7. "IS THIS UNANIMOUS?"

TIM AND LARRY TRIED valiantly to help us parse what seemed like an endless thicket of decisions. But with the economy in deep trouble and financial markets hitting new lows, we were inevitably left to our own devices more than they, or we, would have liked. Larry jokingly called Team Auto a "social experiment"—we were like a petri dish left out on a laboratory counter to see what would grow.

Tim's time was in particularly short supply. He was locked in endless meetings—including a seven-hour session on a Sunday with all the economic team, as well as, for a substantial part of it, the President—trying to figure out whether to start nationalizing banks, and if not, what more should be done to prop them up. In the month of March alone, he testified before Congress six times, announced two massive new liquidity programs, unveiled a regulatory reform plan, and made a day trip to Medellin, Colombia, for the annual meeting of the board of governors of the Inter-American Development Bank. I couldn't begin to imagine how he coped with the stress.

Later, after our auto effort proved successful, many commentators would ask why the administration couldn't have taken a similar approach to the banks. This question flared most emotionally around AIG, the rogue insurance giant to which the Treasury and the Fed ended up committing $182 billion to stave off chaos and make creditors and counterparties whole. Even sophisticated critics almost always missed the crucial point: for banks, unlike automakers, bankruptcy was not a useful tool for reorganization, as the Lehman Brothers disaster had so vividly demonstrated. And as we quickly learned in autos, without bankruptcy as a tool for reorganization, it was nearly impossible to achieve shared sacrifice among the stakeholders.

That was the nub of what was angering the public and weighing on Tim: the absence of shared sacrifice. The hundreds of billions of dollars that the government was committing through TARP was protecting the financial system, but collaterally also rewarding the creditors and counterparties. In a perfect world, instead of having their risk essentially eliminated, these creditors and counterparties should have suffered along with everyone else touched by the crisis.

The Obama administration also opted not to change the management teams at the banks and financial companies. As I went about my business, I overheard fragments of the internal debate on this subject in the hallways of Treasury and the White House, but I stayed out of it. Based on sound advice from former Treasury Secretary Robert Rubin, I had gone to Washington resolved to stay focused on my assignment and not poke my nose into other business. Had I been asked, though, I'd have reiterated my belief that, with rare exceptions, a CEO who leads a company into a state in which its only recourse is a government bailout shouldn't be in his job.

So while Tim tried valiantly to make time for us, we ended up working much more closely with Larry. I was pleasantly surprised by his fascination with autos. But a lot about Larry intrigued me.

Of all the people who I encountered during my stay in Washington, he was among the most colorful and the most interesting. Though we were longtime friends and I had always felt that I had his respect, I was well aware of his reputation for bumptiousness and approached my role as one of his charges with a bit of trepidation. But working for him turned out to be stimulating, enjoyable, and harmonious. Like me—with more justification in his case—Larry didn't suffer fools. He was attentive to the opinions of people he respected, particularly those who offered well-reasoned analyses in matters outside his expertise. Titles and résumés meant little to him; he listened to what was said and decided whether the speaker seemed worthy of attention. Thus he regarded Deese's views on certain matters to be far more valuable than those of higher-ranking colleagues. Harry, too, quickly came to burn brightly on Larry's radar screen. Smart young colleagues adored him, and I could see why Larry had been popular among Harvard students while warring with some members of the faculty.

In our discussions, I tried to keep to my home turf of finance and business. It was hard to challenge him on economics, certainly for me but also for bona fide economists like Christy Romer, the chair of the Council of Economic Advisers. Alan Krueger, the affable chief economist at Treasury, was perhaps the Washington economist whom Larry respected most. He'd been a student of Larry's at Harvard and had received an A+.

I tried to decide whether Larry had always been great to work for or whether the searing experience of being pushed out as president of Harvard had changed him. In part based on what I heard from a few of his former colleagues from the Clinton-era Treasury Department, I concluded that some of his rough edges must have been sanded down. Also, he had arrived in Washington this time with a chief of staff, Marne Levine, who had both Larry's respect and very sound judgment. When he returned from a meeting in the West Wing, fuming about stupid ideas that had been put forward, Marne could calm him and keep him from flying off the handle. Larry visibly worked hard to control himself. At one meeting I attended, a junior colleague in the bleachers (the couch on the other side of his office) offered an unsolicited comment. "That's one of the silliest...," Larry began, but then caught himself and said, half under his breath, "That's the old Larry. The new Larry says, 'Have you thought about it this way?'"

Having been a star debater at MIT, he loved to argue. In many instances, of course, he used argument to express his views and try to win others over. But in other cases, he seemed to take a contrary position just to be sure all the pros and cons were hashed out. At still other times, he appeared to argue because he wasn't sure himself what he thought. For instance, I heard him take both sides—sometimes in the same conversation—on the efficient-markets hypothesis. This principle holds that because markets are always processing all available information, it's futile for an investor to try to "beat the market." In the aftermath of the 1987 stock market crash, Larry had drafted a paper against the theory; the analysis began: "There are idiots. Look around." Yet when Harry produced a set of projections for GM showing high potential returns for a prospective stockholder, Larry invoked efficient-markets theory to push back, arguing that if Harry's projections were accurate, we would already have a line of investors waiting outside our door.

His metaphors were vivid and so was his manner of speech. Once Diana Farrell began to offer an opinion, but before she passed the midpoint of expressing her thought, Larry interrupted to say (not harshly), "I've already considered that idea and rejected it." This so amused our younger colleagues that for weeks afterward they would say to one another, as they debated one proposal or another, "I've already considered that idea and rejected it."

Larry was an economist, however, not a businessman. Occasionally I thought he didn't have the best perspective on financial markets or business. I wasn't sure that he wanted to be told bluntly that he was wrong, especially by a subordinate. So I would gingerly try to correct his minor mistakes (Chrysler had lenders, not bondholders) and to nudge him ever so gently toward my views on business and finance. Our discussions were the high point of my Washington experience; I would leave convinced that there could be no happier future circumstance than the chance to work for him again.

Every few days, often in late afternoon when Larry's schedule was lighter, a delegation from Team Auto would troop over to the White House to squeeze ourselves around the cramped conference table in his office.

That was where we first presented our bill—a mid-March back-of-the-envelope estimate of how much the auto bailout was going to cost. I wanted to have a "budget" at the earliest practicable opportunity, with the notion that we would update it as our thoughts were refined by additional work. Coincidentally, the overseers of TARP had asked to see our numbers. They were getting ready to receive the results of the bank stress tests and were evidently feeling the same dread that Hank Paulson had experienced five months earlier, that TARP might not have enough money to cover all needs. Rahm began intimating that the auto bailout might have to seek new funding from Congress, probably a nonstarter under any circumstance (as the Bush administration had found) but surely impractical on our timetable. After a few anxious days, the issue receded as early signals from the stress tests came in.

Our first, rough estimate for the "auto caper," as Ron Bloom liked to call it, was $100 billion—$75 billion on top of the $25 billion the government had already put in. Within that total, we'd earmarked $50 billion for GM and Chrysler, $40 billion for their affiliated finance companies and for "consumer support programs" to cover warranties and encourage buyers not to abandon Detroit, and $10 billion for suppliers.

