6. THE B WORD

"BANKRUPTCY IS NOT our goal." The words seemed to just pop out of my mouth.

At the behest of the White House, I'd found myself on the phone with some reporters from Detroit while on my way in from the airport on a Monday morning in March. All went fine until one asked about bankruptcy for Chrysler and GM. I should have been prepared for this obvious question, but wasn't.

I hesitated, trying to reconcile my preference for directness with the indisputable need to avoid further destabilizing two already fragile companies. And the last thing I wanted was to be dragged into some kind of horrible media free-for-all.

Dealing with reporters, I had to get used to how the rhythm of journalism in Washington had changed. During my years as a Times reporter, the Washington crew typically faced a 6 P.M. deadline for all but the most important stories. So unless late news broke, we had evenings free for the carousing that journalists back then enjoyed. But reporting these days goes on 24/7, with questions often posed and answered by e-mail. Throughout the day, our press people replied to questions themselves or asked for our help. There was no more stopping at the cocktail hour. By mid-evening, the next day's newspaper stories would appear on the Internet, triggering rounds of pushing and pulling between our communications team and the reporters to try to move errors, misunderstandings, or excessive harshness to a happier place. We would awaken in the morning and open the print editions to see whether our labors had borne fruit.

The tone of the relationship between the media and the government had changed too—it had grown more mistrustful and cynical even than after Watergate. No matter what we did, our competence, our motives, and, at times, our integrity were questioned.

The game was rough, but the White House press office had decided it was time for us to play it. We needed to make the case to the public that the task force was getting things done. That was why I had found myself in that airport car on the phone with the Detroit News and the Detroit Free Press, being questioned about one or more of the automakers having to declare bankruptcy.

I went ahead and said what had come to mind: "Bankruptcy is not our goal. I've been in and around bankruptcy for twenty-six years as part of my private-sector work. It is never a good outcome for any company, and it's never a first choice." I knew that I was on the edge of being disingenuous, but no formal decision had been made about bankruptcy and the decision would be the President's, not mine. So great was our concern about scaring off car buyers that we did not want to take any chances by throwing around the B word.

Sharpened to a sound bite—"Bankruptcy is not our focus; bankruptcy is not our goal"—my ad lib became our mantra.

Yet all the while we were preparing for it.

The day after our return from Detroit I'd met Matt Feldman, a bankruptcy lawyer whom we'd recruited because TARP'S nine-attorney legal department had no one available with cutting-edge experience in restructuring. I didn't know Matt but Harry and Ron did, and he had also been recommended by a mutual friend on Wall Street. Nonetheless, hiring a lawyer at Treasury presented its own complications; TARP or no TARP, I was told, only the general counsel was permitted to hire attorneys. We eventually ground through the bureaucracy, trying to take advantage of Matt's expertise as best we could along the way.

So skittish was the White House about any talk of bankruptcy that when Matt's firm put out a press release proudly announcing his joining the task force, I was ordered to reprimand him for breaching protocol. I knew that Matt had nothing to do with the release—it was an innocent effort by his firm to brag a little—so I chose to ignore that particular instruction, the only time in my government career when I did so.

Matt Feldman was our last senior hire. Balding and cherubic, he had the maturity, steady nerves, and persistence that we'd require in dealing with the strong and stubborn personalities of a dominant industry. Matt also had terrific judgment on business issues well beyond questions of law. And he would prove to be as fine a restructuring lawyer as I have ever met.

We now had plenty of chiefs but no Indians. Harry proposed that we launch an investment-banking-style recruiting drive. It didn't faze him that we had only a couple of weeks to hire people, instead of the usual six months. On March 13, he blasted out an e-mail to his entire network of Wall Street contacts. "The work is incredibly intense," Harry wrote. "The amount of work is massive, the timelines are tight and the level of focus is also very high." And he added "compensation = government wages." When Matt read it, he thought it was so tough that no one would respond; Harry's view was that we wanted only highly talented people with an extraordinary sense of commitment. His e-mail was a way to select for them. We were soon deluged with hundreds of applicants, the vast majority from people we hadn't solicited directly as Harry's e-mail ricocheted around cyberspace.

