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Auto Bailouts “Unambiguous Success” Despite $14 Bil Cost, Argues Rattner

Losses could narrow if GM stock regains momentum.

by on Dec.16, 2011

Former auto czar Steve Rattner.

The federal bailouts of General Motors and Chrysler were a collectively “unambiguous success,” according to the man who helped pulled the deals together – despite the likely $14 billion bill to U.S. taxpayers.

Moving fast was critical, and despite claims that it would have been easier to just let the makers go into bankruptcy on their own, former U.S. auto czar Steven Rattner told The Detroit Economic Club there was no option but to have the federal government step in considering the economy had fallen into its worst downturn since the Great Depression.

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White House officials, up to and including President Barack Obama, have suggested that the bailouts ultimately saved anywhere from 500,000 to as many as 1 million U.S. jobs and prevented the economy from going into a full-fledged depression.

“It’s unambiguous that it was a success,” said Rattner, who detailed the effort to save the two makers in his book, “Overhaul.”

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Car Czar Bloom Leaving White House

Helped oversee auto bailout, new fuel economy mandates.

by on Aug.11, 2011

Fiat/Chrysler CEO Sergio Marchionne talks with White House auto czar Ron Bloom in May.

One of the key figures in the bailouts that saved Chrysler and General Motors – and a driving force behind the compromise that will nearly double U.S. automotive fuel economy standards – is leaving his post at the White House.

Former investment banker Ron Bloom will leave his post as the senior automotive advisor to President Barrack Obama by the end of the month, though it does not appear he has lined up a new job, according to White House sources.

Bloom was the nation’s “car czar” until earlier this year when Congress pulled the budget for his post, but he remained the top auto advisor to the president, officially in the role of Assistant to the President for Manufacturing Policy.

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The 56-year-old originally joined the new administration in February 2009, just weeks after Obama took office and had to address the rapidly-failing fortunes of Detroit’s auto industry.  Bloom first served as assistant to the first White House auto czar, Steve Rattner, but Bloom took over the top spot after that former banker and one-time journalist left Washington following the emergence of Chrysler and GM from bankruptcy.

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Former Auto Czar Rattner Settles Influence-Peddling Case

Rattner fined $10 million.

by on Dec.31, 2010

Former auto czar Steve Rattner settles in a pay-for-play scandal, which will result in a $10 million fine.

Former auto czar Steven Rattner has agreed to pay a $10 million fine to settle a “pay-to-play” case that claimed the one-time reporter had handed out kickbacks in order to steer $150 million in New York State pension fund business to his Wall Street firm.

The settlement, approved by NY Attorney General – and Governor-elect – Andrew Cuomo also bars Rattner from having any dealing with any public New York pension fund for five years.  But the former NY Times journalist still scored a victory.  Cuomo had originally hoped to force Rattner to pay a $26 million fine and to bar him for life from working anywhere in the securities industry.

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Rattner, who is worth a minimum of $188 million according to knowledgeable sources, served as the Obama Administration’s first “auto czar,” helping put in place the bailout of, among others, General Motors and Chrysler, in early 2009.  But shortly after leaving the government he became enmeshed in an ongoing scandal involving the illegal efforts by various private equity firms to gain lucrative pension fund business.

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Has GM Set Nov. 17th As Date For IPO?

Former “Car Czar” leaks plan.

by on Oct.25, 2010

Former auto czar Steve Rattner's settlement of a pay-to-play scandal is on hold.

The timing of General Motors Corp.’s initial public offering of stock has been a closely guarded, if eagerly-anticipated, secret.

But while GM officials have adamantly refused to discuss the time line for the IPO, former U.S. “auto czar” Steven Rattner may have given it away during an interview on the PBS interview program, the Charlie Rose Show.

While talking about his new book, “Overhaul,” Rattner told the host that the IPO was scheduled for November 17. So far, no one has come forward to support Rattner’s assertion but it appears to fit with the time line GM has established. GM’s current management is eager to shed the “Government Motors” tag as quickly as possible.

The Detroit Economic Club has withdrawn the invitation it had extended to former auto czar Rattner, who was previously scheduled to appear before the business group at a meeting in downtown Detroit next week.  But DEC President, Beth Chappel, has canceled the invitation, DEC officials confirmed Tuesday.

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“I am very sorry to inform you that we must cancel Mr. Rattner’s appearance at the Detroit Economic Club next Tuesday, October 26th.” Chappel said in an e-mail to DEC members. “We do not believe it is appropriate to proceed with this meeting, given the recent settlement between Mr. Rattner and the U.S. Securities and Exchange Commission,” Chappel said.

The DEC is one of the most prestigious public speaking venues for presidents, foreign leaders, leading American politicians and top business executives over the years.

