Life, when you really think about it, is basically just a series of key moments or turning points. And some of those moments, in the blink of an eye, can change your life forever. One of the moments for me arrived on what had been, up to that point, a very unmemorable day. I will always remember it.
It was March 25, 2009, a Wednesday. I’d been out all morning—doing what, I do not recall. I was driving into the office so I called my secretary, Marilyn Taylor, to let her know I was on the way. That’s when Marilyn told me that Steve Rattner had just called and wanted me to call him back. And I remember thinking to myself: Well, that’s strange. Why would Steve be calling me?
I had met Steve many years earlier—in the 1990s—when he was at Lazard Frères, the big investment bank in New York. Lazard was one of AT&T’s longtime bankers, and Steve worked there, so that’s how we met. Didn’t know Steve too well, to be honest. At Lazard I mostly dealt with Felix Rohatyn, the managing director. Felix is famous for saving New York City from bankruptcy in the 1970s. He later became the US ambassador to France, which entirely tracks because Felix is a very worldly guy. But what Felix was best known for, and still is, is deal making—in Wall Street circles Felix was regarded as a deal maker’s deal maker. And in the 1990s AT&T was doing a lot of that. Over the course of many deals—Felix helped us out on the $47 billion AT&T wireless deal, for instance—we got to be pretty good friends and stayed in touch. Steve and I, not so much. No good reason for that, we both just got busy with life, I guess. But I liked Steve just fine, always did.
When I got to the office, I called Steve back. His secretary put me right through. “So what’s up?” I said, or something like that—I am recounting these conversations from memory, so the wording might not be exact. I hadn’t talked to Steve in a couple of years and had no idea what to expect.
First thing Steve did was ask if I remembered him. Steve is one of those super-smart New York banking types. Polished, well spoken. Interesting background—he’s a former reporter for the New York Times. So, yes, I remembered him. Then he started asking me what I’d been up to. Not a lot was the honest answer. I’d been retired from AT&T for about two years and was still trying to get used to not having to put on a suit and tie every day, which I’d done every day of my working life, pretty much, for forty-four years. I wasn’t having much luck, but I was trying. I was also spending more time out at my ranch—I have a place about an hour outside San Antonio. I like to go there whenever I can with Lucille, my eleven-year-old chocolate Labrador. My wife, Linda, isn’t particularly fond of the ranch, and I can certainly understand why she feels that way because it’s basically in the middle of nowhere. But Lucille and I like it just fine. Anyway, I wasn’t doing a whole lot right then, so that’s what I told Steve.
After a few minutes, Steve said something like—and again I am paraphrasing—“So you know, Ed, I’m newly appointed as Car Czar to deal with the coming bankruptcy of GM and Chrysler.”
I was not unfamiliar with Steve’s Car Czar duties. I am a longtime news junkie—you sort of get to be that way when you run a big publicly traded company like AT&T. A bad news story can upset investors and shave a billion dollars off your market cap pretty quick, so I always tried to stay on top of the headlines when I was running AT&T. And old habits are hard to break. I still watch the news most mornings when I’m having my coffee—except when it’s duck season; then Lucille and I are usually out hunting. Right around this time you couldn’t turn on the TV or pick up a newspaper without seeing some story about GM. Nobody had anything much good to say, because GM was basically flat broke. I knew from reading and watching the news that Steve was head of the auto task force—the formal name was the Presidential Task Force on the Auto Industry—that had been set up by the Obama administration to deal with the auto crisis. Since Steve was leading the group, a lot of media types had taken to calling him the Car Czar. Steve’s number two was Ron Bloom, a former Lazard banker and restructuring specialist who’d just spent twelve years working with the steel-workers’ union. Harry Wilson, another restructuring specialist and former Goldman Sachs banker, was also on the team; it had a dozen or so members in all. The Auto Team—or “Team Auto,” as Steve liked to say—reported to Tim Geithner, the US Treasury secretary, and Larry Summers, chief economic adviser for the White House. President Barack Obama, who’d only been in office about two months at that point, had ultimate authority on everything.
