DETROIT – Steven Rattner, the Obama Admin.’s former car czar who led General Motors and Chrysler out of bankruptcy, says GM is “fixed” and its $20 stock price is not a concern.
“I think the world is very pessimistic right now, and I think these companies are doing great and the stocks are very attractive, so I would not be a seller of any stocks at this price,” Rattner tells the media following an appearance at the Detroit Economic Club here.
The downward slide in GM’s stock since its $33-per-share initial public offering last year pretty much mirrors the slip in Ford’s stock over the same timeframe, Rattner contends. GM’s stock price isn’t doing better because “Wall Street doesn’t like surprises.”
The auto maker’s heavier-than-expected first quarter incentives and its pull-back on guidance for the fourth quarter both came as a shock to analysts.
“GM is performing materially better than we ever thought it was going to,” Rattner says. “My friends on Wall Street don’t think (the company) has as clear and consistent messaging to the Wall Street community as the investors would like. So I think the stock price to some degree reflects that.”
Rattner, who is promoting the new paperback edition of his 2010 book, “Overhaul: An Insider’s Account of the Obama Administration’s Emergency Rescue of the Auto Industry,” contends the “rescue,” a word he prefers to bailout, of GM and Chrysler had to be done no matter how unpleasant some Americans found it.
“That there was some alternative that would have led us to the same place is ridiculous,” he says of politicians and the media who criticize the bailout. “I think it is just pandering to this anti-government sentiment that is out there, and I understand that. But there was no alternative.”
Rattner says there were two choices regarding GM and Chrysler in February 2009, when he was brought onboard by the White House: “Liquidation and millions of jobs lost or something like what we did with the government being involved. There was no third alternative.”
To win re-election, President Obama must “hammer home” the message that it could have been worse, he says.
Rattner expects the U.S. government will get back all but $13 billion-$14 billion of the $82 billion in taxpayer money used for the GM and Chrysler bailouts, as well as for associated companies such as Ally Financial, the former GMAC credit arm.
The investment in Ally still is “unrealized,” and the company has not gone public yet because of the mortgage mess the country continues to endure, he says.
Rattner, who admits he didn’t know much about the auto industry before taking the car czar role – joking Chrysler CEO Sergio Marchionne “since breakfast forgot more about the auto industry than I know” – believes the worst is over. But he also thinks further automotive manufacturing job losses are inevitable.
“These are not world-class jobs,” Rattner says of entry-level wages that pay workers $14-$15 an hour. What’s more, such manufacturing jobs can be done at a lower cost elsewhere, such as Mexico and China. “I wish I had a great solution.”
Regarding GM and Chrysler dealers that were casualties of the bailouts, some of whom are suing the federal government, Rattner says it was the auto makers’ decisions to cut stores, not the government’s.
Had there been more time, the government might have pushed the auto makers more “to explain their logic,” and GM and Chrysler may have gone about the process of cutting dealers in a different manner.
Another regret Rattner has about the bailout process is that United Auto Workers members were not asked to take wage cuts and share in the sacrifice made by white-collar workers.
