Alum may become Obama’s ‘car czar’

By
Monday, February 2, 2009

Correction appended.

A Brown alum and Corporation member could be appointed President Barack Obama’s “car czar”, a new position that would be created to oversee a bailout of the American auto industry, according to multiple media reports.

Steven Rattner ’74 P’09, co-founder of the New York-based investment firm Quadrangle Group, would become Obama’s point person overseeing the restructuring of manufacturing giants General Motors and Chrysler, which received promises of up to $17.4 billion in government money in December in exchange for promises to make serious internal changes.

Obama was said to be near appointing a car czar, the New York Times reported in mid-January, and had “focused” on Rattner for the job. Rattner had “expressed interest,” the Times reported, though no final decision was reached. Bloomberg News and the Wall Street Journal, among other media outlets, have published pieces in recent weeks exploring the possibility of Rattner’s overseeing the automaker bailout.

Rattner worked as a business journalist early in his career, then worked at Wall Street firms, including Morgan Stanley and Lazard Freres, specializing in media and communications investments. He co-founded Quadrangle in 2000.

He is also a major fundraiser for the Democratic party, and his wife, Maureen White, served as a co-chairwoman of finance for Hillary Clinton’s presidential campaign.

A member of the Brown Corporation since 1994, Rattner was also editor-in-chief of The Herald during his undergraduate years.

Rattner could not be reached for comment on his potential position.

Though many have pushed for a “car czar” so as to provide critical oversight of a major industry in a time of economic crisis, others question whether one person can solve the complicated problems the industry faces.

“I don’t think it’s entirely clear what authorities will be given to the car czar,” said Richard Arenberg, adjunct lecturer in public policy. Though the original idea was to allow the car czar to restructure the “Big Three” automakers – Chrysler, GM and Ford Motor Co. – without bankruptcy proceedings that could end in liquidation, previous czars created for other problems have not been effective, he said.

“The devil is in the details,” Arenberg said. “The trouble is that (czars are) outside the normal bureaucracy.”

Though czars are meant to “cut through all the bureaucratic red tape,” they often end up stuck in it because they lack the “lines of authority” that would allow them to succeed, Arenberg said. It’s also unclear who the car czar’s boss would be, he said, adding that it could be the secretary of the Treasury, the secretary of commerce or even the President.

In the background of the debate over a car czar is Obama’s announcement this week that California and other states will be allowed to impose their own stricter environmental standards on cars – breaking with the stance of George W. Bush’s administration. Such mandates could make the auto industry’s recovery – and hence the car czar’s job – even more difficult, according to Professor of Economics George Borts, who taught Rattner at Brown.

“There are conflicting noises coming out of the Obama administration, which might make (the car czar’s) job harder than I thought it would be,” Borts said. Applying more stringent environmental requirements will advantage foreign automakers, whose cars are often more fuel-efficient, he said.

The car czar must also try to reconcile the Big Three’s needs with union demands, Borts said. American automakers are “weighed down” by health benefit payments for retirees not yet eligible for Social Security or Medicare, he said, adding that convincing unions to allow cuts to these benefits will be the “main hurdle of a car czar.”

Recalling Rattner’s days at Brown, Borts said he taught him courses in microeconomics, macroeconomics and international finance.

“He was a very smart guy,” Borts said. “He’s very well-informed.”

Due to an editing error, an article in Friday’s Herald (“Alum may become Obama’s ‘car czar,'” Jan. 30) incorrectly reported that Professor George Borts taught Steven Rattner ’74 P’09 in microeconomics, macroeconomics and international finance. Borts said he only probably taught one of those courses. The Herald regrets the error.