Harry Wilson's War: Steve Rattner Credits Much of GM's Rescue to Obscure NY Comptroller Candidate
Harry Wilson, the Republican candidate for state comptroller, may not be preparing to turn the extraordinary praise he gets in Steve Rattner's new book, Overhaul, into a TV ad or mailer. But Rattner's remarkable account of Wilson's skillful and tireless contribution to the Obama auto-industry rescue is more than a kiss from a frog.
Onetime car czar Rattner is now clearly damaged goods, battling the Securities & Exchange Commission, which is attempting to bar him for three years from the financial services industry over his tawdry role in the New York pension fund scandal. But many of the closest friends of the media financier and Democratic fundraiser are standing by him, including Mike Bloomberg, Chuck Schumer, Arthur Sulzberger Jr., Mort Zuckerman, Joel Klein, Fred Wilpon, Norm Pearlstine, Barbara Walters, and Andrew Ross Sorkin, all of whom appear on a list of 77 prominent stalwarts in the acknowledgements of his leaked but as-yet unreleased book.
A former Times reporter whose 318-page thriller proves he hasn't lost his touch at the keys, Rattner apparently remains Bloomberg and Sulzberger's prime financial advisor, even as his former partners at Quadrangle have thrown him under the bus, paying $12 million in fines and agreeing to "wholly disavow" Rattner's "unethical" conduct in their pension-fund settlement with Attorney General Andrew Cuomo and the SEC.
What makes Overhaul work for Wilson, who is running against Comptroller Tom DiNapoli, is that Rattner's narrative is so credibly written, and supported by such compelling detail, that it sublimates any concerns a reader might have about Rattner himself. Still largely unknown with the November election only a couple of months away, Wilson is invariably described in the media simply as a hedge fund millionaire, though he may have accomplished more in his six-month stint on Rattner's "Team Auto" than others do in lifelong public service careers. Rattner and his wife Maureen White are known as the Democratic National Committee's ATM, but he says he "could think of no one who would be a better addition to our state's leadership than Harry," predicting that Wilson "would help salvage the state's disastrous finances."
The Wilson of Rattner's memory is so driven he falls asleep on midnight conference calls and against a pillar at a roof bar victory party, dials into one meeting from a conference room next door rather than waste the seconds "to walk ten feet and exchange pleasantries," grills General Motors top brass in brutally incisive questioning for hours "as only Harry could," trumps GM with tougher, straighter numbers repeatedly, and corrects the head of GM North America who tells him one afternoon that he and Harry can meet at 10 the next morning ("No, I mean ten tonight," Harry shoots back). Faced with a July 10, 2009 deadline to close the GM deal, Wilson is sending e-mail blasts to GM executives at 8:24 p.m. on July 4, berating them for turning off their cellphones for barbecues. When Rattner gets up at 5:45 each morning, he starts his days off by reading the overnight e-mails from indefatigable Harry, who dons a head-set daily at 6 p.m. to talk to his school-age kids back in Scarsdale and cries once before leaving his family for another 100-hour work week in Washington and Detroit. Wilson's human touch also resonates when he blasts GM for "segregated" bathrooms -- one set for salaried and another for hourly workers.
Rattner's lawyers from Cadwalader, Wickersham & Taft had such confidence in Wilson that he was the government's only witness in the GM bankruptcy proceeding. Rattner serves up the e-mails he got from the lawyers as Wilson testified. "Harry is an animal on the stand," said one. Another, at the conclusion of his testimony, read: "Harry has been one of the most phenomenal witnesses I've ever seen." The judge, says Rattner, ruled in favor of the government, concluding: "The Court fully takes Harry Wilson at his word." Rattner depicts Wilson as more of the architect of the GM deal than anyone else, whose "intensity and stamina" become the standard that others on the 14-member team tried to achieve. "In reality, the talent of Harry" and his two assistants "were what really drove the process," says Rattner, who hired Wilson after reading his unsolicited, over-the-transom, resume, intrigued by his Republican and Wall Street background as well as his desire "to serve my country in the near time."
Ironically, it was Wilson who came up with the idea to effectively nationalize GM by becoming its 60 percent controlling shareholder, putting him at odds with Republican orthodoxy, still expressed by Senate GOP leader Mitch McConnell, who insists that the interventionist Obama administration used the auto crisis as "an opportunity for government to extend its reach into industrial policy." Rattner in fact recounts that Wilson realized that new, nearly $50 billion, in government aid to GM "would leave the company groaning under a potentially unmanageable load of fixed liabilities" until it suddenly occurred to him that "we infuse the bulk of our money into GM by buying stock" rather than lending it to the company as the Auto Team had with Chrysler. "Harry bounded into my office one morning waving a sheaf of papers," wrote Rattner, declaring "we've been thinking about this the wrong way" and recommending that they instead "equitize most of our debt." This would mean, agreed Ratner, "that the government would own General Motors."
