David Shepardson / Detroit News Washington Bureau

Washington -- The Obama administration vetoed attempts by General Motors to abandon its Detroit headquarters, a new book by a former top auto adviser reveals.

The revelation comes in a 320-page memoir by Steven Rattner, who was President Barack Obama's auto adviser for six months last year, and helped shepherd the $85 billion government bailout and bankruptcies of GM and Chrysler.

"Overhaul: An Insider's Account of the Obama Administration's Emergency Rescue of the Auto Industry" also discloses Rattner secretly forced out GM Chairman Kent Kresa in June 2009, and offered GM's top job to Renault-Nissan CEO Carlos Ghosn.

The book paints a critical portrait of Chrysler Group LLC CEO Sergio Marchionne, other top executives and many in the government.

A draft manuscript was made available to The Detroit News by publisher Houghton Mifflin ahead of its Oct. 14 publication date.

Written with the help of a veteran auto journalist, Jeffrey McCracken, and Sadiq Malik, a former auto task force staffer, Rattner's memoir offers new evidence that the Obama administration's influence on the Detroit automakers was larger than previously revealed.

In addition to the government's role in personnel matters, and in keeping GM in Detroit, the book discloses the White House initially planned for a $100 billion bailout, but the aid package GM, Chrysler and their affiliated finance companies eventually came in at $85 billion.

The administration also considered a $10 billion fund to help auto suppliers -- but cut it to $5 billion -- and weighed but discarded a plan to provide funding to help suppliers go through bankruptcies.

Before his ouster as GM's CEO, Fritz Henderson proposed moving GM headquarters from Detroit's Renaissance Center to the automaker's Tech Center in Warren, arguing it would save money, and symbolize a commitment by the company's leadership to be more hands-on managers.

Rattner praised the idea. But a White House aide, Brian Deese, who has been heavily involved in auto policy, denounced it.

"Are you out of your mind?" Rattner quoted Deese as saying. "Think what it would do to Detroit."

Henderson proposed donating the iconic headquarters on the Detroit River to the city. Detroit received $20 million in tax revenue from GM.

The White House even commissioned an outside analysis of the impact a move would have on Detroit property values, Rattner wrote. The answer: an estimated "double-digit hit on already deflated real estate prices."

Leaving the RenCen "made a lot of strategic sense," Rattner wrote. But Michigan native Gene Sperling, a U.S. Treasury Department official, was one of many who fought the idea.

"It's over for Detroit if you do this," Sperling yelled in a meeting, Rattner recalled. "Don't do this to (Detroit Mayor) Dave Bing... He's a good man trying to do a good thing."

The request was passed up the chain to White House Chief of Staff Rahm Emanuel, "and word came down that the move would be a bridge too far," Rattner wrote.

"Fortunately, this unique intervention into a specific GM matter was never leaked to the press, saving us from having to explain how it comported with our policy of letting GM and Chrysler manage their own affairs."

In a Detroit News interview earlier this year, Henderson confirmed his interest in moving GM headquarters, but White House involvement has never been publicly reported.

Neither the White House nor GM would comment on Rattner's account.

"The book is history," said GM spokesman Greg Martin. "We're a new company and we have too much work to do and no time for book reviews."
Ghosn declined GM job

Rattner discloses that he offered the top job at GM to Ghosn after Rick Wagoner was ousted in March 2009. Ghosn had courted GM for a tie-up with the Renault-Nissan Alliance in 2006.

He was still interested in the U.S. automaker: "I would like GM to be part of our alliance," Ghosn said bluntly.

Rattner said he politely rejected the idea, because there was too much overlap. But he asked Ghosn: "Would you be interested in becoming CEO of GM?"

Ghosn declined.

"I knew it was a long shot and was not surprised when he deftly demurred," Rattner recalled.

A Renault-Nissan executive familiar with the situation said that in 2009, Renault and Nissan were still working through the industry's deep downturn.

"(Ghosn) felt considerable loyalty to both companies and wanted to see them through the crisis," the executive said .

Rattner wrote that he also courted an unnamed executive in the Midwest to become GM chairman, and flew to the target's home for a meeting before settling on Kresa, who was already on the GM board.

A few months later, however, Rattner decided that he wanted former AT&T CEO Edward Whitacre Jr. to join the board as chairman.

Over dinner, Rattner wrote, he tried to convince Kresa to step down. When that failed, Whitacre and Kresa met privately in the map Room of the Treasury Department. Afterward, Rattner told Kresa he was making the change.

Whitacre became chairman, and succeeded Henderson as CEO.

Kresa never disclosed the turmoil and left GM's board last month when he reached mandatory retirement age.