The auto bailout had actually gotten started during the Bush administration, which stepped in with emergency funding right before President George W. Bush left office: around $13 billion for General Motors and $4 billion for Chrysler. (Ford ultimately said “no thanks” to a government handout.) Funding was provided by the Troubled Asset Relief Program, known as TARP, which had been set up in the fall of 2008 to help deal with the mortgage crisis. A triggering event for creating the program was the fast dissolve of Lehman Brothers. Practically overnight, America’s fourth-largest investment bank went out—it filed for bankruptcy in September 2008. Instantly twenty-six thousand people lost their jobs. Lehman turned out to be the canary in the coal mine. Before long, driven in part by the mortgage crisis, US banks and financial institutions were collapsing like lawn chairs. TARP authorized the Treasury Department to purchase up to $700 billion in troubled or “toxic” assets—meaning assets that nobody else wanted, at any price.
TARP funding was 100 percent taxpayer money, of course, so in theory at least all that money had to be paid back. Only, a lot of people thought that would never happen, especially in GM’s case. One reason people thought that had to do with conventional wisdom, which had long held that people would not buy cars from a bankrupt car company. So even if GM managed to survive the bankruptcy process—and that was not a given—the aftershocks would surely kill the company anyway, or so the thinking went. The main problem with this theory? No major US carmaker had ever gone bankrupt, so nobody really knew how car buyers would react. They were all basically just guessing.
Anyway, I was sitting in my office, on the phone, listening to Steve rattle off all this stuff about his Car Czar duties and the sorry state of the auto industry when he said, almost casually, that he would like for me to think about becoming the chairman of General Motors. At first I thought I must’ve had cotton in my ears or something, because GM already had a chairman and CEO—Rick Wagoner. Surely I’d just misheard him. So I waited two beats and said to Steve: “Say that again?”
And damn if he didn’t say it again.
“I’d like for you to think about becoming the chairman of General Motors,” Steve told me. “We need somebody who has experience with big companies, experience with unions, a proven track record, and no association with the car industry.” In other words, he said, getting straight down to business, “We’d like for you to become the next chairman of General Motors, Ed.” As Steve explained it, Wagoner was about to step down because the White House felt a “new direction” was needed at GM, and the Auto Team agreed.
I didn’t ask many questions about Wagoner, and to be honest I didn’t have to. GM’s financial performance pretty much said it all: GM shares lost more than 90 percent of their value on Wagoner’s watch. GM also lost $82 billion and ran out of cash, and would have flatlined for good if the White House had not stepped in with emergency funding. Now GM was burning through that cash, which was all taxpayer money, at an alarming rate. I felt bad for Wagoner—no CEO ever wants to leave under a dark cloud like that. But I felt even worse for employees and shareholders, who were 100 percent dependent on management to keep the ship upright. GM’s numbers staggered me. I simply did not understand how any management team could allow that to happen.
But the immediate question on the table—Would I consider becoming GM’s chairman?—required no thought at all: No, I would not.
For one very simple reason: I knew nothing about cars. Zero. How could I even consider taking the reins of a company whose business I knew nothing about? GM was all cars, all the time—that was its one and only product. I knew telecom, not cars. How was that going to work? The short answer: It wasn’t. Plus, I was retired. I’d put in my forty-four years and now I was on to the next chapter of my life. So that’s basically what I told Steve: “I don’t know anything about automobiles, I’m retired; the answer is no.” Or words to that effect, but you get the idea. It occurred to me later, after we’d hung up, that I hadn’t bothered to ask Steve a single question—I basically just turned him down flat. I figured that was pretty much the end of that.
But Steve called me back again the next day.
“You been thinking about our conversation?” he asked.
In truth, I had been thinking about it—and I still thought the idea was utterly ridiculous. Because, as I said, and as I told Steve, I knew nothing about cars. Steve always was a good salesman—a lot of bankers are. So like any good salesman he just sort of breezed right past the “Not interested” part and started talking. Pretty soon, he was spinning all sorts of reasons why he thought I’d be perfect for GM: I have experience running big companies, I’m good with unions, I have deep management experience and experience with operating in a global market; the list went on.
The thing I was most concerned about—no car experience—Steve just brushed aside. Said I’d be bringing a “fresh perspective” to General Motors, which, according to Steve, had been stuck in a management rut forever. He also pointed out that it was a bunch of “car experts” who’d gotten GM in this mess in the first place, and I guess I really couldn’t disagree with him there. I told Steve I’d think about it some more.
And that night I did think about it some more. But mostly what I thought was: No way am I doing this. In the back of my mind, I also thought Steve couldn’t possibly be serious. I must’ve been seen as a shot in the dark, because surely there were better candidates than me out there, right? I didn’t tell Steve any of this, just in case he was serious.
