The Kind of Leader You Are

     I've noticed that leaders fall, broadly speaking, into one of two categories: The first is characterized by utter self-confidence -- and extreme selflessness. These are people who understand the group's mission and try to surround themselves with the cohorts best suited to carry it out. They're unthreatened by group members whose abilities surpass their own.  Leaders in the second category are looking for people to lead, to dominate. They're threatened by anyone who compares favorably to them in intelligence or accomplishment. They fail eventually because the mission becomes secondary to their success as leader.

I Break Bread with Steve Rattner to Discuss Hillary, the UAW, Golf and Deflation

Power Breakfast with Former Car Czar Steve Rattner
October 04, 2010

By Doron Levin

Steve Rattner, the former New York Times reporter who struck it rich on Wall Street, wouldn't have been anyone's first guess as the individual to become overseer for the latest overhaul of the once-mighty U.S. automobile industry.

Yet politics and finance - and perhaps fate - brought Rattner to center stage in early 2009 when the administration of President Barack Obama sought a leader for the restructuring of then-General Motors Corp. and Chrysler LLC, both of which were teetering on the brink of failure.  Rattner, an early supporter of Hillary Clinton for president rather than Obama, got the nod.

Under his guidance and the auspices of the U.S. Treasury, the 15-member Automotive Task Force guided the two automakers through quick bankruptcies, in the process firing Rick Wagoner as GM's CEO and handing Chrysler to Fiat SpA and its CEO, Sergio Marchionne.

 

Rattner's aptly named book about fixing both domestic automakers, "Overhaul," has been arriving at bookstores to generally positive reviews. He agreed to meet us for a "Power Breakfast" at E.A.T., a Madison Avenue delicatessen on the Upper East Side of Manhattan, around the corner from where he lives. E.A.T. draws its clientele from the celebrity-studded neighborhood, a fact underscored when former Washington Post journalist Carl Bernstein sauntered over to our table to greet Rattner. Elliot Spitzer, the former New York attorney-general disgraced in a sex scandal "eats here a lot," he said.

Rattner ordered scrambled eggs with lox, and I an egg white spinach omelette and toast. When our waiter seemed to have forgotten us, an impatient Rattner got to his feet and asked for service, much as he might have demanded to know why a junior Treasury official hadn't produced the reports he needed.

Rattner apologized for several last-minute changes about our breakfast location, explaining that he originally had been scheduled to appear on Fox TV
following our meeting and decided to cancel the appearance at the last minute, a bit uneasy about what the interviewer was planning to ask.

"I'm not sure that a book like mine will sell a copy on Fox. The Obama administration actually accomplished something'' with the industry's restructuring, he submits, adding, "I'm not sure that's what the Fox audience wants to hear. They want a book that tells them how terrible it was, not how wonderful it was."

Rattner has been wading through interview after interview to promote his book. He has been explaining why the Obama administration was correct in imposing tougher conditions on the automakers than those they imposed on themselves and why the U.S. was fortunate that the controversial Troubled Asset Relief Program funds had already been appropriated by Congress for bailout purposes, allowing the Task Force to avoid having to plead for the money.

On the evening following our breakfast, Rattner was scheduled to appear on The Colbert Report. The show's host, comic Stephen Colbert, is renowned for making his guests look and sound foolish. "My goal is just to get out alive,'' Rattner said, who though he's golf with Obama admitted to being "terrified" facing Colbert.

When the Obama administration selected him to lead the Automotive Task Force, he was surprised, he said - but not because he had been an early supporter of Hillary Clinton's for the presidency. After all, lots of Clinton supporters and Clinton herself work for the president. "I wasn't an auto guy, I wasn't a manufacturing guy, I'm a financial guy,'' he said.

He does think "Hillary could run again, but certainly not against President Obama next time, not a chance in a billion that she would challenge him.'' In 2016, he said, "she will be young enough and certainly has the energy, the drive and the enthusiasm."

