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Steve Rattner Explains How GM Was Firing On All Cylinders

After a solid half-century of excellence falling behind their foreign counterparts in efficiency and surviving on credit bubbles, you'd think the former head of the mighty GM empire, Rick Wagoner, might have had some sense of urgency to position the company in a direction other than a government orchestrated bankruptcy. According to Steve Rattner, the well-placed sense of self at GM under Wagoner rule can be summed up by two words: friendly arrogance. From the outside world, that may seem a bit off target for a company whose financial performance mimicked that of a crash test dummy, but Rattner got a in-depth look at GM. Maybe he saw evidence of its inner excellence.

Everyone knew Detroit's reputation for insular, slow-moving cultures. Even by that low standard, I was shocked by the stunningly poor management that we found, particularly at GM, where we encountered, among other things, perhaps the weakest finance operation any of us had ever seen in a major company.

That doesn't sound like something to be particularly proud of. Maybe that was just a summary of days gone by. Once the crisis started to become evident, they must have changed their ways.

For example, under the previous administration's loan agreements, Treasury was to approve every GM transaction of more than $100 million that was outside of the normal course. From my first day at Treasury, PowerPoint decks would arrive from GM (we quickly concluded that no decision seemed to be made at GM without one) requesting approvals. We were appalled by the absence of sound analysis provided to justify these expenditures.

But you can't put all the blame on just a couple people. GM was a tightly-knit collective.

The cultural deficiencies were equally stunning. At GM's Renaissance Center headquarters, the top brass were sequestered on the uppermost floor, behind locked and guarded glass doors. Executives housed on that floor had elevator cards that allowed them to descend to their private garage without stopping at any of the intervening floors (no mixing with the drones).

This is not sounding good. Is that it or could there possibly be even more?

Meanwhile, if ever a board of directors needed shuffling, it was GM's, which had been utterly docile in the face of mounting evidence of looming disaster.

Steven Rattner: Why we had to get rid of GM's CEO [Fortune]