We spent part of a morning reviewing piles of résumés and settled on a small group of candidates to invite to Washington for interviews. They had to pay their own way; unlike an investment bank, Treasury had no budget for reimbursing candidates' travel expenses. Nor was there anything like relocation or temporary-housing allowances for those we hired. Five of our new colleagues (including Ron and Harry) settled at the Woodward, a former office building a block from the Treasury that had been renovated to accommodate just the sort of short-term residents we expected to be.

In hiring, as in many other matters, we would have preferred a more conventional schedule, to make sure we picked the very best. But I'm a believer in the principle of Malcolm Gladwell's book Blink: you can often make equally good decisions in a fraction of the customary time. (Warren Buffett has shown that superb investing need not entail the months of due diligence and deliberation that private equity firms typically apply to a deal. Buffett has been known to make successful multi-billion-dollar bets on the basis of a few meetings or phone calls.)

As we filled out the team, I thought of it as a firm rather than as a governmental hierarchy with gradations of seniority and titles bordering on the ridiculous—we wanted no "principal deputy undersecretaries" or the like. There were five partners (Ron, Harry, Brian, Matt, and I) who each had clear responsibilities but who functioned as a team. Matt ran our mini-law firm, with the assistance of Paul Nathanson, a superstar who had worked for me at both Lazard and Quadrangle before going on to Harvard Law School and a Supreme Court clerkship for Chief Justice John Roberts. We had diligence/restructuring teams for GM (headed by Harry) and Chrysler (headed by Ron with help from Brian Osias). Wall Street and the auto finance companies became my bailiwick, and to guide us with the latter, we recruited yet another Brian, Brian Stern, a youthful but experienced pro in financial institutions.

The White House belonged to Brian Deese, whose physical proximity to Summers and precocious understanding of policymaking were invaluable assets for navigating the byzantine decisionmaking process. Among many other things, I would learn an entirely new language from him, the lingo of the West Wing. "Litigate" meant to debate a decision or the wording of some document or speech. "Lean into" referred to encouraging the media about a particular line of speculation. "Wave off" was the opposite. To get "caught trying" meant receiving credit for having attempted something (like saving Chrysler) but failing.

Our recruiting effort succeeded in part because it coincided with a slow time on Wall Street. But far more significant, I found, was the desire of people to serve. With one exception, none of our new arrivals had any government experience or had ever thought much about coming to Washington. All shared the urgency that had finally prompted me to close my eyes and jump: the nation was going through a financial crisis, and for those of us with relevant qualifications, this was our chance to help. As Harry wrote in his e-mail, "I believe the opportunity is both unique and tremendous."

Washington veterans marveled at our hiring. I made a point of bringing as many of our new colleagues as I could to meetings in the West Wing. Even Larry was impressed. "Where did these people come from?" he asked on more than one occasion. "Every time you come here I see different faces, but they all seem to know what they are talking about." Our growing team attracted a different kind of attention in the halls of the Treasury. Never mind that we were part of TARP and our hiring didn't impinge on Treasury's tight budget; eventually Mark Patterson, Geithner's no-nonsense chief of staff, suggested that a task force of fourteen was, as Larry had cautioned weeks before, large by government standards.