But he's not interested in more public service in Washington: "I've been there, done that. I had an unbelievable experience. I was fortunate that (Treasury secretary) Tim Geithner asked me to do a job that was actually doable. We were able to completely restructure these companies - and it's hard to imagine a job in Washington where it would be possible to feel this sense of accomplishment."

In his view "to accomplish anything in Washington you have to deal with Congress, and that's an exceedingly unpleasant job. As you know, Congress is on the verge of becoming completely dysfunctional. I think that's part of why Larry (Summers) is leaving'' as the administration's top economic adviser, he surmised.

On the teetering U.S. economy Rattner said, "there's so much economic illiteracy and confusion about what to do" in the face of weak growth and the possibility of deflation. I can't imagine that anyone would disagree with the notion that we need to maintain an expansionary fiscal and monetary policy, keeping interest rates low and willing to tolerate an unnaturally high rate of deficit for a while.''

The U.S. budget deficit "is a huge problem that has to be addressed, but I don't believe it can be addressed right now. We need a couple more years of stimulative economic policy and then we need to make some unbelievably tough choices about taxes versus spending and how we want to allocate our resources."

Rattner acknowledges that Americans have borrowed too much and must "repair" personal balance sheets. He says the fault lay with artificially inflated housing values, which caused people to think they were worth more than was reasonable, leading to too much spending and too little saving. But halting spending now, he said, could suppress economic growth and employment. As erudite as any graduate of Brown University should be, Rattner mentioned John Maynard Keynes's popularization of "the paradox of thrift," an economic principle that says when everyone saves, aggregate demand falls, thereby reducing aggregate savings: "Be careful what you wish for,'' he said. "We have to steer a middle course."

Rattner's wealth, reputed to be in nine figures, certainly seems to insulate him from financial worries, yet, "I'm sure my house is worth less than it was," he frets. "But I've been a prudent saver all along the way."

In addition to his Upper East Side residence, Rattner owns a farm in North Salem, New York, an hour's drive north of the city, where he rides horses, plays tennis, indulges in a bit of golf and relaxes with his wife and four children. His eldest, a daughter, just completed work on her first political campaign, on behalf of an unsuccessful Congressional aspirant. Twin children are sophomores in college, and the fourth is on a "gap year" program between high school and college in Uganda.

"I'm a terrible golfer," he conceded, but he joined a club so his children could learn to play. He says he's doesn't much enjoy the game, but responded to encouragement from New York city Mayor Michael Bloomberg, who also belongs to his club. Rattner said he met Bloomberg, a former Salomon Brothers investment banker, about 15 years ago at a dinner in New York. The two men, who remain close, discovered they had many mutual interests, including Rattner's investment banking expertise and interest in media properties. They both ski in Vail, Colorado and see one another there.

"I told Bloomberg I was terrible (at golf), but he said come along anyway," Rattner said. "He's always saying life is not a zero-sum game, you don't have to beat someone else in order to win. He basically plays against himself." There is more than friendship involved: Rattner has served as an investment adviser to the multi-billionaire founder of the Bloomberg LP media empire.

To stay in shape, the 58-year-old Rattner says he works out six days a week, including cardio, weight training and exercises under the direction of a trainer.  He also is a pilot, he said, so I asked what kind of plane he flies.

"Not going there," he said, with a smile, perhaps recalling the roasting that members of Congress gave CEOs of the Big Three automakers - and the resulting public relations debacle - after they flew company jets to Washington in November, 2008 in search of financial aid.  How about a hint as to whether he flies a prop or jet aircraft? "Not going there," he repeated.

Would Rattner rather be watching the Ryder Cup golf matches or the Yankees on television over the weekend? "This is something else that the Mayor and I have in common," he said. "I just have no interest in spectator sports and sports on television. Maybe if there's some really important game the kids want to watch. Or maybe some golf to see if I can learn. But that's it."

