Chrysler Saved By 'Narrow Margin'

The decision to bail out U.S. carmaker Chrysler was made by the narrowest of margins, President Obama's former "car tsar" has revealed. Steven Rattner told the BBC that in March 2009 nine members of the government's bail-out team voted on whether or not to save Chrysler. His vote, along with Larry Summers, the president's economic adviser, swung the decision 5-4 in favor of a rescue.

The bail-out of Chrysler and GM was "undoubtedly a success", he added. Speaking to BBC World Service's Business Daily program, Mr. Rattner defended the huge state subsidies - some $82 billion at his own estimate - needed to keep Chrysler and General Motors from going bankrupt.

"The companies would have shut their doors, their suppliers would then have shut their doors, Ford [which did not receive bail-out funds] would have had to shut its doors because it wouldn't have been able to get parts, as would other foreign non-US carmakers.

"Two to three million jobs would have been lost in almost an instant," said Mr. Rattner, the former head of the Obama administration's taskforce on the auto industry.

The controversial Troubled Asset Relief Program (TARP), which the car bail-out was part of, formally came to an end earlier this month, with many in Congress, especially Republicans, condemning it as too costly and morally hazardous, for the message it sent to banks and big industries.

But Mr. Rattner said that virtually all, if not every penny, of the money invested in the car industry would find its way back to the US taxpayer in time. However, he conceded that the extent of the bail-out had been in the balance until the last minute. He recalled a heated debate in the office of Larry Summers when the vote between members of "Team Auto", as the people running the rescue called themselves, took place.

"The vote was four to three against saving Chrysler. Larry turned to me about what I wanted to do. I was torn but at the end of the day I just couldn't imagine not saving a company that could be made viable," he recalled.

Chrysler has now been sold to the Italian carmaker Fiat, and this year began reporting operating profits, as has the larger GM. Mr. Rattner has no doubt that history will look favorably on the Obama rescue strategy, both for the car industry and the banks in general.

"In the end only about half of the $700 billion set aside for TARP was actually used. I think it was the most important Act of Congress passed in 70 years," he said. "If it hadn't existed, we would have been thrown into a 1930s-style Depression. I have absolutely no doubt in my mind."