By early March, I had settled into a routine that would continue until the end of my government service. I had sublet a cozy furnished condo on 23rd Street that had the advantage of access to room service from the Ritz-Carlton Hotel (to which it was attached) and to a Reebok Sports Club. I would get up at 5:30, take a quick look at the e-mails that had arrived overnight (inevitably, a pile from Harry), and be on a treadmill at the gym in time to catch the opening of Morning Joe on MSNBC at 6 A.M. The reports were filled with gloom, with the stock market below 7,000 and people debating whether we were in a recession or a depression. By seven, I would be back to shower, dress, scan the newspapers, and wolf down a bowl of Cheerios or an English muffin, all in order to get to the office in time to prepare for our daily 8 A.M. Team Auto call. Lunch was a tuna fish sandwich or a chicken caesar salad at my desk, a big change from the Four Seasons restaurant in New York, on the ground floor of the Seagram building, where Quadrangle had its offices. I'd get back to my condo between 8 and 9 P.M., eat some take-out food or order room service, and respond to the e-mails and other tasks that had piled up during the day. Answering government e-mails from home took some doing. The Treasury's e-mail system had layers of security that made it difficult to navigate remotely. (I'd been given a top-secret clearance—complete with a security briefing—but I never needed it for my job.)

I had anticipated this ascetic life and soon came to enjoy it, though it was a long way from the glamour of Washington that many envision. An unexpected benefit was that my caloric intake was so reduced that I lost five pounds during my time in government. Another happy surprise was that Team Auto was sufficiently autonomous for many of us to be able to commute home on weekends. I didn't mind spending most of Saturday and Sunday on conference calls or answering e-mails or commenting on drafts as long as I could be with my family for meals.

My teenage children didn't have much interest in cars or car companies—these were city kids. But having grown up in a politically active household, they were curious about government life. They particularly wanted to find out how it compared with the TV show The West Wing, reruns of which they watched endlessly. (I've never seen a single episode.) One weekend when I was stuck in Washington, my twin boys, who were seniors in high school, came to visit. They'd been to the White House (and the Oval Office) during the Clinton years and now wanted to see the Treasury building where I worked. Built in the mid-nineteenth century, the Treasury has all the feel of the important monument that it is. The department has an in-house curator, and the building's long and eventful history is displayed on its walls. As my boys and I walked the cavernous halls on Saturday morning, I enjoyed as much as they did looking at the vintage photographs, some of significant events, some of the building and its neighbors over the years. We also toured the portraits of former Treasury secretaries on the third floor, each with a surprisingly frank caption explaining the individual's successes and shortcomings. And we visited the ornate marble Cash Room, a banking hall where in the past money could be redeemed for gold and silver, and which was also the scene of President Grant's inaugural ball. (Since arriving at Treasury, I had been to the Cash Room for two ceremonial events: Tim Geithner's swearing-in and his disastrous first bank speech.)

The toll on my colleagues, who had more limited financial means and many of whom had young children, was far greater than it was on me. Every evening around six, Ron, Matt, and Harry would don headsets and call home to talk to their school-age kids. Ron would make the five-hour drive each week from his home near Pittsburgh in his 2003 Mustang (making him one of only a couple of task force members who drove an American car). When Matt Feldman told his wife he was joining the task force, she replied, "Let me understand this. You're moving away, you're leaving me with four kids, you're resigning your partnership, you're giving up 98 percent of your income, and you're asking me to be excited about that? I'll support you, but don't expect me to be excited about it." My young colleague Sadiq Malik spent his first month on a friend's couch in the Virginia suburb of Rosslyn. I tried to ameliorate the sacrifices as best I could, such as by paying for a stocked refrigerator and cabinet of cookies, granola bars, and the like to sustain the team during the late nights.

Even Harry Wilson, tough as nails, experienced low points. He had given up a treasured early retirement to go back to a life of hundred-hour weeks, and he and his family were feeling the strain. Two weeks after joining Team Auto, having been told he couldn't go on the Detroit trip because of lack of space, he mistakenly took a worried comment that I made during a Sunday conference call as personal criticism. That night, as he said goodbye for the week to his wife and four daughters, most of them broke down in tears. Bombarded on all sides, he lay down on his bed and cried. The next morning, after a mostly sleepless night, he took the first flight to Washington, miserable as he contemplated another week of back-to-back meetings.