Rattner declined to comment, as he has to all interviewers citing his lawyers' orders, on his role in the investigation of New York's pay-to-play pension-investment scandal, in which public officials were accused of benefiting from kickbacks from firms soliciting their business. The Quadrangle Group, the private-equity firm he helped found, was accused of impropriety and settled the charges last April, while publicly disavowing Rattner with a statement implying he was a responsible party.

"It's extremely painful to find out that your former partners don't put any value on loyalty," he said. "These are people I worked with, one for 20 years, one for 16 years, one for 12 years."

With so much financial upheaval, it's not too strange that prosecutors and the public have been looking for culpability. Rattner acknowledges the "poor business judgment" shown by Wall Street firms, helping to create the nation's credit crisis and economic meltdown, "but what I'm worried about is the Wall Street doesn't get that, and the reason for all the vilification and why people are so angry at them," he said. "They jeopardized the health of their firms; in many cases they were selling products that they didn't believe in themselves.

"The flip side is that the financial industry is one of the world's great growth industries," he said. As government reforms regulations to make banks operate more prudently and efficiently "we shouldn't throw out the baby with the bath water."

More intervention from Washington probably won't be needed in Detroit, he opined, surely insofar as Ford Motor Co. is concerned.

Rattner praised Ford's management for fixing the automaker without government help, especially in light of its continuing weak balance sheet, compared to GM and Chrysler.  "Car sales are cyclical, they're only going to go up from here," he said. "Ford is going to make a ton of money over the next couple of years."

But as the auto industry earns more, the United Auto Workers union leadership has promised to "take back" what it sacrificed in the course of the shared financial sacrifice among all parties leading up to the bankruptcies of GM, Chrysler and many suppliers. Skirmishes between the UAW and the automakers are perpetually in the news, like the one last week at GM's Lordstown assembly plant. Union members were vexed that GM was sending Chevy Cruze's to non-union repair shops.

"I worry about" union-management conflict, Rattner said. "They (the UAW) want to get back what they gave up, and that's not going to happen. We can't go back to 29 job classifications, the whole week off for the July 4 holiday, overtime pay when you work a short day and then a long day. These are changes that aren't pleasant, I know, but there's no going back."

For the time being, a weakened U.S. auto industry awaits a sales rebound and return a to profit that could put the UAW again on a collision course with auto-industry management.

As a private citizen, Rattner won't have to worry about the repercussions, nor his legacy for leading the financial rescue of a shattered industry.

If Rattner changes his mind about more public service, who knows? An enduringly healthy Detroit might prove to be Rattner's best argument in 2016 - or before - for an even bigger job in Washington.

 

About the Author

Doron Levin is a contributing writer to Edmunds' AutoObserver.com, writing commentaries, profiles and interviews, including AutoObserver's Power Breakfast with Power Brokers feature. Levin has been reporting on business and financial subjects from Detroit, specializing in the global auto industry since 1984. He has been a correspondent for the Wall Street Journal, bureau chief of The New York Times, and a columnist for the Detroit Free Press and Bloomberg. He is the author of two books, "Irreconcilable Differences: Ross Perot vs. General Motors" and "Behind the Wheel at Chrysler: The Iacocca Legacy"