What I found offensive about these numbers was that less than three months earlier, the CEOs of GM and Chrysler had sat before Congress insisting that less than $20 billion would solve all their problems. Economist Mark Zandi's dramatic calculation of $75 billion to $125 billion, so startling at the December 2008 hearing, had proved far more prescient than those of men who should have known their business far better than any economist or government bureaucrat.

Larry barely batted an eye—we had just begun our work, so neither he nor we were in a position to put much certainty behind any estimate. And there was no immediate need to whittle down the numbers. The existence of TARP allowed us to contemplate committing tens of billions of dollars freely, a surreal contrast to the normal process of prying money loose.

The toughest issue on the table was what to do about Chrysler. Could it be saved? Should it be saved? The questions were debated at nearly every meeting. Finally, on March 13, the matter came to a head. Shortly after 4:30 on that chilly afternoon (though the cherry blossoms were ready to bloom), we gathered around Larry's table and took our regular seats, I at his right and Deese at his left. Filling out the table were Ron, Harry, Diana, Gene Sperling, Alan Krueger, and Austan Goolsbee. Austan, a forty-year-old economics professor from the University of Chicago, had been an adviser to Obama from the beginning of the long march to the White House. In appreciation for his steadfast support, the President had named him to one of three slots on the Council of Economic Advisers. Perhaps in part because of his special relationship with Obama, Austan never shrank from speaking his mind clearly, directly, and forcefully. He liked to go by the numbers, using the rigorous analytical approach for which the Chicago economics department was known.

Regarding Chrysler, there was no doubt as to what Austan (and CEA chief Christy Romer) believed. He began by recapitulating the dismal state of the auto industry that we had been living with for the previous ten weeks. He went on to address the impacts on employment of a potential Chrysler liquidation. Of course the loss of Chrysler would not mean that fewer cars would be sold in America; Chrysler's lost production would be taken up by other automakers. The question was, which ones would benefit?

Austan and his team had concluded that Chrysler's product line overlapped much more with those of GM and Ford than with those of foreign-owned companies. In their view, most would-be Chrysler buyers would likely turn to other domestically produced brands. Thus Chrysler's demise would actually boost GM's and Ford's odds of surviving the current Great Recession.

We all knew that Chrysler's liquidation would immediately vaporize nearly 300,000 jobs—40,000 at Chrysler and the balance among its suppliers and dealers. But Austan argued passionately that once other automakers raced into the gap, the net loss would be a fraction of that, perhaps a small fraction. The Chrysler skeptics had other strong arguments for letting the company die. It was the weak number three among the U.S. automakers. Continuing to bail it out would send the wrong signal about the Obama administration's inclination to make hard decisions when confronted by corporate sob stories.

Harry took the economic analysis and translated it into financial implications for GM. Goolsbee believed that GM would capture more than a quarter of Chrysler's customers, or about 300,000 additional cars sold per year. That would strengthen its business and reduce the amount of taxpayer capital it would need. Harry's quick calculations showed that if Chrysler went away, GM's pretax profit could be increased by about $2.4 billion a year. That could add more than $10 billion to GM's market value, a meaningful increment for whoever ended up owning shares.

No one challenged the accuracy of Harry's figures or those of the Council of Economic Advisers. The case for saving Chrysler was based more on political and social reality. For example, while the net job loss might ultimately be as low as the CEA suggested, on day one of Chrysler's liquidation, those 300,000 jobs would disappear. Moreover, the job loss would be directly associated with an Obama decision, while the jobs regained would be invisible.

In addition, the government would still face huge costs in letting Chrysler fail—for instance, Michigan's state unemployment insurance fund might go broke and need bailing out. Deese offered an argument that resonated with Larry: Given the uncertainty in our economy, it was better to invest $6 billion for a meaningful chance that Chrysler would survive than to invest several billion dollars in its funeral. (The hole in this argument was that we could invest $6 billion and still have to pay for the exact same funeral.) He and other defenders also extolled the potential benefits of the Fiat alliance and of preserving "optionality" for later moves, such as an eventual merger with GM.

Back and forth the arguments flew. For Austan Goolsbee and Alan Krueger, the CEA's analysis was compelling. Harry, meanwhile, was particularly emphatic about the positive effect Chrysler's demise would have on GM. Goolsbee and Wilson were also concerned about Chrysler's weak product line and its ability to turn the corner, even under Sergio's strong leadership, before its cash ran out. Diana, taking the perspective of a management consultant, wondered rhetorically why the government would be in the business of saving losing companies.

On the pro-Chrysler side, Gene reminded us that liquidation would shatter entire communities. Ron emphasized the need to preserve as many jobs as possible. Brian asked why, from a policy and political perspective, we would let Chrysler go if we had reasonable confidence that it could be saved. I saw the sense in all these diverse views and felt torn.

Larry pressed us to attach probabilities to our recommendations and countered with odds of his own. Like Bob Rubin, with whom the concept is most closely associated, Larry is an enthusiast for "probabilistic decisionmaking," a method for weighing uncertainties. He asked how likely we thought it was that federal money would keep Chrysler alive for eighteen months (essentially past the midterm elections) and for five years (potentially through another business cycle).

At one point, he confessed that as we gave our answers, he was discounting our probabilities based on what he thought we would say. For example, knowing that Ron was in favor of saving Chrysler, Larry lowered the probability Ron assigned to the success of the alliance with Fiat. The opposite for Harry. Plainly, Larry was loving this debate.

I was truly undecided. The economic and financial analysis for letting Chrysler go seemed compelling to me, as did Diana's logic. But I knew I was expected to form an opinion based on all of the factors, not just the numbers. Finally, Larry turned to me and said, "I know where everyone else is on this. What I'm trying to figure out is where you are." I continued to wiggle. Deese, whose judgment I respected enormously, was looking at me across the table as if to say, "Are you out of your mind? If we have a way to support Chrysler as a viable business, we can't let it go down in this economic mess."

Larry called for a show of hands. His question was precise: "If you assume that the probability is 50 percent or greater that Chrysler would survive for five years, would you save it?"

Diana was unhappy with the phrasing, because she thought Larry was stacking the deck—forcing those who believed Chrysler's chances were actually slim to assume a higher probability. She had suspected that he wanted to save Chrysler and now was sure of it. While she recognized that under Larry's formulation she should be voting to save Chrysler, she voted against it anyway, as a kind of protest. Austan felt sandbagged too—he thought that if Christy had been present to vote, and if Deese, a junior staffer, had been barred from voting, a further bailout for Chrysler would have stood no chance.

As it was, the vote was 4 to 3 against a further Chrysler bailout (with Bloom, Deese, and Sperling in favor) when Larry turned to me again. I was still unwilling to commit. Frustrated, he asked, "If you were President, what would you do?" This was an effective reminder that the man I'd signed on to serve did not have the luxury of sitting on the fence. I could not duck the question put this way, so finally, reluctantly, I cast a "51-49" vote in favor of the bailout. With that, the tally was tied, so Larry's became the deciding vote. He approached the question from a seemingly simple standpoint: Which would be the bigger mistake, saving Chrysler, which would keep a very fragile competitor to GM alive? Or letting it go, which might decimate the U.S. economy?