Wilson was "passionate" in making this pitch to Obama's top economic adviser Larry Summers, who initially "recoiled" at the concept, says Rattner. Summers went along eventually, insisting, though, on a plan to sell all the government stock in eight years, an idea that Rattner says he and Harry "hated," preferring to sell when it was "financially optimal." That means that Wilson actually favored continuing government intervention longer than the Obama administration could accept. In fact, Rattner says that Wilson was seen by others on the team as moving from being its "fiercest laissez-faire capitalist" to "an outright government interventionist." Wilson even proposed at the end, after the bankruptcy and the creation of a new GM, either a "senior-level consulting assignment for himself inside the company" or becoming "part of a government monitoring group" that would go to board and management meetings. It was Summers who wanted a "hands-off policy" with "no long-term role for Harry" or anyone else, letting GM, with newly-installed and government picked executives, run the show.
While these positions suggest Wilson's non-ideological approach, Rattner does sound some alarms about Wilson, though he never directly presents them that way. Wilson fiercely opposed any effort to rescue Chrysler, undaunted by estimates that the collapse of the company could cost 300,000 jobs and that the pricetag to save it was a mere $8 billion, a pittance compared with what the government was pumping into AIG, Citigroup or GM. He pushed a GM proposition that it leave Detroit for the suburbs, a small-ticket, cost-cutting, idea with Katrina-like consequences for the city that was unceremoniously shot down from the White House. Wilson also opposed a "vitality agreement" for GM barring it from cutting its workforce after the $50 billion infusion, arguing that such a ban was "bad economics" and would tie GM's hands. He lost that case too, with other Obama officials asking the logical question of what the point was of saving GM "if we weren't going to safeguard American jobs."
Rattner says that Wilson "scarcely needed encouragement" from him to get tough with United Auto Workers in his GM dealings, but tells the separate tale, without ever acknowledging the irony, that Wilson pushed him to be precisely twice as generous in payments to bondholders as Rattner wanted to be, giving them a 10 percent stock stake in the new GM. When Rattner wound up caving to that demand, Wilson upped the ante again, pushing Rattner "to sweeten the pot," which he did again. In Rattner's scoresheet at the end of the book, one of only two regrets was his wish that he "had avoided the crazy math that led us to give" what he now calculates as 35 cents on the dollar to the old GM bondholders, but Rattner doesn't point out that the math was partly Harry's.
Wilson was so much tougher on the UAW than he was on bondholders that he crossed the line from being independent of unions, a potentially admirable characteristic in the comptroller's race, to appearing anti-union. Rattner says his deputy Ron Bloom, one of Time Magazine's 100 Most Influential People who now oversees auto and manufacturing policy in the Treasury Department, "felt that Harry was in outer space about what the United Auto Workers could possibly accept." Bloom, who won the war with Harry on the viability agreement and was Wilson's superior in the chain of command, had to take over-the-top guff from Wilson. Harry resisted Bloom's involvement in the GM negotiations, writes Rattner, and told Bloom that the bondholders "think you totally sold out to the unions" in the Chrysler deal, and "don't think you can be an honest broker."
Wilson's union problems, though, went far deeper than Bloom. UAW president Ron Gettelfinger "would have none of Harry," writes Rattner, interrupting Wilson when he mentioned that his mother had worked in upstate textile mills and snapping: "Harry, I don't want to hear your stories about factories." At another point, Gettelfinger belittled the 36 year-old Wilson's lack of industry or labor experience: "I know you are an expert on autos, but have you ever met my retirees?"
Rattner's epilogue, which contains references to events that occurred just last month, concludes that the Chrysler and GM deals were so successful that he anticipates that "the U.S Treasury will cover most if not all of the $82 billion the American taxpayer staked on overhauling Detroit." While he is still not sure the surgery saved Chrysler, which he calls "hollowed-out" before the rescue, he's "delighted" with two successive quarterly operating profits at the new Fiat/Chrysler. The industry, he says, has added 55,000 jobs. Rattner calls this "the largest industrial rescue in history," and as lost as it is in the national, 24-hour, news cycle of endless GOP Obama-bashing, that may not be hyperbole.
It is ironic indeed that Harry Wilson, a largely ignored candidate for an office the media also ignores, was such a pivotal player in this reclamation. The story of Wilson's role has its disturbing sides, but the bottom line, assuming the accuracy of Rattner's narrative, is that Wilson, the new kid on the block in NY politics, is as formidable a candidate for statewide office as the Republicans have nominated in at least two election cycles.