rescue of the Auto Industry in Americadiscusses his new book and whether the bailout of the auto industry was good for America.

Guests:

Steven Rattner

The Morning Brief

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Comments [40]

Warren from New York, NY

Mr. Rattner is clueless. His envy of Germany's machine tool industry is a case in point. He will gladly scrap jobs that aren't high-tech enough to pay more than slave wages, citing this industry as a possible one. But he can't ask how come Wisconsin lost its machine tool industry. That's someone else's problem, at least until he is made to take a Steinberging trip west in a jalopy starting in Detroit, which I highly recommend for his soul.

He gets as far as blaming GM's board for the firm's demise. Thanks to Harry Truman, German workers have board representation. Could it be that this has something to do with why German industry has kept its edge? Could that be Wisconsin's problem?

Rattner will never get out of his head what entered it while sitting on Larry Summers' knee until Moore advances from the Steinberg to the Nobel economics prize. Now there's a thought.

Sep. 29 2010 11:44 AM
Martin Brod from New York

Ratner on Elizabet Warren threat to the Banks-
Banks will shrivel up if they can't use 20 page fine print credit card contracts. Really?
Ratner on adulation of Sommers-
As Sec. of Treas- Sommers was
culpable as we alll (myself included) were culpable..
Well not exactly ALL. Brooksley Born then head of the CFTC fought for government oversight on derivatives trading (see Front Line Brooksley Born interview) only to be scorned by Sommers and his acolytes. Perhaps he thought that women did no have the intellect to deal with matters of high finance.
I think that Steven Ratner has done his job well
for Somers and others who were so competent
in destroying this country.

Sep. 23 2010 09:50 AM
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Sep. 23 2010 08:38 AM

what about senator corker voting against the GM loan before celebrating GM plant reopening thanks to the loans that he voted against

Sep. 22 2010 04:33 PM
RJ from Brooklyn

I found it interesting during the debate about the "bailout" (technically it was a loan, wasn't it? unlike TARP) that a big fuss was made over upper management contracts at financial firms that could not be broken because they were legally binding, despite their incompetence. But it became so easy to force the UAW to renegotiate a contract that's been in existence for about 80 years; isn't that one at least as legally binding as the head of Merrill Lynch or BofA's?

Sep. 22 2010 02:19 PM
Lance Lofthouse from Hackensack, NJ

I remember a story from my childhood that went something like this... Henry Ford invented the car made from replaceable parts. Besides making the car on an assembly line he included one absolutely brilliant idea. He designed the car to sell at a price his workers could afford. No pun intended concerning the word af-ford. I can't believe Ratner dismissed Michael Moore's comment about UAW wages. Adding insult to injury I listened to the CEO of GM complain on a radio interview that GM could not be competitive with Toyota because of UAW pension payouts. GM did not set aside the pension funds. GM used the pension income as operating capital. Now, when it came time for a payout GM is whining that this drives up costs and they can't compete. How is this any different from running a Ponzi scheme? Shouldn't the executive team of GM be thrown in prison? (BTW: Congress approved the same Ponzi scheme concerning Social Security funds during the Johnson years.) Ratner's casual and brain fogged dismissal of Moore's simple reasoning about of our current economic disaster is based on Ratner's myopic, ivory tower academic view. Ratner is an icon of economic disaster. I guess the mighty Ratner, in all his academic (emperor's new clothes) splendor, is ignorant of Occam's Razor. The solution is the problem! All of these financial wizards need to have the curtain drawn back to reveal their destructive leadership. Ironically I must admit I am a member of the NRA, a devout conservative and loyal follower of the dearly departed Bill Buckley yet I feel with all my heart that Moore absolutely, positively nailed the issue. We need more clear minded visionaries like Moore. I was beside myself because someone with airtime actually brought this obvious truth to light in such an eloquent fashion. At this point Michael Moore has my vote. I hope he would banish Ratner and his ilk back to academia where all they can do is try to pollute the minds of unsuspecting college students.

Sep. 22 2010 12:52 PM
Virginia Greene from White Plains

I think it was necessary to bail out GM. Remember, the country was in panic mode at the time. It's easy to Monday morning quarterback the details and how to do it better, but the general idea was a way to save jobs and a very big American company.

Sep. 22 2010 12:43 PM
Tim from Brooklyn

Warning: Rant!

I was quietly in favor of the bailout until a recent business trip, where my requested rental Ford Focus was replaced by a 2010 Chevy Aveo.

