Rattner: Taxpayers will lose $14B on auto bailouts

— -- Taxpayers will lose about $14 billion on the $82 billion investment to restructure General Motors, Chrysler and Ally Financial, former auto czar Steven Rattner said Thursday.

"It's unambiguous that it was a success," Rattner told the Detroit Economic Club, acknowledging his inherent bias because he led the effort.

He said at the time there were no private sources of capital to finance in a bankruptcy for either GM or Chrysler. Fast action was essential. And at least 500,000 jobs were at stake when suppliers, dealerships and other vendors were included, he said.

In addition, Rattner acknowledged in a recently published epilogue to his 2010 book, "Overhaul," that about $19.4 billion the government put into GM before the 2009 bankruptcy is "lost money."

Asked what he would have done differently, Rattner at first said, "amazingly little," but then after a brief reflection he added, "We put more cash into GM than we now, in hindsight, probably needed to."

Rattner, who is now a cable television pundit and manager of New York Mayor Michael Bloomberg's personal fortune, said the auto bailout was unfair to certain groups of people.

Salaried retirees from Delphi, GM's largest supplier, had their pension plan terminated with benefit cuts for some retirees of up to 70%, while the bankruptcies of GM and Delphi provided government money to bolster the pensions of UAW retirees.

"While the Delphi salaried retirees did get the short end of the stick, the GM salaried retirees took a fairly significant haircut on their medical benefits," Rattner said.

Chrysler and GM ended franchise agreements of hundreds of dealers, many of whom had received sterling evaluations for sales and customer service.

Rattner said dozens of industry leaders, consultants, economists and dealers told the Obama administration's Auto Task Force that having too many dealers was a competitive disadvantage for both Detroit automakers. But he said his team did not choose which dealers were terminated.

He also said the fact that the task force did not need congressional approval enabled it to act quickly. Both GM's and Chrysler's bankruptcies were completed in about 40 days.

"I'm convinced if we had to go through Congress for any approval, at least one of these companies would have had to liquidate," Rattner said.

One questioner asked why the Obama administration has been ineffective in reviving the housing market or convincing lenders to do more to revise existing mortgages.

"We the government didn't extract a big enough price from the banks for what was spent to rescue them," Rattner said. "They got a lot of capital at really cheap prices and almost no one lost their job at the senior level."