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Former Auto Czar’s Pay-To-Play Case On Hold

Settlement delayed.

by on Oct.15, 2010

Former auto czar Steve Rattner's settlement of a pay-to-play scandal is on hold.

The Securities and Exchange Commission has postponed – temporarily – a vote to approve a preliminary settlement with Steven Rattner, the Obama administration’s former “auto czar” who was instrumental in re-shaping Detroit through a massive bailout of bankrupt makers General Motors and Chrysler.

Since leaving Washington in the summer of 2009, Rattner has been swept up in a “pay-to-play” scandal involving New York State’s public pension fund.  The SEC has been working on a settlement, but the financier remains under investigation by New York Attorney General Andrew Cuomo.

Under the proposed deal with the federal government, Rattner would pay $6 million and accept a two-year ban from the financial industry, according to The New York Times, where Rattner once worked as a reporter before launching a second career as a financier.

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Such a settlement with the SEC would effectively end the 58-year-old Rattner’s career as a financier and make it doubtful he would ever hold a top political office.

It is unclear why the SEC settlement hearing was postponed, and the agency has not set a subsequent date.  It is also uncertain whether a settlement deal might be in jeopardy due to the Cuomo investigation, which would not necessarily be impacted by a settlement between Rattner and the federal government.

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Ex Auto Czar Rattner Pulls No Punches in “Overhaul”

Few spared in tell-out about GM, Chrysler bailouts.

by on Sep.03, 2010

Few escape criticism from former auto czar Steve Rattner in his tell-all about the GM and Chrysler bailouts.

Steve Rattner isn’t known for being soft-spoken, and he proves it in his new book, “Overhaul,” an insider’s look at the desperate – and highly controversial — effort to save General Motors and Chrysler with more than $60 billion in federal bailout money.

While Rattner downplays the legal problems he’s run into since leaving the White House auto task force, he dishes on virtually everyone he dealt with during his six-month stint, from President Barack Obama to the man who just this week took over as GM’s fourth CEO in less than two years, Dan Akerson.

The bailout of the two Detroit makers actually began during the waning days of the Bush Administration.  But once Congress made it clear it wouldn’t authorize the money needed to keep GM and Chrysler afloat, the politically-charged football was tossed into the lap of the new president.

It landed there only a week after the November 2008 election, and at the first sit-down with his advisors where the topic was broached, Barack Obama wasn’t exactly in Detroit’s court.  “Why can’t they make a Corolla,” the President-elect asked.

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If anything, Obama is portrayed as a calm and level-headed boss by “Overhaul,” Rattner writing that the president “had the air of a man in the business of calmly executing.”  One of the more colorful descriptions the one-time auto czar offers up is the image of the “T-shirts and jeans worn by unshaven, sockless men,” debating what to do next during weekend meetings at the Oval Office.

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Former GM Chairman Wagoner Resurfaces

New board posts puts him on automotive periphery.

by on Aug.05, 2010

He's back...sort of. Ousted GM Chairman Rick Wagoner resurfaces.

Former GM chairman G. Richard Wagoner has avoided the spotlight since he was fired by President Barack Obama’s automotive task force, but now appears ready to launch a second career, serving as a director on various corporate and educational boards.

His newest appointment lets Wagoner put at least one foot back into the auto industry.  Aleris International, Inc. says the 57-year-old Wagoner has been elected to its Board of Directors and to the Board of Directors of Aleris Holding Company, its parent.  In turn, Aleris Holding Company is majority owned by Oaktree Capital Management, a private equity firm.

“We are extremely pleased to welcome Rick to the Aleris board,” said Steven J. Demetriou, Aleris chairman and chief executive officer.  “He brings a wealth of expertise that will be invaluable to Aleris as we continue to strengthen our company and grow.”

A former college basketball star, the former GM chairman also serves his alma mater as vice chair of the Board of Trustees of Duke University and a member of the Board of Dean’s Advisors of the Harvard Business School, Duke’s Fuqua School of Business Advisory Board and the Detroit Country Day School Board.

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And despite his occasional tiffs with the media, Qagoner also was recently elected director of The troubled Washington Post Company and sits on the Mayor of Shanghai’s International Business Leaders Advisory Council.

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Marchionne: Chrysler Rushing New, Fiat-Based Models to Market

CEO believes U.S. maker on track to beat 2010 targets; IPO could be coming.

by on May.11, 2010

Chrysler/Fiat CEO Sergio Marchionne wants to rush more product into U.S. showrooms ASAP.

Desperately short of new product, Chrysler may get a helping hand from Italian partner Fiat sooner than originally planned, according to the man who heads both companies.

Several compact-based Fiats could be on the market by the end of the 2011 calendar year, said Chairman and CEO Sergio Marchionne, in a conference call.