For my part, after spending January and February feeling like a piñata at a fiesta, March came as something of a relief—but only partially so. My fears now focused on the substance of what we were trying to do and the enormous responsibility on our shoulders. I would sometimes sit bolt upright in the night, realizing that the fate of an entire industry—one that constituted a full 4 percent of our economy and was responsible for millions of jobs—rested heavily in my hands. The thought did not make for restful sleep.

Ironically, although I'd just been described in a Washington Post article as "fearless" and "self-confident," my indecision over taking the auto job demonstrated that I was as filled with doubts and questions as anyone. Later, I would learn that Tim had described me as having a low pulse rate, which was literally true, although it often didn't feel that way. Tim meant that I didn't fluster easily. In that respect, I realized that he was right. Once I took the auto job, I didn't shirk from decisions. It was our responsibility to make them.

While I was saying publicly that bankruptcy was not our focus, behind the scenes we were working intensively to figure out the best way to effect the critical restructurings. From the start, we had been the (mostly) happy recipients of much unsolicited advice. The question of how to deal with the two insolvent automakers whose businesses would never survive the long, slow grind of a conventional bankruptcy was fascinating to a crowd of experts.

Many of the suggestions were impractical, even when they came from sophisticated practitioners. Others revolved around the idea that we should push for passage of special bankruptcy legislation to speed us along. We asked our lawyers to draft a wish list of what such a law would include. Given the complexity of the subject, it was evident that if nothing else, passing legislation would involve an unacceptable delay. Many of the procedural steps in the bankruptcy code that we would be seeking to strip away had themselves been added to correct perceived past abuses, so whether Congress would have been amenable to changes was far from clear. Moreover, merely asking Congress to amend the bankruptcy code could well have triggered the consumer strike that we were working so hard to avoid. Finally, we were advised that efforts to shortcut bankruptcy procedures could well run afoul of the "takings clause" of the U.S. Constitution, or at least lead to prolonged litigation over the law's constitutionality, resulting in delays that would almost certainly exceed those involved in a Chapter 11 filing.

At the core of our problem was timing. Rothschild initially estimated that even a Section 363 sale of assets, the fastest possible bankruptcy, would take between six and fifteen months, time that I did not believe we either needed or had. I tried editing the timeline with Todd Snyder and his colleagues, challenging their assumptions at each step. When that didn't work, I asked Matt Feldman for help. Matt looked at the Rothschild analysis and had the same reaction I did. "This timeline is crazy," he thought. "It's way too long." The weekend before our trip to Detroit, the three of us had a series of phone calls. Matt found himself sitting in his study in Westport, Connecticut, watching his forsythia shrubs begin to bloom, being asked by Todd to support a timeline that he didn't believe in to a senior colleague he hadn't yet met.

Bit by bit, we whittled down Rothschild's opening bid to a period that we thought the automakers could survive. A week later, Matt was ensconced in a Treasury Department conference room with a whiteboard, working through structure and timing with John Rapisardi and his team of bankruptcy lawyers from Cadwalader, Wickersham & Taft, who was advising us. Feldman pushed them to a critical breakthrough: unlike most 363 sales, which include a marketing period to ascertain whether a better offer might be lurking in the bushes, we would propose no marketing period, thereby dramatically shortening the process. Matt's argument was that everyone in the solar system knew these automakers were effectively for sale. If another buyer existed, it would have come forward by now.

We discussed none of this with General Motors or Chrysler. Instead we zeroed in on their principal challenges. For GM, management was the issue; for Chrysler, sheer survival.

Chrysler's creditors had been pressing us for weeks for a chance to make their case. Their anxiety was easy to understand. In May 2007, at the height of the private equity bubble, JPMorgan, Citibank, Bear Stearns, Goldman Sachs, and Morgan Stanley had agreed to lend $10 billion to Cerberus to help fund its purchase of Chrysler and Chrysler Financial. It was one of those Rube Goldberg financings that private equity guys and aggressive lenders dream up when times are flush. For a little under a year, all seemed to go well—Chrysler even paid down about $3 billion of the debt. But as the creditors prepared to sell the remaining debt to other banks and investors, as would have been routine, the credit markets began to fail and the value of the debt fell.