Larry listened closely to the "two good companies instead of three" argument that the opponents made and also worried about giving Fiat a "free option." But in the end, for him, this calculus was simpler than his courses at Harvard had been: once he was convinced that Chrysler could get through at least a couple of years, he believed the risks of letting it go represented more of a gamble than the economy should be subjected to at this critical time. As he later described it, "You could think of it as a cheap form of stimulus at a time when the economy clearly needed stimulus." We had all come a long way from the dark days of early March when, having concluded that Chrysler was not viable as a standalone company, we would have guessed that liquidation was the most likely outcome.

When the meeting ended, as we filed out of the office, Larry pulled Krueger aside. Quietly he told him, "I hope you understand that it's different being the decisionmaker than being an economic adviser. There are other factors I have to consider." He knew how strong the case was that Alan and Austan had made, and didn't want his star student to think he'd gone all wobbly.

Larry recognized that Chrysler was a close enough call that the President needed to be briefed, and asked us to craft a short memo. The CEA, worried that its views wouldn't be fully represented, wanted to send its own memo of dissent. But Larry vetoed that, declaring that there would be only one memo to the President, and it would fairly portray both sides of the debate. Our memo to Obama was "litigated" extensively with Larry before being dispatched the following week.

The memo was still being worked on and Chrysler was still on Austan's mind as he prepared for a President's Daily Brief in the Oval Office on March 18. Neither he nor Alan Krueger had heard anything further about Chrysler since the vote in Larry's office five days earlier and assumed the decision had been made to save the company. They feared that they would not be told until the last minute to avoid more disputation.

The topic for Obama that morning was an update on Wall Street, and Austan was present on behalf of the President's Economic Recovery Advisory Board (PERAB)— nongovernmental advisers, led by Paul Volcker, whose job was to give Obama a "ground-level sense" of the economy outside what he called the echo chamber of the Washington bureaucracy. Access to the President's Daily Briefs was, of course, restricted and generally didn't include Austan. In this case, Christy had told Austan, "You can go, but only to observe on matters affecting PERAB, and you're not allowed to say anything."

The briefing was uneventful until the end, when Austan was startled to hear Summers describe to Obama our decision to move up the announcement of a $5 billion receivables guarantee program for auto suppliers to the very next day. We'd wanted to hold off until the end of March, so that the President could announce the program with his other auto industry decisions. But the supplier crisis was real and urgent, and the pressure to respond was enormous, so we'd sped up the launch even though the mechanics of implementing the program were still far from complete. "Okay," said the President, taking it in. "That sounds sensible."

Whoa, thought Austan. "Mr. President," he interrupted, "just be aware that the second we announce we're going to save the suppliers, everybody is going to assume we're saving the auto companies too. Have we really decided that? If not, we've got to figure out how we're going to message this thing."

"Of course," Summers said curtly, and the meeting moved on. As soon as the session adjourned, he cornered Goolsbee outside in the corridor and exploded, "You do not relitigate in front of the President!"

"I was not litigating in front of the President," Austan shot back. "He hasn't seen that program and it has nothing to do with the financial rescue." Larry felt that the freewheeling Austan was off base. The CEA had been aware of the plans to help the suppliers, and there wasn't anything about the program that mandated a rescue of any or all auto companies. The President would still have a free hand when that larger issue reached his desk.

To make matters worse, Austan inadvertently was never informed that the carefully balanced Chrysler memo was about to be delivered to the President at almost that very moment, as Larry had promised. Austan continued to boil based on his impression that the views of the dissenters were not being reflected, a concern that would only grow in the coming days.

Now that it was clear that Larry wanted the Chrysler rescue to proceed, I worked hard to make sure he understood how much was still left to do on the matter and how much uncertainty remained. We had issues to resolve with Fiat, had not begun to negotiate with the UAW, and of course Jimmy Lee and the creditors were still demanding 100 cents on the dollar. We had carried out so little due diligence on Chrysler as a business that to invest now would be, by private equity standards, negligent. As smart as Larry was about so many things, I wasn't sure private-sector dealmaking was his strong suit.

The Fiat negotiations were not going well. Although Chrysler had unveiled the alliance with great fanfare on January 20, we viewed that announcement as a beginning rather than an end. In particular, we remained concerned that Fiat was putting no money into the deal. This was bad business and bad politics. The agreement called for the Italian automaker to get an initial 35 percent ownership stake in return for providing Chrysler with technology and management expertise. I worried about the potential backlash from billions of dollars of U.S. taxpayer money going to an automaker that would be managed and partly owned by a foreign company. Worse, for Fiat the deal was risk-free—if the alliance didn't work, it could walk away with no penalty.

We struggled to persuade Sergio to put up some cash. But as much as the ambitious CEO wanted Chrysler, that was where he drew the line, at least in part because Fiat was facing its own financial challenges. Eventually, after hard bargaining, Ron succeeded in carving back Fiat's initial ownership stake to 20 percent, requiring the company to meet meaningful milestones before receiving additional shares and limiting its ownership to no more than 49 percent until the entire Treasury investment had been repaid. All in all, I felt it was a fair deal, and nothing that has transpired since then has changed my mind.

The launch of the $5 billion receivables guarantee program for suppliers on March 19 would be the first pronouncement from the Auto Task Force, so I wanted to be sure that we put our best foot forward. Our team worked hard to be sure we had all the mechanics right; Mara McNeill, a Treasury lawyer, became our unsung hero on these critical issues. We wrote a public fact sheet, rehearsed questions and answers for calls with reporters, and helped Tim's staff craft an announcement that made it seem as if we had our act together. His statement hit all the right notes. "The Supplier Support Program will help stabilize a critical component of the American auto industry during the difficult period of restructuring that lies ahead," it read. "The program will provide supply companies with much-needed access to liquidity to assist them in meeting payrolls and covering their expenses, while giving the domestic auto companies reliable access to the parts they need."

This unveiling was received better than I would have predicted, even in the heartland. Senator Carl Levin, crusty as he was, called the program "good news." Governor Granholm announced, "Today's action will minimize unnecessary job losses."

Meanwhile, I was pleasantly surprised to see a quote from David E. Cole, chairman of the Center for Automotive Research, in the next day's New York Times. "I am convinced they have decided that a major bankruptcy in this industry is not going to happen if they can help it," Cole said. Only ten days from the President's March 30 speech, and the industry's closest observers did not know what had, for all practical purposes, already been decided.

Unfortunately, however, Senator Corker was furious. He called Summers to remind him of a promise that he and Deese and I had all forgotten. Back in January, as part of the horse-trading to get legislative approval for the second half of TARP, Larry had sent a lengthy, painstakingly negotiated letter to congressional leaders that promised, among many other things, that additional TARP funds would flow to the auto industry only "in the context of a comprehensive restructuring." Of course the Supplier Support Program failed that test. Corker didn't stop at a phone call. He issued a statement saying that the program was "a violation of trust and another sleight of hand by this administration." (Ironically, Corker had voted against the second half of TARP because he thought Larry's letter had not been strong enough; he'd wanted a promise that no more TARP money would go to the auto industry—period.)

It was the first time I'd ever seen Larry shaken. Deese felt terrible too, knowing that responsibility for avoiding such slip-ups generally fell to the person in his role. (Belatedly I realized I also bore some blame. I'd been present at transition headquarters the day the letter went out and knew of the auto industry paragraph. But I'd been so ignorant of the ways of Washington in those early days that I hadn't registered what was going by me.)

