Overhaul: An Insider's Account of the Obama Administration's Emergency Rescue of the Auto Industry

by Steven Rattner

A uniquely informed investigative account of one of the biggest financial crises of President Obama’s early administration

 

During his first year in office, President Obama faced the possibility of more than a million lost jobs as GM and Chrysler headed for financial ruin. He joined forces with Treasury Secretary Tim Geithner and economic advisor Larry Summers in a historic government intervention to keep these two auto-industry giants afloat, working against a ticking clock and fielding vocal opposition from free market champions along the way. It's from this vantage point that former New York Times financial journalist Steven Rattner witnesses a new administration's grace under pressure in the face of gross corporate mismanagement—a scenario rich in hard-earned lessons for managers and executives in any industry.

Genres: Business, Politics, Nonfiction, History, Economics, American History, Government

373 pages, Kindle Edition

First published January 1, 2010

About the author

As Counselor to the Secretary of the Treasury, Steven Rattner led the Administration's efforts to restructure the auto industry. Prior to that, he was Managing Principal of Quadrangle Group, LLC. At Lazard Fr?res & Co. he was Deputy Chairman/Deputy Chief Executive Officer, after tenures at Morgan Stanley and Lehman Brothers. He was also employed by the New York Times for nearly nine years, principally as an economic correspondent. He continues to write for the New York Times, Wall Street Journal, Washington Post, and Financial Times. He lives in New York. "

Reviews

[Alexandra · Rating 3 out of 5]

Long swaths of boring but I thought it would be useful to have read this and that’s probably right. This would be the perfect story to be told by The New Yorker but instead we get the unreliable narrator of Steven Ratner who can’t help point out every indignity of government service as opposed to the glitz of Wall Street. But it’s an important story because the work was meaningful, even if Michigan inexplicably voted for Donald Trump.

[Jasond · Rating 2 out of 5]

Unfortunately this is a must read about the overhaul of the auto industry. It is enlightening because of the assumptions that a crook from wall street, with no automotive experience, was put in charge of the bailout of the industry. It would have been nice, for instance, if there would have been representation of labor on the task force.

That being said, the bailout of the industry was better handled then the financial industry. Starting wages for auto employees fell from $28 to $14/hour. That is a huge hit to the middle class in America it also drags down starting wages for everyone else. Sad.

[Greg Swallow · Rating 5 out of 5]

I thought this book was great. I heard Mr. Rattner on NPR and saw him on Colbert and I was intrigued enough to request the book from my library. The story was straightforward, Mr. Rattner wasted very little time in the story and the epilogue at the end of the book was great, as well, suggesting ways to fix our government in the future. Particularly damning was Mr. Rattner's view of congress, coming from being placed on the hot seat.

[Susan]

Great read for anyone working in Detroit or with an interest in the auto business. The Epilogue was very interesting and an insightful summary of Rattner's experience.

[Terry · Rating 4 out of 5]

This book was fun to read... maybe because I knew the outcome was a happy one.
Dear Steven,
Thanks for saving the auto industry. Love, Michigan.

[Chris · Rating 4 out of 5]

I try to read everything I can get my hands on with regards to the auto industry for a few reasons. First, I live in Michigan. Second, the history of the auto industry is so unique. Second, a lot of times people will say, with respect to decisions made, "in retrospect, those look like poor decisions." In the auto industry's case, assuming you aren't insane, their decisions had to look bad at the time they were made and in retrospect, their decisions look humorous. The Wall Street Journal's Paul Ingrassia does a good job capturing this humor in his writing, especially in his book "Comeback." Third, back in the day when I was a wannabe engineer, I tried to get a job in the auto industry and they told me to "screw off", and I've been pissed every since. Hey Daimler-Chrysler, how did that "merger of equals go?" Bite me!!!! Maybe you should have keep me on the interview list! So, it's interesting (and a bit gratifying) to read how everything bad happened to them is their fault. This book is no exception.

