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The Care and Feeding of Steven Rattner

Marla Singer's picture




 

Steven Rattner's somewhat self-congratulatory mini-memoir on the bailout of GM and Chrysler is a light, charming dalliance about the Car Czar's spring fling with the automotive industry.  "Light," in that Rattner effectively glosses over the difficult issues that permeated the massive government intervention in markets that characterized the bailout.  "Charming," in that sort of quaint way one smiles at the naive misconceptions of self-centered children not one's own.  (Surely it takes no small measure of self-love to put one's name under the subtitle "How the Obama Team Did It" in the face of the newly impending doom that, even now, rushes, nebulous and sandstorm like, to consume GM and Chrysler in the fine red sands of commercial failure).

Unfortunately, Rattner is one of those entitled children, not one's own, empowered and emboldened by parents with a maddening blend of complacency, incompetence and arrogance, who leaves the walls in your house covered in the scribblings of crayon and marker, colors clashing, dyes destined to resist any solvent for months or years to come.  (In the name of all things free market, who in the hell gave that little bastard a fucking Sharpie™?)  We'll be reading the writing on the wall for sometime.

Even if he misses entirely the causes, Rattner does readily identify the product of years of state coddling, subsidy, protectionism and union concessions: one of the most backward and apparently useless management teams in capitalism today.

Everyone knew Detroit's reputation for insular, slow-moving cultures. Even by that low standard, I was shocked by the stunningly poor management that we found, particularly at GM, where we encountered, among other things, perhaps the weakest finance operation any of us had ever seen in a major company.

 

For example, under the previous administration's loan agreements, Treasury was to approve every GM transaction of more than $100 million that was outside of the normal course. From my first day at Treasury, PowerPoint decks would arrive from GM (we quickly concluded that no decision seemed to be made at GM without one) requesting approvals. We were appalled by the absence of sound analysis provided to justify these expenditures.

One wonders, however, how it could escape Rattner that management alone was but part of the problem:

It seemed completely obvious to us that any management team that had burned through $21 billion of cash in a year and another $13 billion in the first quarter of 2009 could not be allowed to continue.

It doesn't take much to pull back and write "It seemed completely obvious to us that any company that had burned through $21 billion of cash in a year..."  Alas, it is not to be.

No account of the bailout, of course, would be complete without some attention to the transformation of bankruptcy law that attended the administration's intervention in Chrysler.  Rattner describes this bit of bob-and-weave thusly:

The lenders felt that this represented an ideological decision by the Obama administration to tilt in favor of labor and against capital. That was simply not the case. At no time during our months of work did the White House ever ask us to favor or punish any stakeholder.

That Rattner would so fundamentally misunderstand that as "Car Czar" he was the White House reminds us just how dangerously oblivious we can expect Czar's to be.  Rattner justifies the wholesale rewriting of bankruptcy code thus:

Many other unsecured creditors -- notably, suppliers and consumers holding warranties -- actually received 100¢ on the dollar. The fact was, Chrysler had to have workers, suppliers, and customers to succeed and therefore needed to give them more than called for by their rank in the capital structure.

It is difficult to divine from this absolutely frightening rationalization anything other than the willingness of those like Rattner to cast aside any inconvenient law, regulation or fundamental premise of what used to be our capitalist system in pursuit of propping up the rotting hulks of politically favored enterprises.  The only complication that might give one pause when reviewing this chronicle is the internal debate as the reader tries to decide if Rattner is a cunning manipulator playing the daft role to avoid exposing a deep, malevolence for free markets, or merely a naive flake.

Fortunately, our restructurings survived, and the companies began to operate as private enterprises, just as the President had outlined and just as we had hoped. With that, the workload of the auto task force dropped precipitously, and many of us prepared to leave Treasury, satisfied that we had given these companies the best possible chance to succeed.

Mission accomplished!

 

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Wed, 10/21/2009 - 10:47 | 105510 Miles Kendig
Miles Kendig's picture

Marla, you have hit the czar with his own car. 

This is one of my personal favorites and expresses my position, and what led me to stay here in one simple sentence. In the name of all things free market, who in the hell gave that little bastard a fucking Sharpie™?" 

And another area of primacy with me, the apparent policy to expand the so called policy of judicial exclusion with this gem;  "It is difficult to divine from this absolutely frightening rationalization anything other than the willingness of those like Rattner to cast aside any inconvenient law, regulation or fundamental premise of what used to be our capitalist system in pursuit of propping up the rotting hulks of politically favored enterprises".

There is so much here from the incompetence and inability of major US corporations to make a decision so that even a government "czar" can find the process loopy to the beautiful way the concept of a child not ones own is drawn forth and ruthlessly applied to the topic at hand that manages to encapsulate the whole marvelously well.