JPMorgan was in the deepest. In acquiring Bear Stearns when the investment bank collapsed in March 2008, it inherited another hefty chunk of Chrysler debt, bringing its total exposure to $2.7 billion. That was many times more than any bank, even one as gigantic as JPMorgan, would ever want to hold in a single loan, never mind one to a troubled automaker. Worse, JPM was rumored to have much more auto-related exposure on its books. So as industry sales headed south, the Chrysler loans, not surprisingly, commanded the attention of JPM's top operative.

That was James Bainbridge Lee Jr., known on Wall Street as Jimmy Lee, or just plain Jimmy. Almost exactly my age, Jimmy had had one employer since graduating from Williams College in 1975. He had started as a trainee at Chemical Bank and had survived a series of mergers to end up in the highest echelon of one of the world's megabanks. He looked and acted the part. He was partial to elegantly tailored suits and white-collared shirts. He hated being "caricatured"—as he put it—by the way he dressed, and while profiles of him often mentioned suspenders, he insisted that he hadn't worn them in more than a decade. Jimmy was one of the most effective "clients' men" of our generation, an articulate peddler of advice, money, and service. His office at JPMorgan headquarters, at 270 Park Avenue, was a combination command center and personal shrine, with banks of monitors, tickers, and screens, plus shelves of mementos of his many megadeals. He had long aspired to run a bank, but in recent years had settled into a happy life, proud of his position in the executive suite two doors down from CEO Jamie Dimon and of his ability to deploy billions at a moment's notice. At a celebration of Jimmy's thirtieth anniversary with the bank, Jamie toasted the man "who has lent more money than anyone on Wall Street and"—dramatic pause—"gotten most of it back."

I had known Jimmy since the mid-1990s and enjoyed watching him work his magic. Not surprisingly, he'd started calling me almost from the first day that my name had surfaced for the auto job. Each time we talked, Jimmy would bring up the proposition he'd been pushing for nearly a year, since JPMorgan had first realized that its huge loan was in trouble: a merger of GM and Chrysler. Many thought the idea made sense because a merger would eliminate redundant product lines, factories, and jobs; Jimmy liked it because he believed it would shore up the fast-eroding value of his loan. Long after Rick Wagoner had vetoed the idea the previous fall, Jimmy was still tirelessly arguing for a merger, like a dog that would not let go of a bone.

In our phone calls he also relentlessly reminded me that creditors deserve to be paid. "When you lend somebody $6.9 billion," he would say, "you expect to get $6.9 billion back. And not a penny less." I listened knowing that Jimmy's position was patently ridiculous. Chrysler debt was trading at around 15 cents on the dollar (admittedly, infrequently), and according to Chrysler's own analysis, the liquidation value of the company was perhaps as low as $1 billion. Clearly, Jimmy didn't believe that the Obama administration would be willing to push back and let the banks take over Chrysler rather than cave in to their demands.

Jimmy was eager to get together and talk. When, after several phone calls, he realized that I was too busy to come to New York, he made arrangements to visit the Treasury. Normally he'd have made the trip by corporate jet, but in the era of TARP—JPMorgan had received $25 billion of government aid—Jimmy felt obliged to go commercial. He chose the Acela express train for himself and his associates, and arrived at the Treasury around noon on March 13, muttering about the breakfast burrito that he had consumed en route. I loved the idea of Jimmy slumming on the Acela, forced to make do with a breakfast burrito.

