Who Saved GM?

There has been an amusing disagreement in the editorial pages over whether Steven Ratner (the car czar) or Rick Wagoner (the ex-CEO) are responsible for the operating profits showed by new GM.  Ratner published a self-congratulatory book on how his team saved the company, in part by firing Wagoner, and Malcom Galdwell responded by saying the the operating changes put in play by the fired Wagoner are the current reason for the company’s operating profit.  Ratner replied and other pundits have weighed in on both sides.  Ratner’s major claim is stock price.  Wagoner took over when old GM’s stock was $30 and was fired when the stock was at $0.  Gladwell’s notes that Wagoner cut the saving deal with the union’s on wages and put in motion the new car line that are at the core of the new GM’s net operating profits.   Ratner was “just a finanical engineer”  aided by bankruptcy rules that enabled him to reduce debt payments dramatically.  The government (Ratner) provided the bridge financing, accepted the debts of GMAC, and called the shots on management during the reorganization.  The bankruptcy judge went along.   The debate poses the very serious questions of whether a straight bankruptcy would have been better and whether, given the government controlled bankruptcy, Ratner made the optimal calls. One thing is for certain–the procedural protections of bankruptcy normally in place were totally suspended by all involved.

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