Cheers

Wed, 10/21/2009 - 11:07 | 105543 Cognitive Dissonance
Cognitive Dissonance's picture

It’s all part of the wash, rinse and repeat cycle. After all, when you break the law, you must justify it after the fact. Or should I say "spin" it after the fact.

Most people don't understand that these articles and book deals by "all the president's men" are not just to enrich them for the years of poorly compensated public service. No, they have a much higher ideal in mind when they place pen to paper, usually through a ghost writer of course.

The purpose of course is the fine art of spin in all its glorious forms, including the wholesale omissions of facts, distortion of event sequences and recollections and the ever present and all important putting words in other peoples' mouths. And let's not forget that crowd favorite, the always handy and indispensible outright lie.  

Wed, 10/21/2009 - 11:29 | 105570 tip e. canoe
tip e. canoe's picture

wash rinse spin repeat AGAIN!
wash rinse spin repeat ONCE MORE!

now soak in your filth...longer...longer...you're not clean yet!

http://www.youtube.com/watch?v=nRWqOJbGWxA

Wed, 10/21/2009 - 10:51 | 105521 Cognitive Dissonance
Cognitive Dissonance's picture

Marla's take.

In the name of all things free market, who in the hell gave that little bastard a fucking Sharpie™?

Followed by the very first paragraph of the Fortune article.

Without any experience in automaking or government, Steven Rattner left his Wall Street perch to wade into the largest restructuring in American history. The scale and speed of the rescue raised many questions, inspiring Rattner to write this account of a defining moment in capitalism.

Ya'll got that right? A defining moment in capitalism.

I'm speechless. I read the rest of the article but I can't remember anything because I'm still in shock. God help them for they know not what they do.

Wed, 10/21/2009 - 11:06 | 105538 Miles Kendig
Miles Kendig's picture

Who?  The Administration?  Industry?  Newsweek?  Wall Streeters who go to Washington?  All of the above?

Wed, 10/21/2009 - 11:13 | 105550 Cognitive Dissonance
Cognitive Dissonance's picture

Unfortunately I forget to include the tab SARCASM when I invoked the words of a bloodied, battered and dying Jesus on the Cross asking God to forgive them for they know not what they do.

That doesn't imply that they didn't have knowledge of what they were doing, just they didn't give two shits about the consequences of their actions.

Even Jesus was politically correct back then. :>)

Wed, 10/21/2009 - 11:50 | 105576 Miles Kendig
Miles Kendig's picture

http://www.youtube.com/watch?v=kTHSYeNEFjQ

Steven Rattner, you comb your hair to hide your lying eyes.

Wed, 10/21/2009 - 11:55 | 105597 Cognitive Dissonance
Cognitive Dissonance's picture

I must constantly remind myself that these people are psychopaths. The popular perception is that in order to be psychopathic, you must be a foaming-at-the-mouth ax wielding mass murderer. Nope, not so.

A person with an antisocial personality disorder, manifested in aggressive, perverted, criminal, or amoral behavior without empathy or remorse.

That definition pretty much describes most of the people running the world now a days.

Wed, 10/21/2009 - 10:53 | 105525 Anonymous
Anonymous's picture

Rattner, Baroksky, emmanuel, axelrod, cass sumstein (information czar), summers, and shapiro are the key criminals in our nation. someday, someone going to put them into encampments. They will be put inot labor camps and sleep on straw beds.

Wed, 10/21/2009 - 10:55 | 105528 Anonymous
Anonymous's picture

I think I'm love....and the gubmint inspector announces today that tax payers will likely NOT see their money back from GM, Chrysler.

Wed, 10/21/2009 - 11:16 | 105555 Cognitive Dissonance
Cognitive Dissonance's picture

But we still made a profit, didn't we? Right?

I heard them say on TV the taxpayer made a profit on the bailout money. It must be true because you can't lie on TV, right?

Wed, 10/21/2009 - 11:12 | 105549 TomJoad
TomJoad's picture

Poetry Marla, pure poetry!

Wed, 10/21/2009 - 11:18 | 105559 Rainman
Rainman's picture

These " rotting hulks of politically favored enterprises " are the foundations of the Fabian Socialist revolution. These are not zombies. These are the useful tools for reallocation of national treasure.

For more information on this subject, read " Public Healthcare Option ".

Wed, 10/21/2009 - 11:20 | 105562 Steak
Steak's picture

"The fact was, Chrysler had to have workers, suppliers, and customers to succeed and therefore needed to give them more than called for by their rank in the capital structure."