I wasn't sure if I would like this book because I was opposed to the bailout at the time and didn't really want to read a book where the head of the auto task force took a victory lap with taxpayer money. I was surprised though, because even though the author does take a victory lap, it is a well-deserved one. Rather than just pumping taxpayer money into the companies and letting the status quo continue (like, uh, the banks), the auto task force demanded and got major structural changes to the companies that should have happened a long time ago. The author, a private equity guy, treated the bailout as a private equity takeover (a good one, not a bungling one as with Cerberus taking over Chrysler). The Obama Administration deserves credit for letting this happen, because the temptation to just let the status quo continue with taxpayer money must have been great.

I learned some things in the book that changed my perception of the bailout. The Chrysler secured bondholders got roughly double what they would have gotten had the company been liquidated. I was under the impression that they got screwed, since the workers received a larger percentage of what they were owed than they bondholders did, and the bondholders are entitled to 100 cents on the dollar before the workers get anything. I think that it is unlikely that the bailout did anything to damage the capital market, as can been see from Jimmy Lee and JP Morgan (a Chrysler secured bondholder) rushing to jump-in the GM IPO. I also learned that GM's management was worse than I imagined, which I had already imagined to be really bad. Rick Wagoner was completely out-of-touch with reality, refusing to consider bankruptcy even when GM was down to a month's worth of cash. Bizarrely, he blamed everyone BUT GM for its problems. If the company would have had to liquidate, it would have been completely his fault. I recall reading somewhere that GM assumed they'd get a [early 1980s] Chrysler style bailout if they ever ran out of cash. This wasn't mentioned in the book, but it would help explain GM's behavior. Moral hazard rears its ugly head again.

I wondered why GM and Chrysler didn't merge and use that as an opportunity to wind down Chrysler in an orderly fashion while keeping Jeep under the GM fold. Apparently this was considered and nearly done, but the task force rightly concluded GM's management wasn't up to the task whereas Sergio Marchionne was the leader Chrysler needed. Congress was also worse than I imagined. Michigan's politicians were fairly useless (not a surprise), demanding a guy with a "manufacturing background" to head the task force, rather than a private equity guy (how did those "manufacturing guys" do running the company???) and then took credit for the task force's success. Congress also hamstrung the closing of dealers, even though everyone recognized there were too many of them, and complained about the government's involvement in the two companies for the closings. If the government wasn't involved, the two companies would have liquidated and there would be precisely ZERO dealers!!!

I still wonder why the UAW was able to drive such a hard bargain during the bailouts. The auto task force was unable to get them to make significant wage and pension concessions. I'm not all for taking away retiree pensions, but I worry that the pension burden is going to hinder "shiny new GM's" competitiveness in the future and pension obligations are usually discharged in bankruptcy. It seems to me that the UAW had zero bargaining power. Without the task force, the two companies would have liquidated and every UAW worker would have instantly been out of a job. The UAW's threat to walk away from the table just doesn't seem credible. Perhaps the Administration tipped its hand too much by saying it wouldn't allow the companies to fail? Perhaps if Chrysler would have been liquidated (this was one vote away from happening), the UAW would have made more concessions with regards to GM? Hard to know.

Overall, libertarians such as myself hate bailouts. However, given that a bailout happened, I think we got the best one possible. Libertarians will likely be surprised by the author. For example, in the epilogue, he says that a lot of the green projects funded through the stimulus will likely be wasted because of a lack of private equity focus in making these decisions. Yup! Also, in the introduction, the author says the auto companies should count themselves as lucky. Yup! Not only are they lucky that the bailout worked, but they are lucky that they went bankrupt during the financial crisis. Given GM's cash burn rate since 2004, they were destined to go bankrupt at some point. If it happened at any other time, its pretty unlikely that the bailout would have happened.

[Ankit Agrawal · Rating 5 out of 5]

A bit dated given that the events in the book happened 15 years back but that doesn't take away anything from how good the book is. It is unputdownable and reads like a thriller with plenty of drama involved. Didn't realise the herculean effort it took behind the scenes to save two of the three large American automobile companies at the height of the financial crisis in 2008-09. There's plenty of potential for a movie here along the lines of Barbarians at the Gate, wonder why nobody's gotten to it yet. It helps that the author, besides being a private equity professional, was a journalist in his earlier avatar, he knows how to weave together a good story.