How can a car the size of a golf cart-- that handles like a pig-- only get me 26 mpg highway from Boston to Brooklyn? My 1994 Corolla used to get me 30-plus.

The fact that Chevy would put their nameplate* on such a joke of a car tells me much about GM. They will fail again if they continue with shoddy quality control/ poor brand management. I'll feel bad for the US workers if this happens, but I won't open my wallet again.

*Aveo is made by GM subsidiary Daewoo in Korea, so it's not like it's making jobs here either. Does GM lack the faith/imagination to build a better small car here?

Sep. 22 2010 12:15 PM

GOD, I came in on the tail end of this and am frustrated beyond belief.

WHAT WE SHOULD HAVE DONE DIFFERENTLY:
Take the banks & auto co's into RECEIVERSHIP and converted debt into equity. This is a very logical and normal process, cf: S&L crisis (see: Prof. William Black who was an S&L regulator, and Pershing Square hedge fund CEO Bill Ackman).

For every shill such as Ratner -- an appropriately named shill, btw -- I would LOVE it if media would have on someone like Prof. William Black as a voice of reason. For those vast millions of us who have no clue about the "mysterious" world of finance (it really isn't it's just a huge scam that wears a mask; "casino" isn't fair, because casinos are fair and tightly regulated, unlike the fraud that banking is, ie, to wit, the SEC and the CFTC who were completely out to lunch as the meltdown was building) we need to hear voices of reason based upon history, not fear mongering and shilling for elite money interests.

We are a joke - a tragic, sad joke. Heard from the City of Bell, California lately? Look it up and get ready folks - it's not an isolated situation.

Sep. 22 2010 12:08 PM
Unheard from NYC

We're doomed. There is one solution and it amounts to a full on class war. This is sad and tragic. The super rich have reestablished feudal law.

Sep. 22 2010 11:54 AM
RLewis from bowery

"No it's the CEOs whose salaries have to be slashed immediately and substantially."

Robert is absolutely right here.

Unforturnately, the only way this is going to happen is by letting some of these big companies go under. That will hurt a ton of others in the process, but CEO's do not seem to learn by any other method. Crass, soulless capitalism is the only way to go.

Sep. 22 2010 11:53 AM
Leah from Brooklyn

If Mr. Rattner had two x chromosomes he may have had a different impression of Mr. Summers.

Sep. 22 2010 11:51 AM
Josh Levine

"I would love to know what we should have done instead."

NOTHING. GO HOME.

I was really looking forward to watching capitalism do its thing on the auto industry, among others...

I am enough of a patriotic American to be confident that, despite what our current crop of rich geniuses assert, the country would not have spontaneously combusted.

Universal health care. Roads. Tunnels. Broadband. Clear laws. If the government lays down the infrastructure, real business people will take care of the rest.

Sep. 22 2010 11:51 AM

What kind of car was he delayed in? If he's on a book tour, his publisher or publicist probably got a car service since he's undoubtedly doing more than one interview today.

Sep. 22 2010 11:50 AM
sophia

"What should we have done differently?"

How about what Sweden did?

Temporarily take over the banks, investigate them, chop them up for parts and make all the shareholders lose their money, instead of getting the taxpayers to bail them out and then pay for it at the cost of Social Security and every other public benefit.

Sep. 22 2010 11:49 AM
Robert from NYC

I just don't understand the point that someone is THE guy/gal for the job. Well there has to be at least one other person who can "do the job". What if THE guy/gal died? Then there is no one who can do the job? Then we're really screwed? I DON'T THINK SO.

Sep. 22 2010 11:49 AM
John from Staten Island

What does Mr Rattner think about the consolidation of the banking industry. Has a banking merger ever been denied due to anti-trust?

Sep. 22 2010 11:44 AM
Em

There is this huge myth about workers wages. Wages were able to increase because of the profitability of the company, i.e. they could afford it. It is mismanagement that at fault and that needs to be continually hit home. The real issue is greed and the maximization of profits and dividends and the hugely disproportionate salaries of executives. That was the basis of globalisation, where suddenly the way was open to exploit slave labor abroad, and use this as a leverage tool against workers who had finally achieved some fairness. Profits are not some objective property that is automatically reinvested, and the auto industry is a prime example that profits were not reinvested in this country but enjoyed by the wealthy few, much of it abroad. The disparity between rich and poor and the decimation of the middle class which has occurred will not be given up easily by those that have profited the most.

Sep. 22 2010 11:44 AM
sophia

Mr Rattner lost all credibility with his defense of Wall Street.

It was not just a liquidity problem and the only reason WS is "profitable" now is because their private debt has been turned into a public debt.

