Among the federal government’s most controversial actions during the Great Recession was the rescue of the automobile industry.
Investment banker Steven Rattner, who had no background in the automobile industry, was the Obama administration’s point person while most of the decisions were made. His memoir, Overhaul: An Insider’s Account of the Obama Administration’s Emergency Rescue of the Auto Industry (Houghton Mifflin Harcourt, 336 pp.), takes readers behind the scenes when many of the key decisions were made. Like most such books, parts are quite self-serving, but readers willing to persist will learn a great deal about how the government makes key decisions.
The rescue, for which the government laid out a mind numbing $81.8 billion at the beginning, featured several clashes of ideology and culture that Rattner, who had initially been reluctant to accept the job, discusses at great length. He found himself frustrated with the glacial pace of government decision making and angry at the intransigence and self-delusion of the executives of Chrysler and General Motors.
"From [Chief Executive Rick] Wagoner on down, G.M. seemed to be living in a fantasy," he writes.
Rattner also describes the battles within the administration, including Obama’s reluctance to sign off on a hefty pension ($7.3 million over five years) for Wagoner, once Rattner and his team decided Waggoner was no longer an effective CEO and needed to go.
"Suddenly I was indeed in the presence of a community organizer; the president plainly had difficulty with the notion of writing a check that was 100 times the annual income of a GM worker to the CEO who had brought the company down. Obama grimaced and reluctantly acquiesced," he writes.
The jury is still out on the rescue effort. While profits at the automobile companies are up, the Treasury still owns 33% of GM. The Treasury Department estimates that the government may eventually get back all but $15 billion of the $81.8 billion it spent, but that could change if consumer spending doesn’t pick up and auto sales don’t increase more.
Regardless of the outcome, the story of the government’s rescue of the automobile industry is an important part of economic policymaking over the last two and a half years. Those wanting to learn more about those events will get a great deal out of Overhaul.