[Monzenn · Rating 4 out of 5]

High four. A nice narrative about the auto bailout. I got a good look at the main cast of characters in both the government and the companies, and at a good pace too. Unfortunately some of the auto-specific items did not land for me, but it's more of my interest than the book's fault. Still a book I would recommend.

[Walter Guyer · Rating 5 out of 5]

the government stepping in to save the us auto industry was one of the major decisions that had to be made in the wake of the 2008 financial crisis. this book is written by one of the architects of this process showing just how high the stakes were and the decisions that had to be made to deal with the fallout

[Mike · Rating 3 out of 5]

Interesting account of the bailouts and thought processes. Highly dismissive of the investors genuine concerns and the implications of such a massive deviation from bankruptcy law.

[Jason · Rating 5 out of 5]

good story teller + lots of interesting detail + didn't waste time on fluff.

[Davey · Rating 4 out of 5]

(AB) (NF) Fascinating. Very detailed behind the scenes work of Obama administration guiding Chevrolet and Chrysler through bankruptcy and successfully out the other side

[John Willis · Rating 4 out of 5]

Insider account of the automobile bailout written from a non-partisian perspective. Lots of details on the meetings, numbers, and different solutions that were talked about before the auto bailout was finalized. Written in story like form, although in parts it got a little slow. Glad I read it as it gave me insight into what happened behind the scenes.

[Bill Manzi · Rating 4 out of 5]

A very good accounting of the events surrounding the U.S. Government bailout of the American auto industry. Rattner did not pull very many punches in his analysis of the problems facing the auto industry or of the individuals involved in the massive restructuring that saved G.M. and Chrysler. Rattner gave out some pretty harsh criticism of auto industry executives as well as some notable politicians, and the criticism, from my perspective, was fair and deserved. The condition of General Motors, and the absolute blindness of top executives to the management rot that brought an American manufacturing giant to the cusp of ruin, is highlighted through this book. Lots of money being paid to top managers at G.M. for negative results. Rattner goes through some of the details, including the fate of bondholders and the terms ultimately accepted by the U.A.W. , two of the areas where the results of the restructuring have come in for the most criticism. His defense of those terms is spirited, and takes into account Rattner's fundamental understanding of what could be achieved politically with the UAW. Rattner couples his criticism of the auto industry with a fairly harsh attack on Congress, and that criticism is bi-partisan. He shows the hypocrisy on both sides of the aisle, but points at Congress as an institution:
"The auto rescue succeeded in no small part because we did not have to deal with Congress. Before taking up my post, I didn't realize how important this would be. I went to Washington thinking I understood the strengths and weaknesses of our legislative branch. Either I'd been hopelessly naive when I'd covered Congress as a reporter or it had changed for the worse. I was stunned to realize that if the task force had not been able to operate under the aegis of TARP, we would have been subject to endless congressional posturing, deliberating, bickering, and micromanagement, in the midst of which one or more of the troubled companies under our care would have gone bankrupt. Congress yields authority only under the direst of circumstances, as the example of TARP shows."
Spoken like a true executive! But despite Rattner's pro-executive bias his estimations of Congressional preening and ego driven meddling ring true. Legislative bodies tend to be alike in many ways. Congress is at the top of the food chain in terms of the very worst tendencies of legislative bodies to ignore substance in favor of uninformed politics.
Rattner, for a guy with $200 million in the bank, makes it a point to highlight all the times he picked up a dinner or lunch tab. But his personal parsimony does not take away from what is a pretty good book. This issue, if handled differently by Mitt Romney, who comes from a family that ran American Motors, might have tipped the 2012 election in a different direction. At the end of the day the decision to save the U.S. Auto industry was indeed the correct course of action. Rattner helps us to understand the details that went into that decision.

[Anthony · Rating 2 out of 5]

I should have liked this book. Sure, I'm no fan of the Obama administration, and view the auto bailout as at best a necessary evil, but I love cars, business, and politics, and this book should combine it all.

But I had a hard time getting myself to get through it. It's plodding - Rattner insists on giving lots of details I don't need know, like what Bush was eating the first time he met him. He also refers to Larry Summers and Tim Geither by their first names throughout the book, which takes some getting used to.

