U.S. Economy Would Be `Dust' Without Intervention, Rattner Says: Tom Keene
Steven Rattner
Ramin Talaie/Bloomberg
Steven Rattner, co-founder of Quadrangle Group LLC and President Barack Obama's former auto-industry adviser.
Steven Rattner, co-founder of Quadrangle Group LLC and President Barack Obama's former auto-industry adviser. Photographer: Ramin Talaie/Bloomberg
The U.S. economy would be “a big pile of dust” had the administrations of Presidents George W. Bush and Barack Obama not stepped in, according to Steven Rattner, former head of the government’s auto task force.
“If the Bush and then the Obama administration had not done what they’ve done with all the banks, the auto companies, and various other things, this economy would be a big pile of dust at the moment,” Rattner said in a radio interview with Tom Keene on “Bloomberg Surveillance.”
General Motors Co.’s initial public offering may raise $15.8 billion after the Treasury and United Auto Workers’ retiree health-care trust increased the shares they are selling, a regulatory filing said.
The IPO was expanded by 31 percent to 478 million shares, GM said today in a filing with the Securities and Exchange Commission, a day after boosting the offer price to as much as $33 a share. An overallotment and an offering of preferred shares may increase the total amount raised to about $22.7 billion. Agricultural Bank of China Ltd.’s $22.1 billion initial sale is the largest common-stock IPO in history.
The initial sale, scheduled for today, will bring Chief Executive Officer Dan Akerson closer to his goal of returning the $49.5 billion GM received in a taxpayer bailout last year. The Treasury, which is taking a loss on its portion of the sale, will break even only if the shares climb at least 60 percent, Bloomberg data shows.
Only $5 Billion
The government is likely to come within $5 billion to $7 billion from recouping the $82 billion it invested in reviving the auto industry, Rattner said.
“The government, and I think prudently, has made a decision in the context of the increased size of the GM IPO that it wants to get out as quickly as possible and not necessarily maximize every last dollar,” he said.
Overhauling GM management was essential to the success of the company, Rattner said.
Under former CEO Richard Wagoner “the market cap of GM went during 10 years from $37 billion, its all-time high, to zero,” he said.
“In the last 15 months of his tenure, the company burned through $30 billion of cash,” Rattner said. “The plan that they presented on Feb. 17, 2009, was not viable. And perhaps most significantly Ford went through this entire crisis without needing a government handout, or without needing bankruptcy. And the difference there I believe was management.”
GM’s underwriters stopped taking orders for the IPO yesterday, which was more than seven times oversubscribed, according to a person familiar with the deal.
Rattner’s Settlement
Rattner won’t be first on line to buy GM stock, he said. “Legally I certainly could, but I think I want to be able to be free to talk about GM without people wondering whether I have some ulterior motive, so I will financially stay on the sidelines,” he said. “But I’m certainly cheering the company on.”
The co-founder of investment firm Quadrangle Group LLC is the subject of state and federal investigations of corruption at the New York state pension fund, is near a settlement with the U.S. Securities and Exchange Commission, according to a person familiar with the matter.
Rattner arranged to retain Henry “Hank” Morris, the former chief political consultant to ex-New York Comptroller Alan Hevesi, as a placement agent. Rattner also is accused of setting up a DVD distribution deal for a movie produced by the brother of a pension fund official. Hevesi pleaded guilty last month. Morris reached a plea deal with prosecutors Nov. 5
To contact the reporters on this story: Daniel Kruger in New York at dkruger1@bloomberg.net; Tom Keene in New York at tkeene@bloomberg.net
To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net
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