each group of partners wanted their partner to succeed. there was no i'm better than you. they were in the foxhole together when it was bad. they were out high fiving when it was good. you know, warren buffe can be playing the ukulele wit a spotlight on him an charlie mugner had no interest. very, very interesting. >> rose: steve rattner and michael eisner when we continue. >> funding for charlie rose was provided by the following. maybe you want to provide posumeals for the needy. or maybe you want to help when the unexpected happs. members prectwant to do, from american express n help you take the first step. vote, volunteer, or donate for the causes you believe in at membersproject.com. take charge of making a difference. captioning sponsored by rose communications from our studios in new york city, this is charlie rose. rattner is here. he was the leader of president obama's task force on restrturing the automobile industry in the wake of th financial cris. that effort becamehe largt government intervention in industrial america since world war ii. steve writes about this experience and more in "overhaul" an insider's account of the obama administration'smergcy reue othe autindury. i am pleased to ve him back on this program. he used to be the chairma of the board of channel 13, our sponsoring station here. he's a long time friend of mine. and supporter of this program. and i should say that you in fulldisclosure d mi deeply appreciatedive of the support of channel 13 and steve for this program. having said that, let's talk about you. >> yes, sir. >> rose: how did this job which lead to this book come about. >> it hafernt been a secret. when i lived in washington when i was with the times i really came to believe that public service and public policy were things that i would like to be volved with at some point in my career. and being an honest guy i would tell people that if they asked. so after the election, tim guidener and larry summers called me and asked if i wanted to do sething that lead t tim king me to come take the auto's job. >> rose: and what did they say your mission was? >> the mission was to fundamentally restructure these companies a way that they re going to be viable. they didn't want, and i wouldn't have taken the job f they had said let's put a band-aid on it and get through the next few yea and don't worry about aft that. they really were very coitteto fixing this problem once and for all. >> rose: and when you began to look at the problem, what did you see? >> i saw, in fact, i almost didn't take the job when i began to look at the prlem. because i saw a just what seemed like an impossible problem am you had companies that were hemorrhagg a couple billion dollars a nth. you had massive excess liabilities. you had the whole problem of uaw that everybody is fami wit you had markethare cling, declining, declining. it wasn't clear to me there was a solution. >> rose: and a different problem than general motor than there were at chrysler. >> they were almost mirror images. i didn't realize this until i got well into this project but they were almost mirro images. chrysler had a very weak product line. it didn't have a single car on consumer reports most recommended list. but it had a pretty scrappy management team. general motors actually had-- . >> rose: put in by private equity. >> bob nardelli from yen electric. general motors had actually not a bad suite of products, better than pple ve it crit f but as it came to learn it the the most dysfunctional management structure and team i had ever seen. e most incomtent finance stf, theost bureaucrac company it was really quite-- we were all dazzled by it when we first came to seit. >> rose: so you said to the president, or you said to the task force, we've got, the first thing we've got to do is get rid ofhe management of general mott sners. >> ibecame cle ver early onhat there had to be a management change. you'll remember that rick wagner flew, they flew on the three private jets in november of '08. re tn thhree private jets is rick basically-- . >> ros down to washington. >>or the congressional hearings. and rick said in a very succinct paragraph in this testimony, this is not our fault. we've done everything right. this is, you blame this on the uaw, bla it on oil price, bla is o the pane competition, but don't blame on management. there was no accepting the responsibility. and then in february they had to submit so-called viability repos fohow they were going to fix themselves with some help fr us. and the report was a completeenial, assuming car sas would cket back up, modest tweaks and things like that. and look, i come from private equity. and in private equity one the most important things is what management team a you backing. what management team are you putting your investors money behind. in this case it was taxpayers' money. and we concluded by mid-february this was not a management team that we would back with our money. >> rose: so what did you do then? >> we had a whole series of discussions with larry summers and tim geithner, ultimately rahm emanuel went to t president with a sees of recommendations. and interestingly enough nobody quarreled with our view about changing management at gm. it was almost not discussed. the toughest decision that we faced was whether to save chrysler which was a much more, as i said earlier, a much more marginal player. but the issue of whether to keep rick or not keep rick, ironically got no discussion. >> rose: how do you deal with a health-care system that they had, some people used to say that general motors was a health-care company and not a car company. and hodo you figure out, you know, what nd of demands are you going to make of the unions which have been so powerful? >>t's not just the unions. it's all the stakeholders. although to your point if you want an interesting factoid, general mors the larges pchaser of vili ra the-- viagra in the world because it covered under e union's cadillac health-care plan. >> rose: is at right. >> tru stement. >> rose: factoid for the da >>omething you can take to luncwith you. but look, we approached this like as investors. and we basically id if we're going to invest money in this company, what has to happen to make this company viable. the uaw was absolutely a big piece of the eation. but not the only piece there was too much debt there were too many dealers. a whole series of issues that had to be addressed and we essentially worked with gm to design a new business plan. >> rose: talk about some of the people you had working with us because one of the important people was