The auto bailout

[mavenu]

The shockingly poor financial management of General Motors and Chrysler weakened their case for a government bailout, but officials feared letting the automakers collapse would severely harm the U.S. economy, the former head of the Obama administration's auto task force says.

<a class='bbc_url' href='http://money.cnn.com/2009/10/21/autos/auto_bailout_rattner_excerpt.fortune/index.htm?postversion=2009102109'>Short Version</a> aka, the TL;DR version.

<a class='bbc_url' href='http://money.cnn.com/2009/10/21/autos/auto_bailout_rattner.fortune/index.htm?postversion=2009102109'>InDepth Article</a> <-way better

Everyone knew Detroit's reputation for insular, slow-moving cultures. Even by that low standard, I was shocked by the stunningly poor management that we found, particularly at GM, where we encountered, among other things, perhaps the weakest finance operation any of us had ever seen in a major company. // 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.

For example, under the previous administration's loan agreements, Treasury was to approve every GM transaction of more than $100 million that was outside of the normal course. From my first day at Treasury, PowerPoint decks would arrive from GM (we quickly concluded that no decision seemed to be made at GM without one) requesting approvals. We were appalled by the absence of sound analysis provided to justify these expenditures.

[Guest]

Actually, that doesn't surprise me, because what did surprise me that Opel, among the top 5 of best-selling car brands in Europe (and part of GM) got into major problems due to the crisis...I mean if you are one of the market leaders, I think you must be doing something wrong if you fall that easily...