Overhaul by Steven Rattner Read Free Book Online

the election). GM's in particular caused an uproar on Wall Street. It revealed that the company was now burning through a stunning $3 billion a month—roughly $4 million an hour—more than double the losses of the previous quarter. And for the first time, GM acknowledged publicly that its cash balance would approach "the minimum amount necessary to operate our business" by the end of 2008.
    Wagoner made a customary pilgrimage to CNBC, where auto correspondent Phil LeBeau didn't hold back. "The numbers are not pretty," he began. "How close is General Motors right now towards bankruptcy?"
    Wagoner ducked, but LeBeau kept asking, finally eliciting a direct response: "We have no plans whatsoever to consider anything other than continue to run the business," Wagoner said. "We don't think anything positive would come out of any sort of consideration of reorganizations. I've seen pundits write this stuff, but you can't sell cars to people under that circumstance."
    This wasn't spin. The GM chief executive was convinced that, while consumers might fly on bankrupt airlines, they would never buy cars from a bankrupt automaker because of the need for warranty coverage and concerns about resale value. Our task force would later learn that, on Wagoner's instructions, GM was making no contingency plans, no preparations whatsoever for a possible bankruptcy filing. Its investment bankers from Morgan Stanley and Evercore Partners had taken the unusual step of beginning to explore bankruptcy options on their own. But in October, when they'd advised GM's board to prepare, Wagoner had cut off the discussion, curtly thanking them for their time. He had similarly dismissed every other effort to convince him to prepare for a possible bankruptcy. This attitude would add materially to the cost of the eventual rescue.

    The auto industry was high on the agenda when Congress returned to work on November 18. At 3:02 P.M. on that overcast Tuesday, Senator Christopher Dodd gaveled to order a hearing of the Banking Committee on the automakers' bailout request. Perhaps underrating the import of the moment, Dodd's aides had passed on storied Senate venues like the ornate Caucus Room in the Russell Senate Office Building, where the Watergate hearings occurred. Instead the session took place in a remote hearing room in the Dirksen building, a drab 1958 relic. It was packed with photographers crowded in front of the dais, attendees in rows of chrome-and-plastic chairs, and banks of TV cameras. Dodd quipped, "If I had known the interest, I would have held this at RFK"—the former football home of Washington's beloved Redskins.
    The guests—CEOs Wagoner of GM, Mulally of Ford, and Robert Nardelli of Chrysler, as well as the UAW's Gettelfinger—testified in alphabetical order. Mulally and Nardelli bemoaned poor vehicle sales, and Wagoner summed up GM's problems as not of its making, as he had at Treasury: "Mr. Chairman, I do not agree with those who say we are not doing enough to position GM for success. What exposes us to failure now is not our product lineup, is not our business plan, is not our employees and their willingness to work hard. It is not our long-term strategy. What exposes us to failure now is the global financial crisis, which has severely restricted credit availability and reduced industry sales to the lowest per-capita level since World War II." As business skidded further in the weeks following the election, the automakers had dropped the pretext of requesting speeded-up advanced-technology incentives. Instead they asked Congress point-blank to open up TARP and direct the Treasury to provide $25 billion of emergency bridge loans.
    That week is remembered less for anything the CEOs said than for the furor that erupted after Brian Ross of ABC News reported that the three had flown to Washington in separate private jets. Wagoner had been advised by his Washington PR person, Greg Martin, to fly by commercial jet, but he had