I knew Fritz Henderson wasn't $%#T!
Last Updated: September 03. 2010 3:42PM
Rattner's memoir opens curtain on auto bailouts
David Shepardson / Detroit News Washington Bureau
Washington -- The Obama administration vetoed attempts by General Motors to abandon its Detroit headquarters, a new book by a former top auto adviser reveals.
The revelation comes in a 320-page memoir by Steven Rattner, who was President Barack Obama's auto adviser for six months last year, and helped shepherd the $85 billion government bailout and bankruptcies of GM and Chrysler.
"Overhaul: An Insider's Account of the Obama Administration's Emergency Rescue of the Auto Industry" also discloses Rattner secretly forced out GM Chairman Kent Kresa in June 2009, and offered GM's top job to Renault-Nissan CEO Carlos Ghosn.
The book paints a critical portrait of Chrysler Group LLC CEO Sergio Marchionne, other top executives and many in the government.
A draft manuscript was made available to The Detroit News by publisher Houghton Mifflin ahead of its Oct. 14 publication date.
Written with the help of a veteran auto journalist, Jeffrey McCracken, and Sadiq Malik, a former auto task force staffer, Rattner's memoir offers new evidence that the Obama administration's influence on the Detroit automakers was larger than previously revealed.
In addition to the government's role in personnel matters, and in keeping GM in Detroit, the book discloses the White House initially planned for a $100 billion bailout, but the aid package GM, Chrysler and their affiliated finance companies eventually came in at $85 billion.
The administration also considered a $10 billion fund to help auto suppliers -- but cut it to $5 billion -- and weighed but discarded a plan to provide funding to help suppliers go through bankruptcies.
***Before his ouster as GM's CEO, Fritz Henderson proposed moving GM headquarters from Detroit's Renaissance Center to the automaker's Tech Center in Warren, arguing it would save money, and symbolize a commitment by the company's leadership to be more hands-on managers.
Rattner praised the idea. But a White House aide, Brian Deese, who has been heavily involved in auto policy, denounced it.
"Are you out of your mind?" Rattner quoted Deese as saying. "Think what it would do to Detroit."
Henderson proposed donating the iconic headquarters on the Detroit River to the city. Detroit received $20 million in tax revenue from GM.****
The White House even commissioned an outside analysis of the impact a move would have on Detroit property values, Rattner wrote. The answer: an estimated "double-digit hit on already deflated real estate prices."
Leaving the RenCen "made a lot of strategic sense," Rattner wrote. But Michigan native Gene Sperling, a U.S. Treasury Department official, was one of many who fought the idea.
"It's over for Detroit if you do this," Sperling yelled in a meeting, Rattner recalled. "Don't do this to (Detroit Mayor) Dave Bing... He's a good man trying to do a good thing."
The request was passed up the chain to White House Chief of Staff Rahm Emanuel, "and word came down that the move would be a bridge too far," Rattner wrote.
"Fortunately, this unique intervention into a specific GM matter was never leaked to the press, saving us from having to explain how it comported with our policy of letting GM and Chrysler manage their own affairs."
In a Detroit News interview earlier this year, Henderson confirmed his interest in moving GM headquarters, but White House involvement has never been publicly reported.
Neither the White House nor GM would comment on Rattner's account.
"The book is history," said GM spokesman Greg Martin. "We're a new company and we have too much work to do and no time for book reviews."
Ghosn declined GM job
Rattner discloses that he offered the top job at GM to Ghosn after Rick Wagoner was ousted in March 2009. Ghosn had courted GM for a tie-up with the Renault-Nissan Alliance in 2006.
He was still interested in the U.S. automaker: "I would like GM to be part of our alliance," Ghosn said bluntly.
Rattner said he politely rejected the idea, because there was too much overlap. But he asked Ghosn: "Would you be interested in becoming CEO of GM?"
"I knew it was a long shot and was not surprised when he deftly demurred," Rattner recalled.
A Renault-Nissan executive familiar with the situation said that in 2009, Renault and Nissan were still working through the industry's deep downturn.
"(Ghosn) felt considerable loyalty to both companies and wanted to see them through the crisis," the executive said .
Rattner wrote that he also courted an unnamed executive in the Midwest to become GM chairman, and flew to the target's home for a meeting before settling on Kresa, who was already on the GM board.
A few months later, however, Rattner decided that he wanted former AT&T CEO Edward Whitacre Jr. to join the board as chairman.
Over dinner, Rattner wrote, he tried to convince Kresa to step down. When that failed, Whitacre and Kresa met privately in the map Room of the Treasury Department. Afterward, Rattner told Kresa he was making the change.
Whitacre became chairman, and succeeded Henderson as CEO.
Kresa never disclosed the turmoil and left GM's board last month when he reached mandatory retirement age.
Henderson has been named senior vice president of Sunoco Inc. and will become chairman and CEO of SunCoke Energy, a company to be spun off from Sunoco's core oil refining and gas station business in 2011.
Wagoner's payout an issue
The president, Rattner says, was concerned by the decision to allow ousted GM CEO Rick Wagoner to collect $7.1 million of the $22.1 million he was owed in accrued pension benefits.
Wagoner was dismissed from GM in March 2009.
"I could see the president's jaw muscles tighten," Rattner recalled.
Obama had difficulty with the "notion of writing a check that was about 100 times the annual income of a GM worker to the CEO who had brought the company down."
The president, he said, "grimaced and reluctantly acquiesced. I found it striking that the president of the United States had spent more time on an issue of executive pay than on the question of whether to dismiss a major CEO in the first place."
Marchionne rankled UAW
Rattner's book also sheds light on actions inside Chrysler, the other automaker bailed out by U.S. taxpayers.
Fiat CEO Sergio Marchionne, he said, clashed with UAW President Ron Gettelfinger and sought to take advantage of the president's timetable, which required a quick tie-up between Fiat and Chrysler.
Marchionne, he said, told Treasury officials: "This is a totally new ballgame."
He also revealed that the government wanted Fiat to put up money for getting a 20 percent stake in Chrysler.
"We struggled to persuade Sergio to put up some cash," Rattner wrote.
Fiat put up no money in the Chrysler tie-up.
Marchionne, according to Rattner, told Gettelfinger about the need to accept a "culture of poverty" rather than a "culture of entitlement," attacking, among other things, retiree health care benefits.
Gettelfinger responded angrily.
"Why don't you come and sit with me and tell a 75-year-old widow that she can't have surgery and that you killed her husband?" the union chief retorted.
Inside the White House
In addition to board room politics, Rattner's book tells White House tales.
The president, Rattner recalls, asked aloud why Detroit automakers were unable to replicate the success of the Japanese car companies.
"Why can't they make a Corolla?" Obama asked in November 2008, shortly after winning the presidency.
Rattner acknowledged that Detroit's automakers weren't entirely to blame.
"I would discover that the struggles of GM and Chrysler were as much a failure of management as a consequence of globalization, oil prices, and organized labor," he writes.
"The auto rescue remains one of the few actions taken by the administration that, at least in my opinion, can be pronounced an unambiguous success.
"Detroit should count itself lucky."
From The Detroit News: http://www.detnews.com/article/20100...#ixzz0yV1CXVDO