Two years ago, no one would have believed that by 2010, America's Detroit-based automakers would be turning a healthy profit. Sunk by billions of dollars in debt and obligations, during a time when car sales were at a nadir and the financial sector was too wobbly to offer backup loans, America's "Big Three" -- General Motors, Ford, and Chrysler -- seemed to be on their deathbed.
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Then, on New Year's Eve of 2008, a phone call between incoming Treasury Secretary Timothy Geithner and private investor Steven Rattner changed everything. Rattner accepted the challenge posed by Geithner in that call: run the government's reorganization of the auto industry. He was named the government's "car czar" in the spring. And in just over a year, the team would turn the automakers' fate around. The team slashed overhead costs, brought in new talent, and got the companies lean enough to compete as 21st-century firms. In short, the auto industry is back on its feet and finally making money rather than losing it. In August, GM filed for an initial public offering (IPO) to raise $100 million. And so remarkable was the success that the Economist, which had railed against the plan and skeptically dubbed GM "Government Motors," apologized to Obama in August.
Rattner is in the news today for a rather different sort of financial deal -- a scandal in which the financier's private-equity firm, Quadrangle Group, was accused of offering kickbacks and favors for access to New York's pension fund. Rattner will pay $6 million to settle the case. It comes just days after Rattner's newly released book, Overhaul, tells the story of the auto rescue -- a story about the political wrangling over the more controversial elements of President Barack Obama's reconstruction plan. Rattner's settlement may do damage to the image of the reform-friendly team that engineered the auto rescue that the author portrays. Before that news, Foreign Policy's Elizabeth Dickinson spoke with Rattner about why Obama hasn't gotten credit for the restructuring and why his administration has struggled to replicate its success.
Foreign Policy: You've worked so closely with the White House -- what were the one or two things you learned about the way that Obama runs his administration?
Steven Rattner: Many people have raised the question of whether Obama is qualified to be, in effect, the most important CEO on the planet, given the fact that he's never run anything except a Senate office and some campaigns. I spent 26 years [in business and] met many CEOs, and I honestly think he's a natural. His temperament, his managerial style, his willingness to dig into things that are far from his sweet spot, were all very evident to me. He came to the meetings prepared; he'd done his homework. He asked all the right questions, and he made sure everyone expressed their views. In short, he did everything a good CEO does. And then he made decisions.
FP: As an outsider now, what would you say needs to happen for the auto industry to continue growing?
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