Steve called again the next day. Three days; three calls. This time he hit me in my soft spot: patriotic duty. “America needs you,” Steve told me. “This is a great company, with great tradition and great history, but it’s in real trouble financially. GM is probably going to go bankrupt, because its cash won’t sustain the business. I’d really like for you to think about this, Ed.” He got my attention with that.
“So this is public service, huh?”
I could tell that Steve could tell that he was getting to me—and he was.
“A total service for country,” Steve said. “America needs you, Ed. Please think about this.”
Steve was calling in from Washington, where he was holding round-the-clock meetings with GM executives. Things were about to come to a head. To get GM turned around, the Auto Team believed the company needed a steady hand at the top. I didn’t disagree; my only question was whether I could credibly step into the chairman’s role. We talked some more; Steve’s patriotic pitch hit a nerve, no question. But this was a big, big decision, and I didn’t want to make it in a moment when I was feeling rushed or emotional. I was heading out of the country for a few days—to Singapore, for an Exxon board meeting. I told Steve I’d think it over and call him when I got back.
Two days later—on Sunday, March 29—I took off for Singapore with my wife, Linda. That same day, Wagoner announced his intention to step down as chairman and CEO. In a prepared statement, Wagoner was brief and to the point: “On Friday I was in Washington for a meeting with Administration officials. In the course of that meeting, they requested that I ‘step aside’ as CEO of GM, and so I have.”
Frederick “Fritz” Henderson, GM’s president and chief operating officer, was immediately elevated to CEO. A long-standing GM board member, Kent Kresa, the former chairman and CEO of Northrop Grumman, was named interim chairman. The news swamped headlines around the world. A lot of people were surprised—many in America were outraged—that the Obama administration would involve itself so closely in the management of a big, publicly traded company like that. The perception that the government was now running GM got solidified when the Auto Team announced, later that same day, that most of GM’s board would be replaced in the coming months. I was halfway around the world in Singapore but glued to the news. The headlines were all about GM, and all of them were bad.
I spent the next few days chewing on my conversation with Steve. The simple reality that I didn’t know anything about cars still worried me. I mean, c’mon, a GM chairman with no car experience? Wagoner had three decades under his belt; Henderson was a twenty-five-year veteran. Almost every senior officer had deep industry knowledge and experience. Same for lower-level managers—the place was packed with car experts and car nuts, top-to-bottom. But Steve had a good point: “Car experts” had damn near killed that company. Maybe a “fresh perspective” would help. I figured it couldn’t hurt.
The headlines were brutal. A lot of people were calling for the Obama administration to let GM go bankrupt and never come back—to just let it die. That’s always a possibility in any bankruptcy situation. In bankruptcy, companies may liquidate, in which case they go away for good. Or if the firm is worth saving and all the interested parties can work out a deal—unions, bondholders, suppliers, those sorts—the company “reorganizes” into a new and hopefully better version of itself, then gives it another go.
People were also upset that General Motors might be in line for more TARP money, and I could certainly understand why, at least on one level. I mean, a 95 percent drop in the share price doesn’t exactly give you confidence in the ability of a company to pull it out, you know? But I also thought $50 billion—which is how much GM ultimately got—was a drop in the bucket compared with the $182 billion the government gave AIG. And I still don’t know exactly what AIG does, do you? It’s a big insurance company, I know, but they don’t produce any goods or services that I’m aware of.
GM, in sharp contrast, is a real company with real products. And it supports real jobs right here in America. So if you look at it in that context—and I do—spending $50 billion to save GM just wasn’t that much. Take a shot and try to save GM, or stand down and know for sure that the US auto industry is going away for good, along with all those jobs? In my mind, it wasn’t even a toss-up.
Steve’s invitation was highly confidential, so I didn’t discuss it with anybody. Except my wife, Linda—we’ve been married forty-seven years, she was my college sweetheart. Linda’s been very supportive throughout my career. When I was coming up the line at AT&T we moved nineteen times—I kept getting promoted, so we kept having to move our family. Linda oversaw all that while also taking care of our two baby girls—they’re both grown and married now. Linda never complained, even when we had to move to New Jersey. When I first told her about GM, she sort of smiled and said the same thing she’s been telling me for more than forty years now: “I think you’d do a really good job. If you want to do this, go for it.”