Audi A8 – VW Technology Inches The Car Closer to Autonomy

    Cars weren't meant to drive themselves, or were they? I was appalled when a famous Beverly Hills plastic surgeon drove his Jeep off a cliff two months ago while tweeting about his collie. As drunk driving accidents decline, tragic stories involving driver distraction are piling up.
Laws to prevent drivers from texting or speaking on cellphones are likely to be futile. Rather, with the rise of wireless gadgetry including satellite radio and vehicle-based Internet, safety considerations dictate that cars will take over more and more tasks from the driver. Eventually engineering may be able, at a minimum, to prevent collisions entirely or minimize their danger. Audi's new A8 shows how seamless and clever some of this high-tech know-how may look.
On a 500-mile drive to northern Michigan and back, I used and paid special attention to the A8's "lane assist" feature. When enabled, a radar sensor determines that the car is drifting out of its lane and ever so slightly sends a vibration to the steering wheel, encouraging the driver to return to the lane. Adaptive cruise control allows the driver to set the car's speed and determine a distance to keep from any cars ahead. If the car closes too quickly, the brakes take over and slow it down. A blind spot indicator warns of a car passing on the left or right. These three features made it much easier for me to change the channel on the radio, take a telephone call or sip coffee without danger. I like doing those things while I drive, and I'm not giving them up.
Of course the A8 is a $90,000 car, in part reflecting the research and development costs for advanced safety devices. But just as stability control was once an advanced safety device and became standard, so will lane change and other technologies enter the automotive mainstream.

“So (rest of sentence here).” The latest annoying verbal tic.

    New York Times columnist David Brooks inspired me today by noticing that Meg Whitman, the California gubernatorial candidate, begins many of her sentences with the word "So."

    I've got to say: So do a lot of people these days. Generally speaking "so" is supposed to be a conjunction and shouldn't begin a sentence, since it's meant to join two clauses. The word may be used as a summing up device at the beginning of a sentence. These days it's become a tic, an unnecessary and hollow preliminary little better than "uhhh" or "ummm." "So, I went to the store today to buy some cabbage." "So, you've sent me the wrong parcel." Ugh.

    How did the "so" habit get started? I don't know, but let's stop.

Digital Obits, 21st Century Style

Most journalists I know don't like to write obituaries. They regard the task as a chore, and so do many of their bosses.

The smartest editors I know taught me that obituaries are an insightful measure of any publication. The shoddy or boring ones reflect disdain for readers. But capture a person's significance upon his or her passing, convey it elegantly and skillfully to community friends and family -- and you've rung the bell.

Hayes Ferguson is a Chicago-based journalist and very accomplished in a non-conventional way. She's also the chief operating officer of Legacy.com, a digital business organized around the publication of obits. Legacy.com partners with hundreds of English-speaking newspapers to amass death notices on line, providing an electronic guestbook, tools for donations and the purchase of flowers and – most importantly – a permanent record of people's lives that replaces the yellowing clips tucked in untold dusty scrapbooks. The newspaper provides the obit, Legacy collects a fee for providing the on-line publication platform.

I know: Why didn't I think of that?

Legacy.com, partly owned by Tribune Co., has been archiving death records from the Social Security Administration, working toward a comprehensive record of every one of the 2.2 million or so people who die every year in the U.S. Soon you might be able to hear (or search) who died from your high school class, your college, home town, army unit, with a press of a button. Lots of clever ways to organize and present the data are waiting to be invented.

Digital ventures such as the one Ferguson supervises represent the latest chapter of the new journalism, as significant and remarkable as Tom Wolfe's "Electric Kool Aid Acid Test." Don't be surprised if an enterprising reporter soon writes an original, brilliant, important piece about death, drawn from the information and records gathered, sliced and diced by Legacy.com.

Ferguson started as a free-lance music reviewer. She worked at the New Orleans Times-Picayune, where her dad had been the top editor. Perhaps she once dreamed of winning a Pulitzer Prize.

Today's journalism is less about prizes, more about how emerging technology is defining journalists' careers.