But mostly there is the insufferable insistance that he is right, without a lot of evidence of it. He gripes about anyone who blocks what he wanted to do - car dealers not happy to be given the shaft, FDIC high-ups who are worried that loans made with cars nobody wants as collateral might not be a great risk, or bondholders who have the nerve to hold out for as much money as possible - he repeatedly says that the bondholders deserve nothing, despite the fact that they would have at least gotten something - and been ahead of the unions - in a traditional bankruptcy. Yet he has no problem repeating the mantra that it was ok to give large concessions to the unions because "it takes people to build cars" - even though, well, it doesn't take those specific people and they don't need to be paid that much. As other reviews that have pointed to the Gladwell review point out, if GM is doing better because of better products, then the management that he was so proud to fire probably was doing something right, since it takes years to develop new products.



Then again, what do you expect from someone who views Cash For Clunkers, a program that destroyed a bunch of perfectly good cars, probably used more energy building new cars than it saved in fuel economy, and drove up the price of the used cars that the working poor buy, as government at its' finest, based solely on the fact that they were able to burn through a billion dollars in a week?

[Sean · Rating 4 out of 5]

I don’t know if everyone would like this book. It’s basically a very long one-sided New Yorker article. But I got a lot out of it!

[Thomas Davis · Rating 4 out of 5]

This was a fascinating book for anyone who has an interest in the automotive industry or the way government programs are implemented at the "deck-plate" level. Regardless of your feelings an the GM and Chrysler bailouts, this book is very informative. (Usually, at this point, critics of the deal chime in.)

Rattner has a keen wit, I only wished he has used it more. John McCain, Steny Hoyer, Bob Corker; all come under criticism for their shallowness and desire to intervene whenever it fit their outlook politically. That's what politicians do. But Rattner, with his book, had a good opportunity to lay some good lumber
on these hypocrites. I wished he had done so more often. He did take up the chance to rightfully lambaste--GM in particular--the corporate clowns that ran these two companies into the ground.

A few complaints. Rattner complains of having to fill out some security paperwork for his "employment" with the U.S. Government. A feeble whinge.

Secondly, Rattner is very hard on the Chevy Volt. Considering the time-frame of the setting of the book, and the Volt's development at that time, his comments seen premature for something that is a revolutionary change in automotive transport. I am sure people complained about electricity and indoor plumbing in their early iterations.

I do love his salient point on may occasions which pointed out that "old" GM bondholders were attempting to bargain for a share of what would have been nothing if GM had been allowed to fail.

These issues aside, I'd like to see Rattner follow-up with a book on the bailout 10 years (now 7ish) down the road to see how the deal will ultimately be judged.

[Jack · Rating 4 out of 5]

This was helpful. So much was made of the US takeover of "Government Motors" and Chrysler, and I knew little of the details. This fills in a lot of holes. Granted, Rattner is not an objective observer: he led the effort to reform the US automotive industry on behalf of President Obama. SO FAR - and time may prove this wrong - this whole venture has been a stunning success. Jobs were saved and the government made two important American businesses more efficient and business savvy, unbelievable as that may sound. Concerns? Hells yeah. I don't want the government thinking they're good at this and trying it more often. Also, Rattner himself is in a bit of legal trouble. Does that make him dishonest in this book? I don't think so. But how the hell would I know? The only downside for me, a guy who only knows how to fill a gas tank and change a tire, and who is NOT business savvy, is that this book assumes a slightly higher level of knowledge about the matters discussed here. A few footnotes with definitions would have helped. Anyway, it seems that the country was well served by a few people who left lucrative jobs and opportunities to become short-term public servants.

[Bookmarks Magazine · Rating 3 out of 5]

Overhaul is, critics point out, Steven Rattner's best chance to frame the debate on whether measures taken on his watch really brought the auto industry back from the brink. It also, incidentally, provides a convenient forum for the author to air a few grievances. For all the history that might be gleaned from such an insider account, though, Rattner's story often struggles under the weight of its own details, slowing when the author focuses on e-mails or lunch menus or names dropped instead of the issues at hand. Despite reveling in the minutiae -- perhaps one of the characteristics that President Obama saw as a positive? -- Rattner makes his case for the good that could be realized from a pricey roll of the dice. Malcolm Gladwell's review in the New Yorker -- in which he credits ousted CEO Rick Wagoner for GM's eventual turnaround -- should be considered required companion reading. This is an excerpt from a review published in Bookmarks magazine.

