Rattner Explains Why GM Had to be Saved

The former chief of the US Auto Task force, Steven Rattner, talked yesterday in a speech backed by the Brookings Institution about the challenges the task force had to face with American manufacturer GM during its bankruptcy.

According to Rattner, the management challenges the task force had to face were bigger than the manufacturer's reputation indicated. Rattner explained the lack of financial discipline led to GM make forecasts based on pre-ordained conclusion, while the operating divisions had no plans on cutting expenses. Still...

"We soon could not imagine this country without an automaker of the scale and scope of General Motors," Rattner said in an Interview with Fortune magazine, cited by DetNews. "The task became not whether to save GM but how to save GM."

Perhaps for the first time, Rattner revealed why the manufacturer's former CEO, Rick Wagoner, was pushed aside.

"It seemed obvious that any CEO who had burned through $44 billion of cash in 15 months should not continue. Perhaps because of its lack of financial discipline, GM was in important ways in worse shape than Chrysler."

The former auto czar added that, overall, the US loathes the idea of owning part of any of the automotive businesses. Still the US had to receive something in exchange for the money pumped into them, so equity was just about the only viable choice.

As for the other companies in the auto sector and not only still crying for help, Rattner said that Washington concluded it "could not solve the problems of every company in every part of the industry."