someone who had real experience with the uaw. >> ron bloom-- . >> rose: a key member with you of the team because he clearly understood the union perspective and had their respect. >> slew-- he understood the union per specific. he worked for the steelworkers and thereas some rivalry. >> rose: i don't mean that particular union >> there was som rivalry with the uaw. but i knew nothing about cars. i knewothing aut the uaw. i needed people around m o did. and was lucky enough that ron was willing to come as my deputy because we need expertise and he had it. >> rose: and where is he today? >> he's in washington, in the treasury. he is the manufacturing czar for lack of a better wor overseeing both the auto wa, what is left of the auto investments but also trying to help deal with this massive problem we hef manufacturing in the future of america. >> rose: when you made the decisions you made, what was the nature ofour confence that is would work. >> we had apretty hi degree of confidence around gm to fix itself. the first important thing to know, i me out of th newspaper siness andou come around it, nothing is replacing the tomobile they may be electric, hydrogen powered or wind powered but people are going to buy 15 million plu cars in a year in this country because that is the nature of our socie it is n like the newspaper businesses where there are fuamental challenges going on. the only question is who is going to sell those 15 million carsment and we believed as you said and i said that gm had better products than people gave it credit for and if we could simply fix the liabilities, fix th cost structure and change the management, that they could be competitive. and in the first two quarters of this year, they had profsor t first time in 4 years. >> rose: now when you looked at this company with your own previous experience in private equity, at was what could have, what wld it cost to buy general motors, whether there was pausble r some private equi firm to come in there. >> there was no private equity firm that wanted it. >> rose: why not, because th wer terrified with the union ntracts? >> t whole, rember, this is mar of 2009. the world was collapsing. the stk market was heading to 0 there was no capital there was nothing. nobody knew where the botm was. nobody wanted to come in except us. and this is exactly why this was the right thing for government to do. because what is government exist for but for stepping when mkets fail. when there is afundamental good reason. >> rose: and supplier of last resort. >> and so we put a total of $50 billion intom but more importantly 30 billion in as part of the final restructuring and for which we got 60%, we the taxyers got 60% ofhe company. and e company going public hopefully on november 17th. and i think will be great success. >> rose: what does that mean for the amount of money that taxpayers put in. >> i think of the 50 billion that the taxpayers put into gm we will recover, well, right now there are bonds of old gm, i won't bother you with all the math that are trading that ily a recover of the government north of 40 billion. we will get most of that 50 billion back out of gm. >> re: chrysle as you said chrysler had been bought by private equity. >> so remember that daimler had bought chrysler say ten years earlier a had paid i think 30 or 35 billion dollars for this company. they, in effect, ran it into the ground. it became only a north american company that, the product platformas bare, cupboard was bare and you said they essentially gave it to private equity. right at the peak-- . >> re: right at the peak of the private equity mania. and it was just straight downhill from there car sales could lsd. the company never had a chance it was overleveraged. it didn't have products. i think naelli tried as hard, is a real can-do guy t it never had a chance. it was just a matter every time. and this became the most hotly debated thing that we had to decide was whetr to save chrysler or not because there is a strong school of thought, why are we saving a we company with poor pructs. if wlet chrysler go, gm and ford would pick up most of their sales it would be ry good for gmnd ford. and whyut in anothe $8 billion into chrysler. and that was a fascinating discussion around the white house for many, many days. >> rose: give the dimension ofhe debate and scuson, which is in here. >> it was one of the most professional analytil debates that i witssneed in my pvate sector caer let alone what i imagined would happen when i got to government. everybody came to the table with very rational arguments. 9 people that wanted to let it go bankrupt essentially said, they were economists, serious people saying why are we saving a failing company. it will help gm and ford. the government shouldn't be propping up losers. it should be helping new companies and nner and they were right about all that. the other side of the argument were people like larry saying, if chrysler can be saved, pannedf it can be viable, if this moment in march when the economy is collapsing, the stock market is going to zero t would put 300,000 ople out of work in one y if we let chrysler go. evenhough some of those would be rehired later by ford ogm, the immedia impact would be very tough. and so whyhouldn't the government be saving chrysler it was a fascinating debate. rose: and you think you made the right decision in the end. >> i do. in retrospect i do. i was torn at the time. i was the last one to vote. i codn't make my mind. i thought both sides were completely right. and there is no dbt that gm and ford would be worth more today if we had let chrysler go. but as i look back at that moment when nobody knew where the bottom was and the economy felt like it was soluly in a freefall, and chrysler will work t will be viable, we will get paid back by chrysler i think we made theright decision. >>ose: and is now owned by fiat. >> it is in alliance. they have an ownershiptake an eventually they can get control but they only can go over 49% when the u.s. government has gotten repaid. >> re: wn you lookt chrysl there were hard cisis that had to be made. you had someecured lenders there, did you not. >> we did. >> rose: what kind of pressure did you bring to bear on them? >> there has been a lot of talk about this. and the answer is nothing more than what we would have done if we were in the prifert sector. i wento tim geithner and i said we have jp more an-- morgan and city group as the lead banks, they are-- tim said don't give them special concessions because they are tarp banks and don't ask anything special from them because they