[Colin Thomas · Rating 3 out of 5]

Fascinating, first hand account of the Obama administration's role role in restructuring Chrysler and General Motors. The book focuses on the automaker's management structure and lack of urgency that required an overhaul for them to re-emerge as healthy, profitable companies. The book does not lack for financial rigors requited to file corporate bankruptcy. However, hearing closed door conversations from The White House to the Big Three's boardroom add an insider human element to this story.

[Sean Hollywood · Rating 3 out of 5]

Mr. Rattner provides an 'insider" view of the bailout of GM and Chrysler - the decisions being made, the challenges encountered. As expected, it was well written (since the author use to write for a newspaper), and illustrates the amount of work staffers do to make "things" happen (and Mr. Rattner was a very high ranking staffer). The book barely mentioned the investigation into the conflict of interest in Mr. Rattner's holdings. Well done and interesting.

[David · Rating 3 out of 5]

To this jaded reader, most corporate writing is yawn-inducing at best, but Overhaul, recommended by a friend, was well-written and engaging. In layman's language, Rattner relates all the behind-the-scenes activity that bailed out two American companies and forced them into changes that are helping them survive the current economic climates.

The author is an ardent Democrat, but his writing is surprisingly non-partisan.

[Kathleen · Rating 3 out of 5]

Steven Rattner did a really nice job with this insider's account of the government bailout of GM and Chrysler. I think this was much more readable than the average book by a government official because he brought his no-BS, private equity style to the writing. It's pretty refreshing to see peacocks and fools called out as such in that matter-of-fact, Wall Street way, and it truly is a compelling story about saving and restructuring these behemoths of American industry.

[Carlos José Zilveti Arce M. · Rating 4 out of 5]

When started reading, sometimes I thought it was merely a personal experience, but as going through the pages it showed so valuable information, government affairs, big companies failures, intrigues.
The author was prophetic about the fate of Nissan-Renault alliance after Ghosn tenure, 10 years earlier! He’s made a precise assessment, at least.
Must read for the ones who live in the auto business.

[Don · Rating 4 out of 5]

Candid, seemingly fairly honest--Rattner lays out the auto bailout in an understandable, sometimes even a little funny, manner. He takes a lot of shots at Congress (easy punching bag) and works too hard to make it sound like he and Bob Corker are best buds, but overall delivers a well-rounded history of an extremely important event in American history.

[baggyparagraphs · Rating 4 out of 5]

Excellent memoir by the auto czar; Rattner was once a New York Times reporter, before becoming a hedge fund manager. His work is very persuasive. I originally opposed the bailout of GM and Chrysler. Not only is this a good account of their restructuring, but it's simply one of the best books ever about the auto industry.

[Graham Davis · Rating 4 out of 5]

Interesting behind the scenes insights into the Obama autos task force, but Rattner is a very annoying narrator, constantly talking about the sandwiches he purchased at meetings or how cheap the U.S. Government is. We get it. A good read otherwise.

[Sabrine Cutting · Rating 5 out of 5]

I appreciated Rattner's perspecive as a PE guy from New York.

His observations of the corporate culture of the Detroit autos as well as quirky statements, such as prefacing each of Jimmy Lee's trips to DC on the Acela, made the read into the auto restructuring enjoyable.

[Mark · Rating 1 out of 5]

This book isn't even close to be a fair and accurate account of the bailout. While I was reading this, it convinced me that we should have let the industry fail. It was only later, for national security reasons, that I changed my stance.

[Hasan · Rating 4 out of 5]

A really good, informative book about the inside story of how the Obama Transition team hired really smart people from the private sector to address the American auto disaster and the painstakingly long and grueling challenge to eventually rescue it. Great job by Steve Rattner and his entire team.