Ahh, so thats the logic for paying out Goldman 100 cents on the dollar...The Fed needed its primary dealers to succeed, so gave them more than called for by their rank in the capital structure.  Funny how that logic can be so explicitly stated for a car company but that same rationale is a state secret when it comes to the financial sector.

Wed, 10/21/2009 - 11:44 | 105581 Miles Kendig
Miles Kendig's picture

Right on.  +!

Wed, 10/21/2009 - 11:38 | 105579 Missing_Link
Missing_Link's picture

This was one of the most stunningly well-reasoned articles I've read in a long time.

My hat's off to you, Marla Singer.  If only the mainstream "news media" like CNBC had a tiny fraction of your insight, wisdom, and journalistic integrity.

Wed, 10/21/2009 - 11:58 | 105612 Cognitive Dissonance
Cognitive Dissonance's picture

If only the mainstream "news media" like CNBC had a tiny fraction of your insight, wisdom, and journalistic integrity.

See my comment about psychopaths above. It doesn't just apply to the masters of the universe but also to those who support, enable and profit from them.

 

Wed, 10/21/2009 - 11:56 | 105604 just.a.guy
just.a.guy's picture

Is Marla Singer the same person as "equity private", given the nearly identical writing style?  Regardless, it's a good point made better by excellent writing.  You really should write a book or two, "Marla".

Wed, 10/21/2009 - 13:09 | 105728 Anonymous
Anonymous's picture

I say yes. The fluid, wonderful style is unmistakeable. The incisive prose, keen logic and quick wit....I could go on and on.

Wed, 10/21/2009 - 12:03 | 105627 Sancho Ponzi
Sancho Ponzi's picture

I saw a Chevy truck commercial last night that included something to the effect of 'A dirty little secret Ford doesn't want you to know.' For a company whose sole survival depends on the American taxpayer to start dissing a company that did not take one dime of taxpayer money is unconscionable.  This type of advertising backfires, and whoever is responsible should be fired. 

And where is the transparency? To my knowledge there's no public access to GM's balance sheet despite the fact the taxpayers own a majority of the business. In my opinion, the sooner GM goes under, the better. Ford and Caterpillar can re-tool to make tanks and troop carriers, so I don't buy the national security BS. 

If the Gov is hell-bent on keeping GM in business, call it what it is: A public works program.

Wed, 10/21/2009 - 12:26 | 105667 John Self
John Self's picture

If I am at the head of the mob bearing torches and pitchforks when it encircles its prey, and the kleptocrats start sobbing, "Why?  What have we done to deserve this?", then Paulson's coersion of the bankers is Exhibit A and the disgusting Chrysler saga is Exhibit B.

Wed, 10/21/2009 - 12:27 | 105669 deadhead
deadhead's picture

Marla:

Standing ovation.

I would prefer to see a cat scan of your brain, it must be beautiful.

Thank you.

Wed, 10/21/2009 - 12:49 | 105700 Cognitive Dissonance
Cognitive Dissonance's picture

Just a signed picture (8x10 glossy please) will be fine.

Actually I would love to see a cat scan of Marla's brain while she's on fire and writing one of her articles.

As Cheech Marin once famously said "Fireworks, man. I see fireworks".

http://en.wikipedia.org/wiki/Cheech_Marin

 

Wed, 10/21/2009 - 12:57 | 105710 AN0NYM0US
AN0NYM0US's picture

PR Shock and Awe

Rat  speaking in DC at 1pm edt - should be on Bloomberg -

Wed, 10/21/2009 - 13:02 | 105721 Marla Singer
Marla Singer's picture

Tell-all book, no doubt, to follow hard upon.

Wed, 10/21/2009 - 13:39 | 105776 spekulatn
spekulatn's picture

OUTFRIGGINSTANDING stuff,Marla. 

 

"MARK IT ZERO, DUDE"

Wed, 10/21/2009 - 14:39 | 105861 Sisyphus
Sisyphus's picture

PowerPoints, huh? Oh, I can speak for hours about the misuse of MS PowerPoint at the big three... no, big two... no, just one... a big half maybe. What can I say about that piece of crap software? Incompetent managers at those firms hide behind glossy presentations, postulating ideas that make you kinda farp (fart and burp at the same time). I used to work for one of them threes. The manager that I worked for once had four employees in his team spend a month developing a 10 minute presentation for the higher ups. All of those dudes were earning six figure salaries. What a waste of time and money. Forget the man hours spent; the money spent on thousands of color printouts, rough draft presentation booklets, lunch, dinners, mid day coffee breaks, conference calls with counterparts was just astronomical. And people wonder why these companies are failing and cannot compete. Two things - incompetence and organizational incest.

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