By the time Linda and I boarded the airplane in Singapore to fly back to Texas, my mind was pretty made up: I’d give it a try. The worst thing that could happen, I figured, was that I might not be successful. On the other hand, I just might. You never know until you try: That’s how I’ve always lived my life, no reason to stop now.
Service to country. That’s what I thought about the most. I’ve been very fortunate in my life. Damn lucky, in fact. So if my country wants my help, and is asking for my help, then by God I’m going to give my help to the best of my ability. I didn’t know cars, true. But I did know that America didn’t need another punch in the stomach. Not with record unemployment and the stock market jumping around like a Ping-Pong ball—up two hundred points one day, down four hundred the next, back up the day after that—it never seemed to stop. All that instability was contributing to a general sense of malaise in America, and the financial volatility was driving the common person out of the market. It’s a scary thing when you can lose everything in a day, or make everything in a day. I know it was scaring me. If GM went through a painful bankruptcy restructuring, only to fail again due to weak or bad leadership, well, I didn’t even want to think about that. If there was even an outside chance that I could help—and I was turning over some ideas in my head, forty-four years in business will do that to you—then why not give it a shot?
I was no spring chicken—sixty-seven. Not so old, but not so young, either. If the Auto Team really wanted me to take this on, it would have to be with the understanding that I would only stay long enough to get things fixed. Then I was heading back home. Life’s short, you know, and it gets shorter the older you get.
I called Steve when I got back from Singapore and told him I’d do it. With one condition: I needed to be able to call my shots as I saw fit. No second-guessing. And no meddling. If I was going to sign on as GM’s chairman with the express goal of fixing management—and that’s what I was being asked to do—then I’d do my best to deliver. But I’d do it my way. I would listen to anything that anybody had to say. But ultimately, I’d make my own calls.
Companies aren’t democracies; you can’t run management by consensus. Somebody has to be in charge. And that person has to be willing and able to make hard decisions at times. It’s a way of sending a message to the entire management team: We have a vision, we have a plan, and we are executing on the plan. If you are not on board with the plan, for any reason, then you will be leaving. If you fall short for too long, then you, too, will be leaving. And so on. Not quite “my way or the highway”—but close enough.
On the plus side, everybody knows what is expected of them, and what the potential penalties are for not meeting objectives. Sounds a little hard, I know, but clarity is key when it comes to managing a publicly traded company. And clarity had been missing at GM for far too long, which was one reason the place was such a discombobulated mess. That sort of dysfunction trickles down to employees—bad for morale, bad for production, bad for everything. On the flip side, if you can get management focused and hitting on all cylinders, it has a way of trickling down, too.
So that was my bottom line: I’ll do this, but my way. Steve said okay, and that was pretty much that.
Shortly thereafter I had a few discussions with GM’s interim chairman, Kent Kresa, about the timing of my formal appointment as GM’s chairman. Kresa offered to spend a year or so in the job, to let me get up to speed. I had no interest in doing that—zero. Also did not have the time—my plan was to get in and out as soon as possible. I wasn’t trying to build my résumé; I was just trying to get GM fixed. Kent said he understood, so we worked it out: I’d be chairman on Day One.
GM filed for Chapter 11 bankruptcy court protection on June 1, 2009. Eight days later, on June 9, my appointment was announced by the White House. I was the first non-GM person to serve as chairman in the hundred-year history of the company. Kent graciously agreed to stay on the board until his term expired at the end of the year.
As I expected, I immediately got a lot of criticism for not having any car experience. But of course it was absolutely true. No use trying to deny it. People poked a lot of fun at me over this, which didn’t make me feel too good inside, I will admit. But it was what it was.
My game plan, to the extent that I had one, was pretty straightforward: Get in, immerse myself in management, assess the problem, fix the problem, then call it a day and get myself back to Texas. I wasn’t looking to string this out. Like I said, I had a wife, family, four grandkids, and a really great dog waiting for me back home. But I also didn’t think it was going to take that long, because GM’s biggest problem—maybe its only problem—was management. And while I didn’t know much about cars, I did know a little something about that.
Three days; three calls. That’s all it took. Now I was heading to Detroit to become the chairman of General Motors. Me, a guy from Ennis, Texas, who didn’t know a thing about cars. As I said at the beginning of this chapter, life—it can change on you just like that.