Former U.S. Treasury Department auto advisor Steve Rattner on Thursday expressed his wish that the Obama administration's auto task force had made Chrysler and General Motors stockholders, including the United Auto Workers (UAW), sacrifice more during the bailouts. Rattner also said GM must do more to convince Wall Street it’s changed for the better, and is on its way back to achieving sustained profitability.
Speaking at a Detroit Economic Club luncheon, Rattner said he wished the task force had done more to close the gap in wages between American automakers and foreign competitors, as labor in the U.S. costs substantially more than overseas. That wage gap has been the subject of recent talks between American automakers and UAW leaders, as new contracts were discussed.
“We asked all the stakeholders to make very significant sacrifices,” Rattner said. “We should have asked the UAW to do a bit more. We did not ask any UAW member to take a cut in their pay.”
Rattner also said both Chrysler’s and GM’s bondholders should have gotten less from the bailouts, as they would have probably lost everything in an uncontrolled bankruptcy anyway. According to The Detroit News, the bailout cost taxpayers $82 billion, money that was distributed between GM, Chrysler, and other U.S. auto companies to prevent a collapse of the industry following the economic crisis of 2008.
But Rattner doesn’t believe Washington gave GM too much. Speaking to The Detroit News, Rattner said, “We put more cash into GM than we probably needed to – and we knew this. It’s part of why GM is so well-capitalized today.”
The Detroit News reports taxpayers would lose about $16.5 billion if the government sold its remaining shares in GM today. Rattner said that the big players on Wall Street don’t think GM has been clear and consistent in its communication with investors as they’d like them to be.
“Wall Street hates surprises, and there have been a couple of surprises. [GM] went a little bit heavier on the incentives in the first quarter than people thought; they took down their guidance for the fourth quarter.”
Despite his criticisms, Rattner said the bailouts can only be regarded as positive, as they saved “millions” of jobs.
“I’m very proud of the work we’ve done on this hard project,” Rattner said. “It’s unambiguous that this was a success.”
Source: The Detroit News