Henderson has been named senior vice president of Sunoco Inc. and will become chairman and CEO of SunCoke Energy, a company to be spun off from Sunoco's core oil refining and gas station business in 2011.
Wagoner's payout an issue

The president, Rattner says, was concerned by the decision to allow ousted GM CEO Rick Wagoner to collect $7.1 million of the $22.1 million he was owed in accrued pension benefits.

Wagoner was dismissed from GM in March 2009.

"I could see the president's jaw muscles tighten," Rattner recalled.

Obama had difficulty with the "notion of writing a check that was about 100 times the annual income of a GM worker to the CEO who had brought the company down."

The president, he said, "grimaced and reluctantly acquiesced. I found it striking that the president of the United States had spent more time on an issue of executive pay than on the question of whether to dismiss a major CEO in the first place."
Marchionne rankled UAW

Rattner's book also sheds light on actions inside Chrysler, the other automaker bailed out by U.S. taxpayers.

Fiat CEO Sergio Marchionne, he said, clashed with UAW President Ron Gettelfinger and sought to take advantage of the president's timetable, which required a quick tie-up between Fiat and Chrysler.

Marchionne, he said, told Treasury officials: "This is a totally new ballgame."

He also revealed that the government wanted Fiat to put up money for getting a 20 percent stake in Chrysler.

"We struggled to persuade Sergio to put up some cash," Rattner wrote.

Fiat put up no money in the Chrysler tie-up.

Marchionne, according to Rattner, told Gettelfinger about the need to accept a "culture of poverty" rather than a "culture of entitlement," attacking, among other things, retiree health care benefits.

Gettelfinger responded angrily.

"Why don't you come and sit with me and tell a 75-year-old widow that she can't have surgery and that you killed her husband?" the union chief retorted.
Inside the White House

In addition to board room politics, Rattner's book tells White House tales.

The president, Rattner recalls, asked aloud why Detroit automakers were unable to replicate the success of the Japanese car companies.

"Why can't they make a Corolla?" Obama asked in November 2008, shortly after winning the presidency.

Rattner acknowledged that Detroit's automakers weren't entirely to blame.

"I would discover that the struggles of GM and Chrysler were as much a failure of management as a consequence of globalization, oil prices, and organized labor," he writes.

"The auto rescue remains one of the few actions taken by the administration that, at least in my opinion, can be pronounced an unambiguous success.

"Detroit should count itself lucky."

2) If Chrysler had such an overcapacity issue, why not close the Mexican plants and move that work to the States. No, they didn't do that. They moved SLNAP's work to Mexico and WAP. They moved SLSAP's work to Canada. (I frankly don't give a rat's a** that Canada put a little bit of money up. All that work should have come back to the States and the plants outside of the U.S. should have closed.) The Journey could have been moved to SHAP. The new Pentastar V-6 should have gone to KEP, not Mexico. I think they built a new plant for that engine in Mexico. And so far, it looks like the first Fiat will be built in Mexico. Why not BAP?

So all of that American taxpayer money went to closing American plants and moving that work to Canada & Mexico. They didn't even cut any production. They just moved it out of the States. That's just wrong.

3) The UAW didn't give Chyrsler or Fiat any money. The UAW was owed money from Chrysler to fund the VEBA. Chrysler didn't have any money and Fiat didn't want to give up any money of their own, so they basically gave the UAW equity in the company; to be cashed in at a later date when the company is in the black, if that ever happens. So even though the UAW has the majority of equity in the company, it's of the non-voting, non-controlling type. The UAW made no decisions about what happened to Chrysler during the bankruptcy nor can they make any now.

The government should have been very firm with Chrysler saying something like:"we'll give you whatever you need, but you can't close American plants. If you have overcapacity issues, you'll definitely have to cut Mexican plants and maybe Canadian plants."

I hope the book talks about this one issue. I really want to know what happened.

Auto bailouts chiseled out of conflicts and tension

Rattner details struggles between execs, union, White House staff
Christine Tierney, Alisa Priddle and Christina Rogers / The Detroit News

Few people got a closer view of the frantic, messy $85 billion government bailout of General Motors and Chrysler than presidential auto adviser Steve Rattner. In a riveting account, he provides revealing portraits of the key players who labored under pressure-cooker intensity to save the industry and hundreds of thousands of jobs.

Rattner describes a temperamental Fiat SpA CEO Sergio Marchionne, a disillusioned Ron Gettelfinger, president of the United Auto Workers union, and a deeply fractured GM board, split between holdovers from the old GM and new appointees.

While much of GM's collapse into bankruptcy and tumultuous rebirth has been chronicled, Rattner sheds new light on the struggle to rescue Chrysler.