Just one of many examples is the fact that they overpaid for shares by 30 percent according to E Warren.

Oh, so he disapproves of Warren What a surprise.

Sep. 22 2010 11:42 AM
Karen from NYC

What the non-UAW workers got was a small piece of post-sale asset sale, "old GM," now known as Motors Liquidation Corp. There will be very little money for the creditors who are stuck with MLC asset; hence, the union workers have been screwed.

Sep. 22 2010 11:41 AM
JC Brotherhood from Nyack NY

If the accepted economic model is predicated upon outsourcing production and then off shoring profits either in tax shelters or investing in foreign producers, who then will be left in this country to buy all the stuff you want to sell us?
When did we evolve from being "good citizens" to being "good consumers"?

Sep. 22 2010 11:40 AM
Robert from NYC

Well then isn't it the point that the board DOESN'T represent the shareholders!!! Duh! No it's the CEOs whose salaries have to be slashed immediately and substantially. He seems to be avoiding the outrageous salaries and benefits of theses companies. Yes if it takes govt interference, as they like to call it then so be it. Tell me these folks who hate the govt in anything I ask then why do we have a govt? I mean what purpose does the govt serve and govt that's supposedly for, by and of the people! If it does nothing then it is not for, by and of the govt (my prepositions may not be in correct order but you get my drift).

Sep. 22 2010 11:39 AM
Karen from NYC

And don't let Ratner blame the Judge. Judge Gerber had very little choice in the matter, after the government witnesses had painted, on the record, a picture of the "great depression" that would occur, if GM were to go under. All week, we heard, "the government is ramming this through."

I'm an Obama supporter, but this bailout was no "workout" -- it was rammed down the throats of labor.

Sep. 22 2010 11:38 AM
jim d from NJ

Did I hear right? Mr. Ratner said he surprsed by the suppressed wages of American Worker due to the downward pressures of wages of workers in India, Mexico, China? WHERE HAS HE BEEN THE LAST THIRTY YEARS? guess he must of sleeping and not heard the infamous sucking sound Ross Perot warned of.

Sep. 22 2010 11:38 AM
Karen from NYC

And don't let Ratner blame the Judge. Judge Gerber had very little choice in the matter, after the government witnesses had painted, on the record, a picture of the "great depression" that would occur, if GM were to go under. All week, we heard, "the government is ramming this through."

I'm an Obama supporter, but this bailout was no "workout" -- it was rammed down the throats of labor.

Sep. 22 2010 11:38 AM
RLewis from bowery

Brian,
Vivian's question was much more important that you gave it attention.

She should know that the investors are mutual funds and other corporations, not individuals, so the Board does not have to answer to them. That's how you end up with 'go-along' Boards. This must change if capitalism is to work, but there is no mechanism to make that happen. And your guest clearly has no good answer.

Sep. 22 2010 11:37 AM
Unheard from NYC

More money to workers may not be the solution to our short term economic woes but how doesn't Michael Moore's argument make sense? More money to the working class just means more spending by this class. Not that this is easy to achieve.

Sep. 22 2010 11:36 AM
Karen from NYC

I worked on the GM bankruptcy matter. I would like Mr. Ratner to explain to Brian's audience why the retiree benefits of already-retired, non-UAW GM workers were terminated -- no more pension, no more health benefits. It wouldn't have broken the bank to save these workers. I want him to know that what he did to these senior citizens, many of whom had worked for decades for GM or its satellite companies, was disgraceful. Shameful. Contemptible.

I listened to all the testimony at the sales hearing -- a week of it -- and was sickened by GM's treatment of these non-UAW unions.

Sep. 22 2010 11:34 AM
Antonio from park slope

The problem, is not free trade etc. It's how the money is spread upstairs. Look into how much ceo's and executives make vs. the average joe. YOU BETCHA!

Sep. 22 2010 11:34 AM
Trent from Queens

Mr. Rattner stated he reviewed GMs books early in his reign as car Czar and was appalled.
I have heard that the auto business is one of the most complicated businesses to run and conventional accounting is not the most appropriate to use. Is this true?

How did Rick Wagoner respond to Mr. Rattner's findings regarding their accounting?

Sep. 22 2010 11:33 AM
JP from NJ

Agreed Brian. Toyota and Honda manufacturing in America would have gone down in flames to because they are all connected by part manufacturers.

Sep. 22 2010 11:32 AM
Liam from East Elmhurst

Ask Sarah Palin...question one...
Where is Detroit?
What is an auto?
What is the air-speed velocity of an unladen swallow?