Meanwhile, said the Canadian-educated Marchionne, Chrysler is on target to beat its financial targets for this year, which could make it possible to push for an IPO, or public stock offering, “as quickly as we can.”

After a series of significant setbacks, Chrysler has been reporting a smattering of positive news, including an unexpected first-quarter operating profit of $143 million and an April sales increase that was the maker’s biggest year-over-year gain since 2005.

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But analysts contend that the maker still needs an infusion of new models to truly move ahead.  The plan calls for relatively little in the coming months, though the replacement for the Grand Cherokee is considered a first critical step.

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Jay Leno May Have Moved On. Ralph Nader Hasn’t

Nader injects himself into the debate over the future of General Motors and other automakers.

by on May.19, 2009

Ralph Nader, courtesy of the Nader for Presdent Campaign

Ralph Nader is still running for office.

In a letter to Senator Chris Dodd and Congressman Barney Frank consumer advocate Ralph Nader called on the Senate and House banking committees to hold “thorough” hearings to protect taxpayers’ investments and to seek answers to several questions about President Barack Obama’s Auto Task Force. Nader wants to know:

– Is the Task Force right in pushing for elimination of as many brands, as it has demanded?

– Is the Task Force asking for too many plants to close?

– Do GM and Chrysler really need to close as many dealerships as announced?

– Is the logic of closing dealers to enable the remaining dealers to charge higher prices; and if so, why is the government facilitating such a move?

– Is it reasonable and fair for GM to impose liability for disposing of unsold cars on dealers with which it severs relations, as Chrysler has apparently done?

– Has the Task Force evaluated the social ripple effects on suppliers, innovation, dealers, newspapers, banks and others that hold company stock and/or are company creditors, and other unique harms that might stem from bankruptcy?    (more…)

New GM CEO Confirms More Cuts Are Coming

Fritz Henderson vows to get the job done "in or out of court."

by on Mar.31, 2009

The aura of confidence projected by Henderson belies the enormity of the task in front of him.

An aura of confidence projected by Henderson belies the enormity of the task in front of him.

General Motors CEO Fritz Henderson in his second day on the job held a news conference that reaffirmed his commitment to “go deeper and go faster” in preparing a revised viability plan with “a clean balance sheet” that will pass muster with the President’s Auto Task Force. If not, Henderson said “we will do it in court.”

He acknowledged the sweeping criticisms of the President and the U.S. Treasury Department as “painful,” but quickly added that “we got it” and sketched in broad outlines the areas of the strategy that need improvement by June first. 

More job cuts and plant closings will be required, and bondholders and retirees will see commitments made to them by GM trimmed or eliminated. The decision on the sale or closing of Hummer will be made shortly. Saturn’s future remains in doubt beyond 2011, but Henderson said that it is still being studied with no immediate need to take action. Few details emerged, as Henderson said he was not going to conduct negotiations in public that are properly done at the bargaining table. 

Henderson also claimed not to be concerned about his own future beyond 60 days, “I don’t really worry too much about that,” he said. “If we get our job done it’s going to be okay,” he added. In a press briefing yesterday, Robert Gibbs, the President’s Press Secretary, denied that Rick Wagoner’s resignation as GM’s chairman was a quid pro quo for the continuation of aid. He also refused to speculate on what happens to Henderson or GM beyond the current 60-day deadline. 

Treasury is in the process of appointing two directors to the board of General Motors Acceptance Corporation, and is expected to have a significant, if not dominant role, in the remaking of the GM board of directors so that a majority of its members are new by the August meeting. Henderson now has the unenviable task of reporting to two constituencies – the changing GM board, with its new interim chairman, Kent Kresa, and Treasury through its Auto Task Force, headed by Steve Rattner and Ron Bloom. Treasury continues to be involved with any GM decisions that involve taxpayer funding on a “daily basis.”

Henderson said that the need for further cash is being evaluated, and would not say how much more liquidity from U.S. taxpayers would be needed during the next two months. The need for the $2 billion in support that was skipped in March and the $2.6 billion requested for April are still being evaluated. He would not say when taxpayers could expect to see repayment of the loans.

The aura of confidence projected by Henderson during his first leading role belies the enormity of the labors in front of him and his management team that has careened and crashed through an unending series of emergencies.  Henderson worked for virtually his entire career for Rick Wagoner, and he did not really say what would be different now that he is boss in spite of multiple questions on the topic.

Perhaps the biggest issue in getting through the next two months is the core problem of fleeing customers. It’s lights out, if an even worse sales collapse occurs than GM is currently enduring as car buyers shun its brands. The President’s warranty program announced yesterday will be of some, as yet unknown, help. GM also announced — just prior to Henderson speaking — that it will start a plan called “GM Total Confidence,” that it says protects a customer’s paycheck, investment and vehicle for 24 months.  (more…)