The only positive aspect of the episode was that Larry asked me to follow up with Corker and do my best to mollify him, which led to a strong friendship between us. In the course of a sangria-fueled Mexican dinner one warm spring night, Corker asked me, "You seem like such a sensible fellow, why are you a Democrat?" "Three main reasons," I said, ticking off my views that Republicans had favored the rich at a time of growing income inequality, abandoned fiscal responsibility, and held unfortunate positions on social issues such as a woman's right to choose abortion.

As events unfolded, I became convinced that we had gotten our supplier policy right. In particular, we were correct in resisting the many pleas to bail out failing companies—to invade Laos, as Larry would have put it. Suppliers continued to go bankrupt that spring, but the financial markets reopened just enough to provide debtor-in-possession loans, enabling the normal Chapter 11 restructuring process to work. We also encouraged the automakers to provide DIP loans to their most critical suppliers when the banks refused, and quietly supplied GM and Chrysler with extra funds to enable them to do so. The outcome was far better than we would have achieved with bailouts. Once we drew the line on federal intervention, the supply base was forced to merge, shrink, and otherwise restructure itself to a size that realistically reflected the industry's prospects. And we were faithful to our goal of saving only those jobs for which there was sound economic justification.

Our payment guarantee program, meanwhile, was scarcely used. To instill market discipline, we had made the money so expensive that suppliers thought twice before signing up, and ended up tapping only $413 million of the $5 billion we had allocated. But it had the desired effect of reassuring both companies and communities; as a bonus, the Treasury made a little money for taxpayers on the fees.

We were acutely aware of the taxpayer money being sucked every day into Detroit. For Chrysler, each additional month of life support was going to cost $500 million to $1 billion, money that the Treasury would never see again if the company ended up liquidating. GM would cost even more—as much as $2 billion a month. So we wanted the President to impose the tightest possible deadlines for the automakers to come to terms with their stakeholders or seek the protection of the bankruptcy court: thirty days for Chrysler and sixty days for GM. We gave GM an extra month in part because we were quite certain that it would not end up in liquidation (minimizing the risk of a "good money after bad" problem) and in part because the company was so complicated. In a perfect world, Harry would have allotted himself and his team six months to perform due diligence and restructure the business (and in our earlier straw man, we had proposed a total of ninety days for GM). But on March 19, our lawyers at Cadwalader uncovered a sobering fact: the company had a $1 billion bond payment coming due on June 1. If we allowed GM to make that payment, we'd be awarding 100 cents on the dollar to bondholders who were entitled to only pennies. Yet if the company failed to pay, under the law as few as three of its thousands of creditors could force it into a chaotic and potentially fatal uncontrolled bankruptcy. This was an unwelcome extra incentive to work fast.

I knew that by the end of March we had to formalize our recommendations in a "presidential decision memo" and presumably sit down with Obama as he made up his mind. But I had no idea how all of this would work. As usual, I deferred to Deese, who'd never been party to a presidential decision either, but at least had a desk in the West Wing and seemed to know what he was doing.

As Deese was getting under way, a surprising notion drifted over from the White House: the powers that be wanted the announcement to be made by Ron and me on March 27—an idea that struck both Deese and me as insane. This was arguably one of the most important actions that the administration was likely to take in its first hundred days, and it seemed unimaginable that it should come from anyone other than the President. Eventually wiser heads prevailed. The President would speak to the nation on March 30, a day before heading off on his first overseas trip. A gaggle of cabinet members would then fan out across the Midwest to drive home the fact that Washington was coming to the rescue. We never learned the origin of the original rollout plan but assumed it was advisers leery of political fallout from such a controversial set of announcements.

What little I knew about presidential decisionmaking included an appreciation that a decision memo was intended to give the President all the background, arguments, and data he needed. By now, our views were well honed: we wanted fundamental restructurings on a short timetable, almost surely involving bankruptcy. By now as well, the economic and political risks were seared into our brains. We had also refined our budget for the "caper" to a range of $76 billion to $88.5 billion, startlingly close to the final figure of $82 billion.

Importantly, after last-minute lobbying by Austan and Christy—who were still unaware that the first memo had gone to the President—the memo included the views of those opposed to saving Chrysler, the sole area of disagreement among the President's advisers. Wherever the President came out on these recommendations, we knew it was going to be a high-stakes game of brinksmanship.

On Thursday morning, Larry summoned Ron and me to his office in the West Wing. We were talking about various loose ends when Larry abruptly put on his suit jacket and said, "Let's go downstairs." The next thing I knew, I was in the Oval Office for the second time in my life (the first had been during the Clinton years, as a "friend of Bill," to show it to my kids). The room was yellower and brighter than I remembered, almost like a movie set. But this was no movie. President Obama and a clutch of key advisers were there waiting, and the sole topic of the morning's Daily Brief was to be autos. In the hectic pace of life in the West Wing, no one had told me!

The room was packed and the seating protocol intrigued me. Of course the President sat in his wing chair in front of the fireplace. Vice President Biden was not in attendance; his matching chair remained empty. Those who had significant roles in the meeting filled two facing sofas. Another five or six aides—some very senior, including Rahm Emanuel—occupied a row of straight-backed chairs facing the President. Still another clutch of aides, including Deese, stood around the periphery.

Larry began formally, "Mr. President, we're here today to review the decisions that you need to make regarding the auto industry," and then started to tick off the main issues. After just a few moments, the President said, "Larry, I've read the memo." (Indeed he had, as I recognized when he started citing figures from the final page.) The conversation quickly turned to the only major area of disagreement, Chrysler, about which the President had also been informed in our shorter, separate memo a week earlier.

The group was still in the early stages of reprising the arguments that we'd been having for days in Larry's office when the President asked about our conclusion. "Is this unanimous?" he said.

"Well, no, the CEA doesn't agree," he was told. Christy explained that Austan had pushed to have the opposing view presented.

"Where's Goolsbee?" the President asked, realizing that the most vocal spokesman for the opposition wasn't in the room. Christy had asked Larry for permission to bring Austan along, but Larry had refused, citing a decision by Rahm at the outset of the administration that Christy would represent the Council of Economic Advisers. Austan was in his office in the Eisenhower building, across West Executive Drive. A summons went out from the President's assistant Katie Johnson, and after a few minutes Austan strode in. The Oval Office was so full that Austan tried to become the fourth person on a three-person sofa. After a few minutes, the President waved him into Joe Biden's empty chair. That put him awkwardly between the President and Larry. "I understand you don't agree with this recommendation," Obama said.

"Yes, that's true," Austan replied.

"What's your best argument?"

Austan seized on a hometown metaphor: "If you try to land at O'Hare, you've got runways going both ways. We're trying to land planes at the same time. If you try to keep Chrysler in production, that's going to seriously damage our efforts. It's going to make doing GM substantially more costly. You might even threaten Ford."

The President asked Christy to review the net job loss from a Chrysler shutdown, but just then Katie came in with a note. The Daily Briefs are intended to last only about twenty minutes, and she was signaling Obama to move on to his next meeting. "This is too important to decide in a rush," the President told us. "We need to get together again later."

