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ASHINGTON - Shockingly poor financial management at General Motors and Chrysler weakened their case for a federal bailout, but officials feared letting them
collapse, the former head of a government auto task force said Wednesday.
In a first-person account posted on Fortune magazine's Web site and in a Brookings Institution speech, Steven Rattner said he was alarmed by the "stunningly poor management" at the Detroit companies and said GM had "perhaps the weakest finance operation any of us had ever seen in a major company."
GM's board of directors was "utterly docile in the face of mounting evidence of a looming disaster" and former GM chairman and chief executive Rick Wagoner set a tone of "friendly arrogance" that permeated the company, Rattner wrote.
"Certainly Rick and his team seemed to believe that virtually all of their problems could be laid at the feet of some combination of the financial crisis, oil prices, the yen-dollar exchange rate and the UAW," Rattner wrote.
It would seem that both GM and Chrysler had more than a few inept people working for the companies. Either that, or they were totally stupid and had no reason being in the posititions in which they were in.
This is most inexcusable for GM, which has been around for ages and should have had the no-how to deal with hard times no matter how bad the economy was getting. The government should be held accountable also, since it let the companies apply for auto-bailout funds while knowing how weak these giants were. Both car manufacturers should have been allowed to fail even though that would have put many honest workers out of a job.
Did you know that the United States government now owns some 61% of General Motors and 8% of Chrysler?
Rattner said at the National Press Club that he, along with Treasury Secretary Tim Geithner and White House economic adviser Larry Summers, "hated the idea of the U.S. government owning equity in these companies" but they concluded the government needed to protect taxpayers.
"It was frustrating that many commentators were suggesting that the government stay on the sidelines and let the companies fend for themselves," Rattner said. "With financial markets still frozen, both would have unquestionably run out of cash quickly, slid into bankruptcy, closed their doors and liquidated."
Rattner said the loss of the companies could have severely harmed the economy, costing "more than a million jobs in the short run." He said their failure also would have dramatically deepened and prolonged the recession and would have pushed unemployment rates in several states "above 20 percent."http://www2.tbo.com/content/2009/oct/21/auto-task-force-shocked-state-gm-chrysler/news-breaking/#