2 politcal parties-one pocketbook.
1 lousy result-the general public doesn't count.

Sep. 22 2010 11:30 AM
jane

I live in the Hudson Valley and there were MANY old-old cars. The Cash for clunkers really did help people get rid of old cars and hopefully has made the air cleaner for all of us.
The bail-out seems to have been well thought-out and certainly there are more "USA-made" cars on the road. Seems to be part of a whole picture, not just one industry. The health care is supposed to replace the costly car industry health care, I thought.

Sep. 22 2010 11:29 AM
Brian

the auto companies, their suppliers, the towns and cities they are based in, all would suffer, a million jobs could have gone overnight in a giant ripple effect, along with a big chunk of our industrial base.

Sep. 22 2010 11:23 AM
Steve from Manhattan

While GM management is quick to blame the unions for GM's precipitous decline, has GM management ever acknowledged the huge disparity between their own compensation and that of their average line worker? Unions helped create the middle class and the middle class bought GM cars for years. If management decides to outsource manufacturing to cut costs, why is it surprised that GM car sales in the U.S. declined? This applies to the entire manufacturing sector. Globalization has benefited only the fat cats at the top and is quickly eliminating the middle class.

Sep. 22 2010 11:20 AM
Shawn from Prospect Heights

Some argue that bailing out GM sets a dangerous precedent for government involvement in private industry: however the unfortunate reality is that the bailout was simply a necessary result of more than 40 years of government support for an industry selling inefficient, outdated cars that americans couldn't afford.

Sep. 22 2010 11:19 AM
JP from NJ

My 2009 Honda Accord was 100% assembled in America. 75% of the parts were also made in America. You can piss and moan about saving over paid union jobs. But what you don’t understand is that the sourced out companies in America that make parts for my Honda also make parts for Toyota, Ford, GM, Chrysler, etc, etc that are assembled in America. If the government had not bailed out the auto industry, no cars would be made in America, period. Theses small mom and pop shops would have gone out of business over night if they lost GM and Chrysler’s business and there would be nobody here that would be ready and tooled up to pick up their business the next day (physically an logistically impossible) except India and China (oh and by the way China and India would be more then happy to assemble these cars, even with the high shipping and import tax…). These are skilled labor jobs that don’t require a degree like the white collar banking jobs. The ripple effects would have been catastrophic in the blue caller sector …

Sep. 22 2010 11:17 AM
Gerald Cohen

GMC plans to sell a major percentage of its stock to a Chinese company that is controlled (owned) by the Chinese government. If the NY Times is correct with that statement, where does that leave the US?

Sep. 22 2010 11:08 AM
RJ from Brooklyn

From a recent All Things Considered interview:
"It was his years as a successful financier, however, that caused complications in the vetting process for his post as car czar. Rattner says the $400,000 in legal costs he incurred to be appointed is an example of the sacrifices of leaving the private sector for the public arena. While he thinks the money he spent was an exception to the rule, he says the bar is still set too high for those in the private sector who wish to serve their country."
Rattner: "They simply wouldn't do it, and I think, while there are great people in Treasury, great people in the White House, that's a really bad outcome for the country not to attract the best and the brightest, particularly when you have an economic and financial crisis of the sort that we were facing."
My reply: I couldn't help but be moved by the pain in Mr. Rattner's voice as he described the difficult government vetting process he endured after being chosen to help rescue one of the country's largest industries. After all, he was only asked to help save tens of thousands of businesses and jobs. And it made me equally sad that his friends, with similar, as he described it, "complicated" finances "simply wouldn't" tolerate that sort of trouble--and price; after all, not everyone has $400,000 for legal fees. Oh, wait--they all do. And to pay this just for a time-out performing services for the peons, I mean, the public. After which his friends would return to jobs that pay many multiples of the salaries that social workers, health workers, teachers, first responders, advocates, community organizers, and so on earn performing public service year after year after year. And thankfully it wasn't discovered that buried within one of those "complicated" pieces of financial manipulation he's performed at his usual job didn't suggest a conflict of interest--after all, we don't have an insane 24/7 news cycle that would have made hash of the president if he did. Perhaps what disturbs his "best and brightest" friends most is that they are really unsure of what's in their portfolios--and they don't want, bless their hearts, to be found owning a piece of the people's lives they're supposed to be helping.

Sep. 22 2010 10:46 AM
superf88

what did obama and bush disagree on, in this area, if anything?

either specifically or philosophically.

Sep. 22 2010 10:25 AM

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