We reconvened early that evening, in the windowless Roosevelt Room, the only real conference room in the West Wing available for general use. Obama took a seat in the middle of the long table, with Larry directly across, me to Larry's left, Diana to my left, and Ron to Larry's right. Tim chose the end of the table in front of the fireplace, with its painting of Teddy Roosevelt on horseback above the mantel. Flags lined the wall behind Obama, giving him a particularly presidential air. Other senior aides filled the remaining seats: Rahm, Axelrod, Robert Gibbs, Romer, Peter Orszag, Valerie Jarrett, and others.

By protocol, unless they had speaking roles, less senior aides took the couch and upholstered chairs behind where I sat; tonight Brian and Harry and others were there. (For meetings where all the seats were taken, people would stand near the couch—no one wanted to be out of the President's line of sight.) There was a no-BlackBerry rule—attendees were supposed to deposit the devices in a small basket outside the door, with a yellow Post-it to identify the owner. A few regulars, like Peter Orszag, chose to ignore the rule. (Like many of us, Orszag carried both a government BlackBerry and a personal one. His were strapped to his belt like a pair of six-shooters.)

Having spent most of my professional career trying to avoid unnecessary meetings, I was unprepared for the Washington game of jockeying to attend as many as possible, especially with the President. I would watch regular White House meetings grow larger and larger, until Rahm would issue an edict like "principals plus one"—meaning that each cabinet-level attendee could bring one aide but no more. The rule would last for a meeting or two and then attendance would slowly creep up, beginning the cycle anew.

Larry had alerted me that he was going to start this session by asking me to describe what would happen if the administration stopped funding Chrysler. While Larry favored a rescue, he wanted to establish a baseline, a clear understanding of the consequences of inaction. The previous December, Vice President Cheney and his lieutenants had been confused on this critical point, in thinking that without government funding there could be an orderly wind-down or a traditional Chapter 11 bankruptcy reorganization. "Chrysler would run out of cash in a matter of days," I explained matter-of-factly. "It would have to close its doors, cease paying suppliers and employees, and immediately liquidate. Thirty thousand workers will be out of work on day one, and it will cascade from there."

The President and his aides took the information calmly, and the conversation began, retracing in considerably more detail the broad points that had been made that morning in the Oval. Besides Tim and Larry, we hadn't had much contact with Obama's senior lieutenants, and I was curious to see what thoughts and opinions they would offer. With them now at the table, the discussion took on a more far-reaching and political cast. David Axelrod reviewed the latest polling data, repeating points he'd made earlier in the month about public opposition to bailouts, though less emphatically, and balancing that with data about the likely political fallout of a meltdown in Detroit. Press Secretary Gibbs had apparently been somewhat unsettled by what he'd heard in the Oval Office that morning. He had e-mailed Deese in the course of the day to ask for data on the unemployment rate in a handful of key metropolitan areas. Now, in this meeting, he referred us to a map that was part of our handouts. "We talk about a great depression being 25 percent unemployment," he began. He pointed to places on the map. "There's 18 percent unemployment here. There's 24 percent unemployment here. For these guys, it already is a depression." Rahm was quiet, intervening only to repeat his memory trick of identifying the legislators in whose districts large Chrysler facilities were located. Tim remained totally silent, as was his custom when he was comfortable with where a meeting was going. I knew Harry was itching to chime in from his perch, but Diana had warned him that he wasn't allowed to speak.

The President was mostly listening, although at one point he observed that being tough with Chrysler would be a lot easier if the government hadn't just bailed out the banks, particularly Citigroup.

After perhaps forty-five minutes, the key points had been made. Larry turned and asked me to give the President my assessment of whether the Chrysler-Fiat alliance could be completed successfully. This was another question he had flagged for me beforehand; my caveats about the uncertainties of dealmaking had registered and he wanted Obama to hear them. "I would put the probability at 50 percent, Mr. President," I said, "but in my experience, deals generally get worse, not better."

That seemed to put a damper on the group and there was a pause. The President looked around the room and said, "Does anyone else have anything to say?" No one did. The President rested his chin on his hands for a few seconds. Then he looked up and said, "I've made my decision. I'm prepared to give Chrysler thirty days to see if we can get the Fiat alliance done on terms that make sense to us." He turned to me and Ron and added, "I want you to be tough and I want you to be commercial." We took that to mean that we should insist that all of our conditions be met in a way that was prudent from the taxpayer's standpoint.

Not wanting the Chrysler discussion to end on such a down note, Deese—who is anything but shy—piped up from the couch. "I think it is worth recognizing that there are positive attributes associated with the Chrysler deal if it gets done," he said. "It's not all negative, including the fact that while Fiat hasn't committed money, they have committed themselves with their technology, including a commitment to build a forty-mile-per-hour car in the United States." People began to laugh, and it took a couple of beats for Deese to realize what he'd said and start laughing along. Building a forty-mile-per-gallon car would indeed be significant—but a forty-mile-per-hour car probably wouldn't improve Chrysler's prospects very much.

I found President Obama's decisionmaking style to be consistent with his "no drama Obama" reputation and on a par with the best CEOs I had spent time with on Wall Street. In addition to having done his homework, he remained engaged on a subject far from his comfort zone and probably equally far from his zone of interest. He was decisive when his advisers were divided, supportive when they were not. Perhaps most important, he showed courage in making a tough, politically risky decision.

And notwithstanding the disagreement over Chrysler, those more expert in presidential decisionmaking than I—including Chrysler opponents such as Diana—felt that the process worked well. Both sides got their say and the President decided. For my part, I was also somewhat shocked to realize that I was, at fifty-six, the oldest person in the room.

The President accepted our other recommendations without comment, and after a brief discussion about preparing the public announcement for the following Monday, March 30, the meeting adjourned. In hindsight, it is remarkable that our proposed management changes—including the ouster of Rick Wagoner as chairman and CEO of GM—never came up. Within a few days it was to figure large in our lives.

Larry had raised the management question with us early on and in his Socratic way, probing our assumption that Wagoner had to go. But Larry had never seriously questioned the need for new management; for him, it was a matter of who, when, and how. Initially Larry was of the view that, for the sake of continuity, Wagoner should stay until he'd seen GM through the traumatic bankruptcy. To us that seemed a terrible idea. We argued that planning and executing the restructuring was effectively the first chapter in GM's future, and therefore it was critical to have a new CEO who would "own" the result. In due course, Larry came around to our view.

We never talked about who should do the firing. Throughout its rescue operations, the Obama administration had wanted to minimize at least the appearance of intervention in the private sector. Had I thought to flag this question for Larry, he might well have suggested a quiet word with trusted GM board members. Alternatively, he might have asked that Tim do the firing, as Hank Paulson had dismissed the heads of Fannie Mae and Freddie Mac. (None of the previous dismissals had created any fuss.) But when the question never came up, I simply concluded that this unpleasant task was up to me.

So I'd made preparations on the assumption that the President would approve our plan and that I'd have to inform GM right away. We'd asked Rick and his colleagues to come to Washington the next day on the pretext of being briefed on the President's upcoming announcement. As part of their itinerary, I'd scheduled a private meeting for myself with Rick as soon as they arrived at Treasury. I knew that the GM board held a conference call every Friday at noon during the crisis, and I wanted to tell him before then.

While inscrutable, Rick turned out not to be oblivious. He had divined from our previous conversations that his future was in doubt. That morning, he spoke to George Fisher, GM's lead director, with whom I had served on the board of Brown University. "I had good experiences with Steve at Brown, and Steve would know that it was in the government's best interest to keep you around," Fisher reassured Wagoner, emphasizing his view that GM was finally producing more realistic projections and plans.