Our New Lives as Journalists

          What would you do if the newspaper or magazine or TV station that employed you as a journalist no longer had enough money for your salary?  That's the situation, more or less, faced by hundreds if not thousands of bright, highly skilled reporters and editors. Some are quitting the profession, others are reinventing themselves in a variety of unusual ventures made possible by the Internet and digital technology. Several of the latter described their migration at the Knight-Wallace Fellows reunion in Ann Arbor on Saturday, Sept. 11.
          Rona Kobell left the Baltimore Sun earlier this year to work for the Chesapeake Bay Journal, a small monthly dedicated to mostly environmental issues. In an earlier chapter of her career, prior to the financial meltdown of dailies, Kobell would be covering the subject as an environmental specialist for the Sun. Some percentage of Sun readers -- maybe large, maybe small -- were interested in the environment and read the relevant stories. The Sun had no accurate idea how many or who they were.
          But with digital technology, identifying and reaching the specific readers who care passionately about the environmental health of Chesapeake Bay -- and will read a special-interest publication -- is becoming as cheap and simple as starting a Facebook page for fans of the Chesapeake Bay.
          Audiences for narrow subjects and special-interest publications have long existed -- but finding them, getting their email addresses, figuring out exactly in what form they want information, how much they might pay, how often they will read, has never been easier or as cost-effective.
         The Bay Journal isn't lucrative, at least not yet. As a non-profit publication it accepts federal money from an EPA interested in learning what the voters near the bay see, know and think -- a big conflict, as we were taught in journalism school. But Kobell is free to write what she wants, including articles critical of federal programs.
          A former reporter for the New Orleans Times Picayune, Hayes Ferguson, serves as chief operating officer of Legacy.com, an online venture that collaborates with newspaper websites to write and archive obituaries. Obits have always been a feature of the daily newspaper -- are they morphing into something entirely different, unimagined by an earlier generation of j-school professors?
          Watch out, Woodward and Bernstein -- the news biz is changing before our eyes.

Home Prices Can’t Improve Until We Swallow the Medicine

    Everyone wants home prices to start going up. Or at least stop going down. (Has anyone tried prayer? Don't laugh, it might work.)

    Between a quarter and a fifth of homes in the U.S. are worth less than their underlying mortgages. They're not worth what their owners, many of whom have lost their jobs, paid for them. If they were priced properly now – lower – they could be sold. But banks don't want to take the loss, nor do owners. The government is trying, in well meaning fashion, to keep owners in their homes with programs meant to prop up mortgages and make payments more "affordable."

    Putting off the inevitable only prolongs the pain. A healthier course would be for owners, lenders and the government to throw in the towel. Let prices fall to where someone with more money or less debt than you will buy your house. Those who give up their unaffordable houses can buy smaller ones. Or rent. Once existing housing is re-priced, homebuilders can figure out what buyers of brand new houses are prepared to spend. Carpenters and plumbers can return to the job. The economy will start looking up.

    

Dan Akerson's first day at the top of GM

Dan Akerson's first day at the top of GM

Chevy Cruze --The Heartbeat of (Aging) America

General Motors has never built small cars that could attract young buyers on a budget. The new Chevy Cruze doesn't solve that problem. But the compact could be a big hit for price-sensitive older shoppers who were considering Toyota Camry, Honda Accord or Chevrolet's own Malibu, which it resembles. The latter are all midsize vehicles, while Cruze is positioned as a competitor to the compact Toyota Corolla and Honda Civic compacts. But Cruze is bigger than Corolla and Civic, according to specifications provided by GM, and it looks much bigger. In fact, Cruze actually qualifies as a midsize under U.S. government classifications.

Cruze is handsome: Maybe not captain of the cheerleaders. But presentable date material, for sure.

GM's market tactic might prove clever. The base Cruze starts at $17,000 and is less expensive according to Chevrolet than similarly equipped Civic, Corolla and compact Ford Focus. That makes Cruze way less expensive than larger and more expensive Camry and Accord. For the grownup American consumer who has awakened to the perils of unemployment, wage deflation, and shattered housing prices, no better time than the present to choose a car that gets close to the size of larger competitors yet represents a better value. As for younger buyers, those who rejected the Chevy Cobalt that the Cruze replaces, they'll probably stick with Corolla, Civic and Focus for the time being. Maybe the new subcompact Chevy Aveo will be the model that finally draws young buyers to GM.

Perverse Outcomes

Friends and others: I'm launching myself into the social media ocean, feeling like a 15th century explorer in search of a new route to China.  Wish me luck.