are tarp banks. you streat them the way would you treat them as i you were in the private sector and so jimmy lee who is the lead banker for jpmorgan they had 2 biion of the 6.9 billion of tol debt and i had the same kind of discussion. we had many times on wall street. >> rose: what s that discussion like. >> tt discussion was jimmy lee believing that the government would never let chrysler go. bankrupt or out of business and thate could get his full 6.9 billion back. and so until the day the president oke mah 30th, until theorning the president spoke, jimmy called me a couple times a week and said i want my 6.9 billion dollars and not a penny less that was his phrase. and then he had some phrase, i love jimmy he had some phras li you know en u lend somody 6. llio you eect to get it all back. i said jimmy, you know, not every loan you have made has been great. the moment the psident spoke i was literally still in the wte house, and my cell phone ran and it was jimmy saying when can we ta. and thisas when the president said h was epared to t chsler go ouof bines if the lenders and the other constituents did not come to terms. and i said jim you told me there was nothing to talk about. i will not give you 6.9 billion dollars. you said it was that or nothing. he said tif that wa before the president spoke. i di't know how important this was to the president but now i do and i want to be constructive. the point was that jim, the threat of bankruptcy and liquidation got jimmy to accept reality. e reality was that if chrysler had liqdated out of that 6.9 billion dollars, the lender was to the have gotten more than a billion. jilly would say the same thing to youf heere sitting here. we ultimately gave them 2 billion. they did better. >> rose: 2 billi on a debt of how much. >> 6.9 billion. they got abo 30 cents on the dollar but they would have gotten5 nts o the dollar if chrysler liquidated. >> rose: did it set a precedent that bothered you? >> what boered me in retrospect and this i will take a fair amount of blame for, in the president's speech on march 31st, march 30th, exse m he singled out some of the banks that had bee recalcitrant. jimmy was constructive. the speech on april 30th. he singled out the banks that had been recalcitrant and i didn't anticipate the exnt to whicthatould send a message twall street which was already feeling a lot of heatrom washington. so i don't, i think the outcome was right. >> rose: the msage was? >>that h attacked speculators that the obama administration was anti-business, anti-wall street. that kinof a message. we wer't a the president ist. but in retrospect we could have delivered that message a little bit more, slightly more low k fhion. >> rose: to the large -- larger question, this administration who you rked for, and the business community where you have prospered, what's happened? >> what's happened, i think, is that the country is angry. the country is frustrated. you just, you have spoken about this to many of yo other guests. there's 9.5% unemployment. the average workers wages are going down, not up. and at the same time people see business and the banks still making good profits. still making large bonuses. and there's just an ormous amount of anger and frustration, i think in this country. and i think the president who i don't believe an-business, is in a sense has a foot in each camp. he can't just take the side of one or the other. he is trying to bring the two sides together and wall street just doesn't always feel that anybody in washington appriatethem. and flip side is the people in whington don't appreciate that wall street, don't believe that wall street understands the mood of the country i we and spoken frt of a hedge fund not too long ago and i tried to make some of these points and i got booed. i gotwood. when i talkedabout dk --. >> rose: i remember that. >> when i talked aboutow 30,000 people inhis country get 6% ofthe total income iinn th krirk e hight ever in r history, somebody booed me and i wrote a piece for the journal about it saying you guys don't get it. it may be right t may be wron t pretend that it's all fine and this is grea for america. you're going to eventually slit your n thats because the country will come down on you. >> rose: do you think that the president has adopted populous rhetoric to the extremthat he shouldn't have? >> i think he has adopted it to some degree because this is just the real world. and you have to, he is a politician. he ianelected ofcial. he has to understand the mood of the country. and this is the mood of the country. but he famously said and the bank eschs don't like to be remied of this, when he had the bankers in in '09 and they were beating up on him. they said look, you don't get t i'm the only thi standing beside you and the pitchfork. that is what they don't get. i do not believe he is anti-busines i know larry summers an tim geiter are not anti-business. >> rose: speak to this impression by some that he is of a philosophicalind that govnment interventio is a good idea and that his preferences for some governing social democrat european style model. >> completely wrong. iny vw. >> rose: you have worked with him and talked to him about philosophy and you were on the cutting edge of one of the things that mit lead someone to think that. and it wa noa moment when the president urged to us do any more than we had to do. we were draft mood this war. we didn't volunteer for it. he never wanted to go into detroit or go into these auto companies or do any of this stuff. it was thing wes had to do to preve theconomy from coullachesing and onof of t this that we did that has not gotten a lot of attention but relates to gm's ipo was, and this was lay summer's instigation and the presiden was completely on board for it, we set down a set of principless called the u.s. government, a shareholder as to how quickly the government was going to get out. we wanted this to be, larry suers particularly deserves an enormous amount of credit. he wanted this to be the opposite of vietnam. we were going get in and out quickly. he didn't want to be the a minute longer because larry knew that there would be an enormous temptation for the government to go into other sectors. and the whole concept of this european style of industrial policy is enate ma i believe to oureconomic leaders in washington, i lieve that. >> rose: how would you define this president in terms of listening to all the rhetoric from the tea party or from republicans or ian people on the left and right regardless of party. in terms of how you sis essentialhilosophy about government, th