Promptly at 9:15, Rick arrived and took a seat on the red fake-leather couch in my office. I took a chair from my conference table and placed it opposite him. I went straight to the point. "In our last meeting," I said, "you very graciously offered to step aside if it would be helpful, and unfortunately, our conclusion is that it would be best if you did that." He took the news impassively and at first did not say a word. I later learned that coming on the heels of the Fisher conversation, he was devastated.

I told him of our intention to make Fritz the interim CEO while we looked for a permanent replacement. Rick reacted to that, cautioning me against hiring an industry outsider to run General Motors. "Alan Mulally called me with questions every day for two weeks after he got to Ford," he said.

Next we talked about the GM chairmanship. I hadn't succeeded in finding an outsider for the job and the day before had suspended my search. Instead I'd pored over the list of board members in hopes of identifying a director who could make a credible interim chairman. Kent Kresa stood out. I did not know him, but he had the right pedigree. He'd been successful as chairman and CEO of the defense contractor Northrop Grumman and had served on the GM board since 2003, long enough to know the company and not conspicuously overlong. Larry, it turned out, knew him slightly from a foundation board on which both had served and had a good impression. I'd made a couple of calls to friends who also gave positive feedback. So now I asked Rick if he would be willing to see if Kresa would step in as interim chairman for a couple of weeks. Rick concurred and graciously agreed to ask him.

As this awkward conversation drew to an end, Rick suddenly asked, "Are you going to fire Ron Gettelfinger too?" I replied that I was not in charge of firing the head of the UAW. There wasn't much more to say. I offered to let Rick meet alone with his colleagues, who were waiting upstairs in a conference room to start the briefing session, but he said no, we should stick to the schedule. (I don't know when he planned to tell them.)

A long walk together through the halls of the Treasury would have been uncomfortable for us both, so I asked my assistant to help him find the meeting room while I gathered my colleagues, and made sure to give them a head start. But my assistant was new to Treasury, and it took them almost that long to find the conference room. When Rick walked in, Ray Young half jokingly asked his boss, "Do we still have jobs?"

"You do," said Wagoner. Though he hadn't planned to, he told them what had just occurred—which is how Fritz Henderson learned he was to become interim CEO. Rick had barely delivered the news when Harry, Ron, and I arrived.

We had no way to know what we had walked in on, and my colleagues and I plunged into our briefing about the President's forthcoming speech. Henderson, who had suspected the management change was coming, was now dwelling silently on the word "interim." "This is not going to let me be effective," Fritz thought. Then he put the worry aside and forced himself to pay attention to what we were saying about the deadlines and conditions that the President was about to impose—deadlines and conditions it would be his responsibility to meet. "The probability of bankruptcy just went up a lot," he realized as we described the plan.

But Ray—whose lack of common sense seemed limitless—did not get the message. As we finished, he fretted aloud that GM would have to reconsider the timing of its bond-exchange offer. Harry gently suggested that a lot of things at GM would now have to change, but Ray still wasn't getting it. I couldn't help myself and snapped, "It should be obvious that the bond exchange is the least important thing we have to worry about." Fritz rested a hand on Ray's forearm and quietly said to him, "We'll come back to this."

Rick said not a word ("He looks shell-shocked," Harry thought), and the uncomfortable meeting soon came to a merciful end. After I got back to my office, still unaware that Rick had delivered the news, I waited what I thought was a reasonable interval for him to do so and then called Fritz's cell phone.

"What do you think?" I asked.

"Thank you for your confidence in me," Fritz replied. "Let's talk about one thing which I don't think is right—making my title interim CEO. You can fire me any time you want, but at least give me a chance to succeed."

"Let me think about that," I said.

Fritz hung up, thinking, "Steve gets this, but he's got to go through a bunch of hoops to change this, because the decision has already been made that I would be an interim and that would have to get undone." When he didn't hear back from me right away, he was even more sure of his initial instinct. In reality, my bosses didn't much care whether Fritz was called interim or not, so I didn't need to clear it with them. While I understood Fritz's concern, my hesitation about agreeing to his request on the spot reflected my inexperience with such matters and my desire to consult my new guru Jack Welch before responding. When I caught up with him, his reaction was instantaneous. "Fritz is right," Jack said. "If he's called interim, he won't have a chance."

That afternoon, I received a call from a furious George Fisher, calling in his capacity as GM's lead director. (Like most Fortune 500 companies, GM had a lead outside director in an effort to provide a counterweight to the combined chairman and CEO.) George was a gracious man who had been CEO of both Motorola and Eastman Kodak. Unfortunately, as his conversation with Rick that morning indicated, as lead director he had been pretty much blindly supportive of Rick. "We are absolutely convinced we have the right team under Rick Wagoner's leadership to get us through these difficult times and on to a bright future," Fisher had said in August 2008, immediately after GM announced a $15.5 billion quarterly loss. Now he lashed out at me for firing Rick. "I think you are doing a lot of right things, but I think this is wrong," said Fisher, who privately found our actions "abhorrent."

He also felt—with some justification—that the selection of Kresa as interim chairman was a slap in his face. I had expected this and had deliberately not asked Kresa or anyone else to take Fisher's place as lead director, which I pointed out. "I noticed that and appreciated it," Fisher said, calming down as he spoke. Of course, with Kresa as a nonexecutive chairman, the lead director's role had been rendered moot.

Shortly afterward, I got a call from Bob Joffe, the tall, bespectacled sixty-five-year-old former presiding partner at the law firm of Cravath, Swaine & Moore, who had been advising the GM board for many years. Bob was a good friend; we had labored together in the political vineyard as ardent Democrats. He was also a terrific lawyer and counselor who conveyed gravitas and judgment. "The board is pretty upset," Bob reported. "They feel that you've taken away their most important responsibility," by which he meant the hiring and firing of the CEO. There was talk of a mass resignation, Bob said. "I think it would mean a lot if you would be willing to get on the phone with them tonight," he suggested.

By the time I joined the conference call that evening, the GM board members weren't as enraged as I'd feared. Still, I was glad not to be with them in person. There were a number of hostile questions, particularly from some of the longest-serving directors who had been most complicit in GM's decay. I explained that in bringing our decision about Rick to him first, I was trying—perhaps erroneously—to give him the dignity of presenting his departure to the board himself, in whatever context he chose. After about a half hour, the questions petered out and the board excused me to continue its deliberations.

Later, Bob Joffe called to say that my willingness to let the directors vent had been effective in quelling any nascent mutiny. I was relieved. I had been trusted to implement decisions that would normally be executed at much higher levels of the government. A mass resignation on the eve of the President's speech would have been more than an embarrassment; it could have crippled the auto rescue effort and been a particular disaster for me. Fortunately, all of the directors agreed to stay on through the restructuring, and several later told me privately that we had made the right decision.

I called Fritz the following day to let him know that "interim" would be dropped from his new title. It wasn't until much later, though, that he told me the story of his flight home to Detroit on Friday—a somewhat surreal journey during which he and Rick sat next to each other, one row away from a well-known automotive journalist. They didn't exchange a single word about the day's events. When new CEO and former CEO debarked at the sparkling terminal where Team Auto had arrived just eighteen days earlier, Rick went off silently with his security guard. He and Fritz would never have a conversation about what had transpired; from then on in public, Wagoner maintained an aura of silence and impassivity.

