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How A Wall St Guy Worked to Save the Auto Industry

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Steve RattnerThis Monday evening on Oct 25, I watched an interview by Charlie Rose with Steve Rattner. Rattner oversaw the transition of GM and Chrysler from near bankruptcy – and what that would have meant in lost jobs to millions of hardworking Americans all along the supplier chain – to companies that are now seeing profits. I remember reading stories at the time in which Nissan and Toyota begged the Federal government to save at least GM because if GM failed their supplier chain would fail too.

Rattner is both an experienced journalist and a successful Wall St trader who currently works for Mayor Bloomberg.

Rattner’s new book, Overhaul: An Insider’s Account of the Obama Administration’s Emergency Rescue of the Auto Industry, details how the people inside the Administration argued for and against the loans to the auto companies, and why he ultimately chose to save GM and sell Chrysler to Fiat.

In his interview, he remarked how grateful he was that he had the TARP funds to rely upon in this emergency because getting Congress to act speedily was a non-starter…and far too parochial and partisan in March of 2009 to resolve a financial problem that meant the eminent loss of nearly 300,000 jobs when the stock market was not just in free fall but the credit markets were locked up.

His biggest surprise, he told Charlie Rose, was coming from an investor viewpoint to having to deal with the large number of Congressional members, from both sides of aisle, who contacted him to demand that dealerships in their districts be saved, even though those dealerships were not viable from a business viewpoint. Essentially, he said, these Congressional members from both parties put politics ( their jobs) over the necessity of rebuilding the auto companies to be viable businesses again. He said that was his greatest frustration was dealing with partisan Congress and a Wall St impression of itself that was and continues to be incorrect.

Over and over again, he remarked that Obama and his staff is neither anti-business or far left wing. He compared Obama with President Clinton as a centrist, stating that Obama had been thrust into a far more difficult position than any recent President and had to balance the scales between the self-perception of Wall St and that of the American people.

One of Rattner’s more enjoyable anecdotes, at least for me, occurred a month or so ago when he spoke to a group from Wall St. In his speech, he told Wall St that the people of the Country were angry at Wall St and that Obama was not anti-business but only attempting to reflect to Wall St the country’s populist sentiment. As he told Rose, he was booed. When he said that Obama, a truly business friendly president, was caught with one foot between business and an angry populace, he was booed. When he told them of the simmering anger across the country against them, again he was booed. When he told them they needed to change their ways to prevent a populace backlash against them, they booed him again.

My impression from the interview is that Rattner believes that Wall St is so out of touch with the rest of America and so insular and self-seving that they suffer in the long term.

Will that populace revenge occur? It’s difficult to see into the future. But it wouldn’t be the first time. In the dark years of 1930’s, the revenge against the rich was so great that even the movies – the great depicter of American values – represented the “average Joe,” the guy who cared more for average people than the wealthy, as more intelligent than Wall St moguls. But one thing these average heroes in the movies had in common was their belief that all Americans deserved an even shake and even stake in the economy.

Rattner – and even Obama – have tried to tell this story each in his own way. A fiscal crisis is not an easy economic matter from which to recover. It’s not a simple downturn in the market or a matter of inflation, but a serious disruption in the market caused by irresponsible speculation. How that irresponsible works out over time has yet to be defined, but President Obama should not be the fall guy for everyone’s failures or ideology.

The failure lies with Wall St and a market that has yet to come to come to terms with its own self-interest and the good of the country.

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Written by Valerie Curl

October 27, 2010 at 9:17 AM

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  1. […] Continue reading here: How A Wall St Guy Worked to Save the Auto Industry « Epiphanyblog […]

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