The man who led the auto industry bailout says he couldn't believe the condition in which he found General Motors when he took on the largest restructuring in American history.
Writing in Fortune magazine, Steven Rattner says he was "shocked by the stunningly poor management" he found, particularly at GM. He says what he encountered at the automaker was "perhaps the weakest finance operation any of us had ever seen in a major company."
Rattner says it became obvious very quickly that any management team that had burned through $21 billion of cash in a year and another $13 billion in the first quarter of 2009 could not be allowed to continue.
At GM's Detroit headquarters, Rattner says, the top brass were "sequestered on the uppermost floor, behind locked and guarded glass doors. Executives housed on that floor had elevator cards that allowed them to descend to their private garage without stopping at any of the intervening floors."
He says that in the few interactions he had with chairman and CEO Rick Wagoner, he found him be "likable, dedicated, and generally knowledgeable." But he says Wagoner set a tone of "friendly arrogance" that seemed to permeate the organization.
Rattner writes that Waggoner told him, "I'm not planning to stay until I'm 65 but I think I've got at least a few years left in me. But I told the last administration that if my leaving would be helpful to saving General Motors, I'm prepared to do it."
Rattner concluded, "If ever a board of directors needed shuffling, it was GM's, which had been utterly docile in the face of mounting evidence of looming disaster." He says he and his team decided to recommend, among other things, that Waggoner be replaced by Fritz Henderson as interim CEO, changing at least half of the board, and making an outside director chairman.