We received our guests in the Diplomatic Reception Room, an odd, ornate space meant for Treasury secretaries hosting high foreign officials, and the only vaguely suitable room that Haley could find for us that day. Couches and comfortable chairs surrounded a fireplace at one end of the room and a nineteenth-century glass-topped mahogany meeting table occupied the other. All this was the furthest thing imaginable from a sleek, state-of-the-art financial conference room. When the JPMorgan delegation arrived, a Treasury technician was doggedly trying to hook up a Polycom speaker phone so Matt could listen in. (We had by now discovered that the Treasury mess would provide food and refreshments for meetings as long I paid for them myself.)

Jimmy and his team had brought a flip-chart book extolling the virtues of a GM-Chrysler combination. I realized that as a staunch Republican who, like many businessmen, distrusted Washington, Jimmy was worried that the Obama administration would side with the UAW and reject any merger that involved eliminating jobs. He seemed particularly suspicious of Ron Bloom, with his union cred, and he and his associates addressed most of the presentation to me and Harry, as potentially more sympathetic ears.

We listened politely, knowing that given the management problems at GM, a merger simply wasn't in the cards. As Matt struggled to follow the conversation via the balky Polycom, he was wondering, "Are these guys like on planet Pluto? How could they possibly think that someone could effectively put these companies together? GM and Chrysler can't even run their own businesses." I shared that view, but just three weeks into my job and sitting across the narrow table from Jimmy, I wanted to seem open-minded. So I said as mildly as I could, "This may be an option, but we've talked to GM, and GM does not want to buy Chrysler. As the government, we can't just say 'You have to.' " Harry and I also pointed out how difficult executing such a complex combination might be on a short deadline, especially over management's objections. Well, Jimmy said, if we liked the idea, JPMorgan had a lot of people who were very familiar with the auto sector and would gladly help.

Jimmy and his colleagues left feeling better than they'd expected. "Steve and his team kind of understand this stuff and maybe we've got a shot at doing this merger," he thought, riding back to New York on the Acela. For my part, I'd heard nothing to change my view that whatever the theoretical merits of merging Chrysler into GM, GM's current management wanted no part of it—and any new leaders we put in would have their hands full even without a merger. (If we had supported a deal, I don't know whether the UAW would have been able to use its political muscle to block it. I do know—as underscored by Rahm's expletive about the UAW—that no one in the Obama administration ever asked us to favor labor for political reasons.)

The following Monday, I shifted my focus from the emotive characters surrounding Chrysler to their stoical counterparts at GM. The issues there were utterly different. We never contemplated letting GM fail, and because of the company's enormous size, no merger or alliance could save it. We had to address GM's dysfunction head-on, and a key to that was upgrading the leadership.

For starters, I knew we would need a new chairman. I had long been of the view that the roles of chairman and chief executive officer should be separate, as European companies have historically done. Without such a separation, I believed that there would be insufficient checks on the CEO and the management team. A lack of good governance was certainly part of GM's problem.

My search for a chairman was not going well, however. I'd been quietly gathering names—mostly from private equity firms and investors who had achieved success by backing results-oriented management teams. At Larry's urging, I also sought help from perhaps the most admired former CEO in America: Jack Welch. I didn't know Jack all that well and was gratified when he agreed to take my calls. I was intent on landing a world-class former CEO who could serve for five years—which meant no older than sixty-seven, since GM's mandatory retirement age for directors was seventy-two. Jack knew almost every big-time retired CEO and played golf with many of them. I discovered I could turn to him the way I might have turned to an extremely wise headhunter. I'd call with a candidate's name, and Jack would quickly say "Great guy," or "Lightweight," or "Dope"—in most cases reinforcing my own, much more tentative impression.

A big problem was that public resentment toward top executives was just then at full boil. For example, on March 19 a congressional panel interrogated Ed Liddy—the stalwart ex-CEO of Allstate who was a dollar-a-year volunteer running the wrecked insurer AIG—as if he were a common criminal. One of my top prospects for the GM chairmanship was scheduled to visit me in Washington a few days later; after he saw what happened to Liddy, he canceled. I called him and, grudgingly, he agreed to let me come see him at his home in the Midwest. I flew there the following Monday—but he wouldn't change his mind. (Later I learned that his golf buddies had kidded him, "What on earth would you go to GM for? Do you want to end up like Ed Liddy?") It was clear that lining up a chairman before our March 31 deadline would be exceptionally challenging.

