Steven Rattner Interview: Former Car Czar Talks White House Turnover, Rescue Of GM
Former car czar Steven Rattner, whose new book, "Overhaul", has been making waves as the first tell-all book to come out of the Obama administration, spoke to The Huffington Post about recent turnover at the White House, his job rescuing the U.S. car industry and his future.
What do you think of these changes at the White House in recent days - with Summers leaving, Rahm Emanuel perhaps leaving?
I think it's very hard unless you've been there to understand how brutally tough it is to work in the White House in the middle of an economic crisis, it is an exhausting, wearing life that very few people can stand for too long. I'm a huge Larry Summers fan - I think he's fantastic. I think it's a great loss that he's leaving. And I hope they find someone with his skill set to replace him.
Did you have a sense when you were there that he had a time limit?
I only heard the same rumblings everybody else heard about it. I didn't have any particular knowledge one way or another as to what he was going to do.
And the same, I guess with Orszag or Rahm or others?
Yeah, I guess I was surprised by Orszag because he wasn't there very long. Rahm has always said that he wanted to be mayor of Chicago, so I get that. But I think that you can sum it all up by saying that there is more turnover at this stage of an administration that one normally sees but for very understandable reasons. This has been a much more intense experience than anybody really signs up for when you take a job like this. I think people want to get their lives back.
In the past, you've helped raise money for candidates. Have you heard anything about people already organizing to raise money for Rahm for a mayoral campaign?
I just read somewhere that he was in New York meeting with some "Wall St types" to talk about it. I was not one of them so that's literally all I know.
What has been the White House reaction to the book?
Well, I saw Rahm quoted in the Washington Post yesterday or the day before saying that people should read my book and Woodward's book together and they will have a good picture of a president who is muscular and decisive and moving the country forward.
What do you sense now in terms of how GM and Chrysler are doing?
They're both doing better than expected. GM has produced two quarters of net income which is extraordinary - they hadn't made profits in several years. And Chrysler has had two quarters of operating profit, which is also very good. I think the management changes at GM have been all for the better. And I think both companies are very well-positioned to compete.
How do you think the auto rescue effort differed from TARP? The bailout has become a curse word especially as we approach the midterms.
Yeah, I understand that. I am a great believer that TARP saved our country You can rail about it however you want but at the end of the day, if we had not had TARP, we would have had a meltdown in this country of unbelievable proportions. What makes people angry is that the banks were "bailed out" without enough sacrifice by their stakeholders. That's the distinction between how the banks were treated and the auto companies were treated. It's not because the administration didn't want the stakeholders in the banks to sacrifice. It's because there is a bankruptcy mechanism that you can use for auto companies and other industrial companies, where with a bank you can't really use that process because there are so many counterparties and a large bank is so intertwined in the financial system that taking them through a conventional bankruptcy would inevitably bring down many many other banks along the way and that was just not possible. This was a weakness in our system that was exposed by the financial meltdown, and the new regulatory reform package is designed to prevent a recurrence of that, to provide a systemic risk resolution mechanism. Whether it will work or not, we'll see.
Do you think it will work?
I think the jury is out.
Some people have said that "too big to fail" is still part of regulatory reform.
Well, there is a systemic resolution authority that's part of the regulatory reform bill. The question is whether it will work or not. And it's completely untested. I'm not sure the legislation really spells out in enough detail how it should work. I think we're in the unfortunate position of not really knowing if it's going to work until we need to use it.
I saw in the past that you've expressed a little bit of buyer's remorse that the auto task force failed to impose tougher pay reductions or to reform bloated pension programs at GM and Chrysler. Do you still feel that way?
I think what I said was... I don't want to second-guess myself too much because on balance we really did get to the right place. But what I did say was that in retrospect, we could have probably asked for a little more sacrifice from all the stakeholders, not just the unions but also the lenders and other interested parties. We were under enormous time pressure and [at] an extra scary time in the economy so there was a limit to what we felt comfortable doing. But I think you could have made an argument that all the stakeholders could have sacrificed a little more and the pensions is one example.
And are you still in touch with the guys in Detroit? What is the feedback you get from them on the job done by Obama's auto task force?
Frankly, they had some mixed feelings about the task force. Nobody wants to have a bunch of outsiders that they aren't sure understand their business come parachuting in and become the new sheriff in town. I think that is understandably destabilizing to a lot of people but I would like to think that people in Detroit in general feel that we saved their core industry... I hear that every time when I go to Detroit. I get a lot of gratitude for what we did.
There is a lot of feeling that the car companies needed to be rescued compared to Wall Street.
Yet shockingly to me, when you look at the polls, the auto bailout is also not that popular. And I don't really get it because to me it's sort of an unambiguous success. I'm just hoping that as we get close to the IPO and people se the real value of GM and see that its going to succeed. I hope that they will appreciate what the president did for them.
Now you didn't touch too much on the pension fund investigation [in which Rattner's former private equity firm, Quadrangle, is being investigated by the SEC and New York Attorney General for hiring placement agents to land business with state pension funds]. Were you limited in what you could describe?
I was very limited in what I can describe, because it's an ongoing matter. But secondly, I wrote a lot of stuff about many other aspects of my life and my editor basically said, "You know, people aren't really interested in your life. They're interested in autos and the Obama administration." So my editors didn't have a lot of appetite for personal aspects of my life.
I do want to ask, in this case, whether you think [New York Attorney General] Andrew Cuomo here in NY turned up the heat because you took the car czar job?
Unfortunately, I'm precluded from getting into that. You can draw your own conclusions.
Can you say, you mention that you checked out [placement agent] Hank Morris with [New York Senator] Chuck Schumer...
I'm not getting into any of this...
Did you make it clear to Schumer that you were thinking of hiring Morris as a placement agent?
The book speaks for itself.
Well, you describe it in the book...
What's in the book is in the book. I wouldn't walk away from anything in the book but I can't discuss it or amplify it.
I just wanted to know whether you made it clear why you were interested in Morris
I can't go there. I'm sorry.
What's the future for you?
At the moment, I am trying to sell books... And I am spending some time, I continue to help to work to oversee the mayor's -- Mayor [Michael] Bloomberg -- money management operation. All that is keeping me very busy.
Would you be involved in any role in any future Bloomberg political campaign?
I would do anything I could do to help the mayor in any capacity. I think he's an extraordinary guy and I would be very pleased to help him any way I could.
Any return to private equity?
I don't feel that. I feel that 26 years on Wall Street as a full-time occupation, I feel that I've been there and done that.