But behind the scenes, as the initial shock wore off, Wagoner was on an emotional rollercoaster. On Saturday morning, in a fury, he called a lieutenant. "I don't think this is even legal," he fumed. "I am going to go to the board and see what we can do. I'm thinking I should fight this." The next morning he called again, but he was calm. "I need to make it easy on Fritz. I'm not going to fight this," he said. Then, amazingly, he spoke of all the work he still had to get done and how he planned to go to the office at the Renaissance Center on Monday to watch Obama's speech. Colleagues called, pleading with him not to go. Wagoner liked to triangulate advice—it was part of his style as a manager. Once enough people told him not to go to work, he relented. An aide urged instead, "Get in your car with Kathy and drive as far away from Detroit as you can." Wagoner and his wife left almost immediately for their South Carolina vacation home.

For us the weekend was a blur of paperwork—drafts of the President's address, talking points for outreach calls, fact sheets, and formal responses to the viability plans that GM and Chrysler had submitted on February 17. To forestall errors and misunderstandings, we shared drafts of the responses with the automakers, expecting—and getting—considerable protests about some of our language, especially from Chrysler, because of the flat statement that it was not viable as a standalone company. Many of us, including me, remained uneasy about giving Chrysler a lifeline, and we included in the fact sheet six difficult conditions the company would have to meet to qualify for the additional $6 billion of assistance that we were contemplating.

Harry, meanwhile, had had a surreal conversation with GM's Ray Young in which Ray tried to negotiate several points in our formal response to GM's viability plan. He was effectively trying to remove or blunt our many criticisms of GM—criticisms that industry observers had been voicing for years. Harry listened patiently for a while, but finally exasperation took over. "Ray," he said, "this isn't a negotiation. These are our firmly held views. Of course you're free to disagree, but we haven't spoken to any industry observer who feels any better about the plan than we do."

On Sunday night, when we assembled in the Oval Office to hear President Obama make his courtesy calls in advance of Monday's speech, I was more than a little awed by what we had unleashed. My friend Arthur Sulzberger sent the first news flashes to my BlackBerry. I texted back, "I'm sitting in the Oval Office!" feeling the unreality of the moment.

For the President, of course, it was another evening of work, more momentous than some but less momentous than others he would surely face. And yet it marked a turning point in American industrial history—a turn, I hoped, for the better. After his calls were completed, we fanned out in preassigned groups to other rooms in the West Wing for follow-up work. Deese and I conducted a background briefing call for reporters. More than a hundred members of the media dialed in to listen to a "senior administration official" preview the next day's announcements by the President.

On the verge of the largest industrial restructuring in history, accompanied by massive government financial support, the first question was "Why did you believe it was necessary to ask Chairman and CEO Wagoner to step aside?" From there, the questions mushroomed across the full range of our actions, but with a disproportionate number still focused on the fate of Rick Wagoner.

Simultaneously, Larry and Ron spoke with the "auto caucus"—interested members of the Senate and House. When we reconvened afterward in Larry's office to compare notes, he was concerned about what he had heard. "I think we need something more on the demand side," he said. For all of Larry's reputation as an academic, his political instincts were sharp. And his instincts were now telling him that we'd been thinking too much like wonks—obsessively dwelling on financial restructuring and doing too little to promote a broad auto industry recovery.

We brainstormed how to fix the problem. It was Deese who surfaced the idea of trade-ins for gas guzzlers. The notion of boosting overall sales by offering rebates on trade-ins of old, fuel-inefficient cars had come up during the late-2008 discussions about a stimulus package and again in our early work on autos. A similar program had been a hit in Europe, where the German government had offered the equivalent of a $3,200 rebate for consumers willing to scrap cars at least nine years old and buy newer ones. But we'd dismissed the idea because such a program would require legislation, which we doubted could be enacted quickly enough and which might also distract Congress from more important parts of the President's agenda. Under tonight's circumstances, however, rebates suddenly seemed like a pretty good idea. "Let's try it," Larry decided. Brian labored through the night to work out a plan and insert new language into the President's speech, thus giving birth to Cash for Clunkers.

The speech was set for 11 A.M. We assembled in Larry's office shortly beforehand and, following custom, trooped downstairs to the Oval to see if the President had any last-minute questions or requests. Of course, this was unlikely—his speech by now was loaded into the teleprompter and he didn't have to worry about questions from the press because there would be no Q&A. Going to see him was just another manifestation of the White House obsession with racking up face time with the President.

After a few minutes, we trailed Obama to a staging area in the State Dining Room. Gathered there were members of the Presidential Task Force on the Auto Industry—the secretaries of energy, transportation, labor, and the like, as well as Tim and Larry. They were reporting for duty as what the communications department called potted plants. Often White House image makers don't want the President to make an important, controversial announcement by himself. So they arrange potted plants behind him to convey an added note of gravity and consensus. A protocol officer carefully lined up the officials and, just a few minutes behind schedule, they marched out to the foyer of the White House, where the announcement would take place. Brian, Ron, and I were left standing by ourselves in the State Dining Room; we had not been deemed worthy to serve as potted plants! I didn't care—this was another aspect of Washington that I found unappealing. We made our own way to the foyer and stood behind the camera crews, craning for a glimpse of the President as he delivered his remarks.

The speech was clear and direct. "Let there be no doubt," he said, "it will take an unprecedented effort on all our parts—from the halls of Congress to the boardroom, from the union hall to the factory floor—to see the auto industry through these difficult times." But our groundbreaking rescue plan ended up having to compete with the news of Rick Wagoner's ouster, word of which had leaked to the media on Sunday and was getting more attention than it should have. I was stunned by commentaries suggesting that the government was somehow overreaching by replacing a CEO who had lost $11 billion of taxpayer money in three months—and had been asking for more. No private-sector investor would have put up with that; it was commonplace to make large infusions of new capital contingent upon a management change. Larry professed to be less surprised, while acknowledging that the reaction was stronger than he would have predicted.

Rightly or wrongly, the notion of Washington exerting its grip on an industrial icon was unnerving to many people. Governor Granholm called Rick a "sacrificial lamb." The New York Times published a truly moronic op-ed piece by William Holstein arguing that GM would now be "deprived" of Wagoner's expertise. Happily, several respected commentators praised our decision, notably Paul Ingrassia, a Pulitzer Prize-winning auto expert. His op-ed in the Wall Street Journal was headlined "Wagoner Had to Go: We Heard More Realism from the President Yesterday Than We've Heard from Detroit in Years."

From my standpoint, the controversy over Obama's decision to offer more assistance, contingent on the automakers' meeting strict deadlines, was more expected. Senator Corker, still smoldering over supplier assistance, called it a "major power grab." The Journal's editorial page started referring to GM snarkily as "Obama Motors" and "Government Motors." David Brooks on the Times op-ed page dismissed the deadlines as empty threats and concluded: "It would have been better to keep a distance from GM and prepare the region for a structured bankruptcy process. Instead, Obama leapt in. His intentions were good, but getting out with honor will require a ruthless tenacity that is beyond any living politician." I suspected Brooks had no clue what a "structured bankruptcy" meant. All the same, I was gratified at least that both the Times and the Washington Post praised the President in their editorials.