Marchionne and the investment bank J.P. Morgan Chase would prove to be "among our biggest headaches in the race to save the company," he writes in "Overhaul: An Insider's Account of the Obama Administration's Emergency Rescue of the Auto Industry." The 320-page memoir will be published in mid-October. A manuscript was made available to The Detroit News by publisher Houghton Mifflin Harcourt.

In April 2009, during the final stages of Marchionne's negotiations over Chrysler with the auto task force, "Dottore Jekyll became Signore Hyde. Yes, there was a charmer in Sergio. But there was also someone else," Rattner writes.

At one meeting, when his right-hand man Alfredo Altavilla reminded him of a term of the deal that had been agreed upon, Marchionne erupted. "The tirade got so bad that Ron (Bloom) and others quietly got up and left."

But later on, Rattner described Marchionne's legendary work ethic and thoughtful remarks that Marchionne addressed to Chrysler employees.

While tensions between politicians and auto executives were evident at the time, in late 2008 and early 2009, Rattner describes the conflicts behind closed doors that pitted bankers, dealers and even union leaders against the new Democratic administration.

Bondholders were stunned when they realized they'd lose out in Chrysler's restructuring under bankruptcy, while a UAW trustee would emerge as the majority shareholder.

"Jimmy became apoplectic," Rattner writes, referring to the bondholders' representative, J.P. Morgan Chase Vice Chairman James Bainbridge Lee Jr.

"He demanded to know why the UAW should get any consideration, since it was well below the banks on the priority list of who would get paid in a bankruptcy. Ron (Bloom) responded to that, bluntly telling him, 'I need workers to make cars, but I don't need lenders.' "

Bloom, a former union adviser, was a key task force member.

Gettelfinger felt manipulated and wouldn't shake hands on the deal with Andrew Horrocks, then a managing director with investment bank UBS, one of Fiat's advisers.

Chrysler officials declined to comment, saying they hadn't seen the book. GM also did not comment.

Looking at GM, Rattner, a former New York Times reporter and investment banker, said there was no doubt in his mind that Chairman and CEO Rick Wagoner had to go.

"It wasn't personal. It was business," he wrote. "We did not know of another industrial company in history that had burned through so much cash as GM had on his watch."

Then-GM President Fritz Henderson was the obvious replacement, Rattner said, describing him as "smart, energetic, down-to-earth, and more open to change" than Wagoner.

Henderson, deeply loyal to Wagoner, was stunned by the turn of events. He later spoke to Rattner about his flight back from Washington to Detroit with his onetime boss and mentor -- "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," Rattner writes. "He and Fritz would never have a conversation about what had transpired."

Of all the casualties of the auto company bailouts, bankruptcies and reconstitutions, Rattner seems conflicted as he relates how Henderson was ousted from GM after just 247 days as CEO.

"He was not only a GM lifer but also the son of a GM lifer. ... 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," said Rattner.

From the outset, task force members and GM directors openly discussed the odds on his survival. Henderson is portrayed as being over his head in this ruthless environment. In addition, his loyalty to CFO Ray Young -- who was considered out of his depth by Rattner and some board members -- cost him dearly.

At Henderson's first board meeting under new GM Chairman Ed Whitacre Jr., Henderson didn't outline a vision or strategy for the automaker. After a quick greeting, he turned over the floor to Young.

Former Coca-Cola Chairman Neville Isdell pulled Henderson aside after the meeting and told him, "You missed your moment," according to Rattner.

Henderson resigned in December, and Whitacre took over as CEO, as well as chairman.

Rattner praises the former AT&T chief for his leadership. But he was puzzled by Whitacre's sudden decision last month to leave before the upcoming initial public offering that will make the automaker a publicly traded company again.

"He had promised to see GM through its initial public offering, which the directors took to mean that he would stay at least until 2011," Rattner writes. "I shared the board's disappointment with Whitacre."

But he believes Daniel Akerson, a partner from the large Washington, D.C., private equity firm Carlyle Group, is the right replacement. "Akerson and Whitacre have the same kind of toughness and decisiveness."

Besides Akerson, GM's board considered two other directors to replace Whitacre: Patricia Russo, former CEO of Alcatel-Lucent, and Steve Girsky, GM vice chairman and a former Wall Street analyst.

"Girsky was not seen as a plausible replacement -- no real management experience," he wrote. "And while Russo had done well as GM's lead director, her past performances as a chief executive had been rocky. That left Akerson. In my view, he was the right choice."

But Rattner regrets Akerson was appointed chairman of GM as well, effective Jan. 1.

"Nothing has occurred to change my view that 'best practices' in corporate governance means separating the chairman and chief executive roles," he wrote. "If ever a company needed to hew firmly to best practices in corporate governance, it is the one that owes its existence to the support and goodwill of the American taxpayer."