There was even less room to maneuver in replacing Rick Wagoner as CEO. In a perfect world, we'd have liked to look outside the company or outside the industry, as Ford had done in recruiting Alan Mulally from Boeing. Yet following through on such a search would take months and be very risky. GM didn't have that kind of time. Meanwhile, the obvious internal candidate was Fritz Henderson, whom I'd met when GM had made the presentation to us in the dingy Treasury Annex. He'd impressed me as smart, energetic, down-to-earth, and more open to change than Rick. His knowledge of the business seemed encyclopedic. Yet something he'd said to Harry on March 11, during Harry's first trip to Detroit, stuck in my mind. Harry had asked at one point, "How would you characterize the culture of General Motors?" Fritz had meandered for a bit, talking about the company's good people, then paused. "You know, it's the only firm I've ever worked for," he said. "It's the only culture I know."

I knew Rick and Fritz were planning to return to D.C. in mid-March. I called Rick and asked to see them together and then to meet with them separately. I had no specific agenda for the three-way meeting; it was mainly a pretext to get time alone with each, and it came and went without incident. But when Rick came back at 4:30 that afternoon, he still had Fritz in tow. Somehow our signals had gotten crossed. We had an awkward moment until Fritz excused himself and retreated to the local Starbucks, where he sat thinking that management changes surely must be in the works.

Rick and I faced each other uneasily at my conference table. He was impassive; I was nervous. While I had interacted with many CEOs in my Wall Street career, I'd never, in effect, conducted a job interview with the head of one of America's largest corporations. I asked him to describe his management team, the individuals' strengths and weaknesses, and how he saw it evolving over time. He said that Fritz was being groomed to succeed him, although after only twelve months as president, he would benefit from more experience. I was looking for an opportunity to gently shift the conversation around to Rick, but couldn't find one. So I just asked, "And what about your plans going forward?" Rick seemed to be expecting the question. "I'm not planning to stay until I'm sixty-five," he said (he'd just turned fifty-six), "but I think I've got at least a few years left in me." He paused and added, "I told the last administration that if my leaving would help save General Motors, I'm prepared to do it." My sense was that he left the meeting thinking he'd persuaded me of his importance to GM's turnaround, in part because of the lack of a qualified replacement.

Fritz came by the following morning. Balding, mustachioed, slightly stocky, he seemed an unprepossessing fifty-year-old corporate guy. But when he spoke, there was knowledge and intelligence in his voice. We ate lunch at my conference table—chicken caesar salads from the Treasury mess (paid for by me, of course). I kept the conversation general, just trying to get to know him and gain a sense of whether he was up to the job of replacing Rick. Fritz put his cards on the table. "Last summer I turned down a very attractive CEO job because I felt I had a responsibility to see GM through its problems," he said. He was equally direct about compensation; his salary had been cut by 30 percent and he hadn't received a bonus since 2005. "I understand the situation," he said, "but at some point, I need to focus on my family's financial security."

Fritz represented a conundrum. He was not only a GM lifer but also the son of a GM lifer. Born and raised in the Detroit area, he had attended the University of Michigan and, while he had moved around the world during his career at GM, he was a Detroit auto guy through and through—not exactly fresh blood for a company that needed sweeping change. Yet there was much about him to like. (I enjoyed razzing Harry about the fact that unlike him, Fritz had been a Baker Scholar at Harvard Business School, an honor based solely on grades and restricted to the top 5 percent of each class.) And I was intimated by the prospect of trying to recruit an A+ player from outside, not to mention the time and disruption that an intensive search would entail. We needed to be ready by March 31 to tell the world who would be the new CEO of General Motors.