The single most interesting reaction I heard came not in the media but by telephone. I had barely returned to my office after the President's speech when Jimmy Lee of JPMorgan called. "We need to talk!" he barked.

"I thought there was nothing for us to talk about," I said innocently. "You said '$6.9 billion and not a penny less,' and that's not going to work for us."

"That was then and this is now," he said.

I chuckled silently and continued to play dumb. "What changed?" I asked.

"I didn't realize how important this was to the President," Jimmy said, somewhat fatuously.

I was surprised by how quickly Jimmy had picked up the phone, but not by his shift in attitude. This was precisely what we had hoped to accomplish when we'd urged the President to set a firm deadline for Chrysler, with liquidation to follow unless all the stakeholders agreed that the sacrifice would be shared.

We hunched around a balky speakerphone in the Oval Office, listening in as Barack Obama briefed legislators on his first major action on autos. He'd been President barely two months. That's Larry Summers, chief economic adviser, with the wrinkled brow; I'm at far right. At left is Press Secretary Robert Gibbs; between Summers and me are Brian Deese, standing, and Gene Sperling. Official White House Photo by Pete Souza

© Tribune Media Services, Inc. All rights reserved. Reprinted with permission.

They begged for a bailout but arrived by private jet: from right, GM CEO Rick Wagoner, Chrysler CEO Bob Nardelli, and Ford CEO Alan Mulally, with United Auto Workers chief Ron Gettelfinger, testifying before a Senate committee in November 2008.
AP Images/Evan Vucci

President George W. Bush and Treasury Secretary Hank Paulson smiled outside the Treasury on the October 2008 day Congress passed TARP, the $700 billion financial rescue fund. Tens of billions of those dollars would soon flow to automakers.
AP Images/Charles Dharapak

With GM and Chrysler teetering, the Senate could not muster the votes for a bailout, but Bob Corker, the Republican junior senator from Tennessee, emerged as the unlikely architect of tough guidelines adapted by Bush and later Obama. AP Images/Carlos Osorio

I was intrigued by the dynamic between Summers (left) and Treasury Secretary Tim Geithner, who jointly oversaw our task force. Tim had been Larry's protégé in the Clinton administration, yet their styles were different. Tim was a man of few words, Larry a man of many. Tim was organized and low-key; Larry was more chaotic but his intense interest in autos thrilled us. Stephen Crowley/The New York Times/Redux

A big flap erupted when I was named what the media kept calling the "car czar." Critics asked, what did a financier know about making cars? So I needed a deputy who could balance my Wall Street credentials with credibility in Detroit: Ron Bloom, who had served as chief restructuring officer for the United Steelworkers. (Above, me in a March 2009 TV interview; below, Ron at a Senate hearing in June.) Jay Malin/Bloomberg News/Getty Images; AP Images/Susan Walsh

America's biggest, fastest industrial restructuring depended on Harry Wilson, who quarterbacked the overhaul of GM; Matt Feldman, our resident genius of bankruptcy law (the image is from American Lawyer magazine—the 363 on the tire refers to the section of the bankruptcy code whose application by Matt was groundbreaking); and Brian Deese, who secured for Team Auto a foothold in the White House (that's the entrance to the West Wing behind him) and contributed his policy expertise.
Courtesy of Harry Wilson; Paul Godwin; Stephen Crowley/The New York Times/Redux

Team Auto's whirlwind tour of Detroit on March 9, 2009, included a visit to a Dodge Ram assembly plant. That's Diana Farrell of the task force at right, Ron Bloom (center, right) shaking hands with a Chrysler official, and me (left) fretting that we were running late. Seeing the assembly workers whose jobs were in jeopardy was a sobering reminder of the gravity of our task; I thought of them often in the ensuing months. Marcin Szczepanski/Detroit Free Press/MCT/Landov; AP Images/Carlos Osorio

General Motors world headquarters in Detroit's Renaissance Center, seen from a mostly abandoned warehouse district. As both city and company crumbled, GM's leaders reigned in splendid isolation from a thirty-ninth-floor

General Motors Chairman and CEO Rick Wagoner in his Detroit office on March 19, 2009, three days after our first one-on-one meeting.
Fabrizio Costantini/Bloomberg News/Getty Images

Bob Nardelli, chairman and CEO of Chrysler, on his way to a Senate hearing in December 2008.
AP Images/Kevin Wolf

Ford Motor Company CEO Alan Mulally at an international automotive congress on January 12, 2010, in Detroit. Under his leadership, Ford avoided bankruptcy and didn't need a bailout; he is the only one of the three who still has his job.
Bill Pugliano/Getty Images

The strain of multibillion-dollar negotiations showed on the faces of five men, all very different, who were key players in the crisis: Ray Young, GM's hapless chief financial officer; Fritz Henderson, who after working at GM for his entire career served as CEO for 247 days; Ron Gettelfinger, chief of the United Auto Workers; Sergio Marchionne, Fiat's hot-tempered CEO, designated by Barack Obama as Chrysler's last hope; and Jimmy Lee of JPMorgan, who was obliged on his trips to Washington to forgo the corporate jet and ride the Acela.

Above: Jeff Kowalsky/Bloomberg News/Getty Images; Fabrizio Costantini/The New York Times
Opposite: Bill Pugliano/Getty Images; Reuters/Johannes Eisele/Landov; courtesy of James B. Lee Jr.

By permission of Michael Ramirez and Creators Syndicate, Inc.

David Horsey/SeattlePI.com

On June 1, 2009, President Obama announced the ultimate overhaul: the Treasury was forcing General Motors into bankruptcy, and when it emerged, the company would be 61 percent taxpayer-owned with a chairman and four new board members selected by the U.S. government. To keep car buyers from fleeing, the President established government-backed warranties, and his Cash for Clunkers program was aimed at spurring demand. Meanwhile, editorial cartoonists needed no further encouragement.
Brendan Smialowski/Bloomberg via Getty Images; AP Images/Mark Lennihan

Chrysler lowered the boom on inefficient dealers in June, canceling franchises and ordering dealers to take down their Dodge and Chrysler signs. Some 800 of the company's 3,200 "stores" were closed.
Reuters/Joshua Lott/Landov

Ed Whitacre (top), the flinty Texan I coaxed out of retirement to become chairman of the new General Motors, evoked memories of Lee Iacocca by going on TV as the company pitchman. Soon after this commercial ran, the board pushed out Fritz Henderson and Ed took over as CEO. I was disappointed in summer 2010 when he left after nine months in the job. But his successor, Dan Akerson, another Team Auto recruit, also embodies the no-nonsense, disciplined approach GM needs to survive and even thrive.
Courtesy of General Motors

When our work was completed, I took Team Auto and friends to a Mexican restaurant for margaritas and farewells. From left: Matt Feldman, Brian Stern, Meg Reilly (Treasury spokesperson), Paul Nathanson, me, Ron Bloom, Mara McNeill (Treasury attorney), Brian Deese, Dustin Mondell (Rothschild banker), Clay Calhoon, Lindsay Simmons (Treasury attorney), Harry Wilson, Sadiq Malik, Sally Wrennall-Montes (Treasury assistant), Rob Fraser, Haley Stevens, David Markowitz, and Brian Osias. Courtesy of Paul Nathanson