Overhaul (2 page)

A few minutes before 7:30 a handful of us from the President's auto industry task force had followed chief economic adviser Larry Summers down a narrow flight of red-carpeted stairs and along a short corridor to this room. We'd spent the past hour in the rabbit warren of offices on the second floor of the West Wing, reviewing once more the key documents for a nationally televised announcement President Obama was to make the next day, the seventieth of his presidency. For Obama, this would be among his first major public actions; for our little task force, it was the point of no return.

Since the task force's hasty formation in February, we had been meeting with General Motors and Chrysler, both of which were being fed intravenously with taxpayers' cash. Dozens of consultants, investment bankers, and other outside experts had presented their views, and the question of what the government should do with the struggling automakers had been debated extensively up the administration chain of command. Finally, in tense meetings at the White House a few days before, the President had made his decisions. Those decisions had remained secret until now; tonight he would call the Michigan lawmakers to alert them to what he was planning to say the next day.

The President hadn't come downstairs from his living quarters yet, giving us a few minutes to root for Tiger's comeback—for me, a welcome distraction from worrying about whether our plans for the largest government intervention in industrial America since World War II could work. We had had only five frenzied weeks to prepare for this moment. One more time I mentally reviewed those plans, which included additional billions in taxpayer funding for General Motors and Chrysler and several other controversial and risky measures. What could go wrong? I'd asked myself over and over. As a prime mixer of the strong medicine that the President was about to administer, I was sure that if disaster ensued, all eyes would be on me.

In particular, I worried about the much-discussed prospect of putting the automakers into "controlled bankruptcy," a radical approach that defied conventional wisdom. While the President's speech the next day would leave open the possibility that bankruptcies might be avoided, I knew that the mere mention of it—let alone actually taking the step—risked imploding the auto companies, crippling thousands of related businesses, vaporizing millions of jobs, and intensifying what was already a deep recession across the Midwest. With America in the midst of the worst financial crisis since the Great Depression, this was no hyperbole: the failure of the auto companies could endanger the economy in ways that were almost too frightening to contemplate.

The President arrived a few minutes late (Tiger was playing a particularly crucial hole), dressed in khakis and a black zippered jacket. I was not surprised that he was wearing casual clothes—I had on khakis myself. Since President Obama's arrival in the White House, shirtsleeves had become the Oval Office norm, and on weekends almost anything went—even T-shirts and jeans worn by unshaven, sockless men.

While his dress was informal, the President's mood was resolute. He had the air of a man in the business of calmly executing his decisions, not second-guessing them. After he'd chatted briefly with Reggie about the golf match, we followed him into the Oval Office, where he sat behind his desk, bare but for a folder of talking points for his calls.

Katie dialed him first into a conference line on which four lawmakers awaited: Michigan's two senators and two of its congressmen. Delegations from our task force had been meeting regularly with them—tense, often testy sessions in which we were lectured about the importance of helping this critical industry.

We clustered around a phone across the room from the President's desk, by the armchair in front of the fireplace where he sat during meetings. Katie had activated the phone's speaker so we would all be able to listen in, but it barely functioned—probably installed by a "well-connected government contractor," the President joked.

He worked through his talking points, fluidly detailing the next day's announcements. Then he paused to let the legislators speak. John Dingell, the longest-serving member of the House of Representatives in history, was gracious and statesmanlike. The others were audibly on edge, although considerably more polite and restrained in conversation with the President than they had been in their meetings with us.

Congressman Sander Levin seemed to interpret the President's allusions to bankruptcy for GM and Chrysler as just a negotiating tactic. "I understand that you have to refer to bankruptcy to get people to the table," he began.

The President interrupted in a measured tone: "I don't want you to leave with that impression. I'm telling you that because it's a real possibility."

At this, a chorus of anxious voices crackled through the speaker. Senator Debbie Stabenow urged that if the President was going to send such a tough message, he ought to couple it with a strong statement of support for the auto industry. Senator Levin beseeched him not to use a broad brush in criticizing the companies and to acknowledge the progress that they had made.

The President listened carefully. When he brought the call to a close after about thirty minutes, he asked Larry to take another look at the speech. By the following morning we'd responded by sanding down the criticism of the companies and adding the "Cash for Clunkers" program to bolster car sales.

The next call was to Governor Jennifer Granholm of Michigan. I'd gotten to know her as an energetic, dynamic candidate during her 2006 campaign, but Michigan was suffering the nation's highest unemployment rate, and in our more recent conversations she'd seemed beaten down and demoralized. Now, as she listened to the President outline his plans, her spirits seemed to fall further and her voice barely rose above a whisper.

"I hope you know what you're doing," she said softly.

During the final call, Ron Gettelfinger, head of the United Auto Workers, who had been defiant the previous autumn when Detroit first asked for federal help, was low-key and respectful now. This augured well for the tough discussions we knew we needed to have with him.

When his calls were completed, the President walked out of the Oval Office and back to the small TV, to learn that Tiger had hit a birdie putt on the eighteenth hole to win. Tiger's day may have ended, but for the task force, a night of work was just beginning.

F
OUR MONTHS EARLIER,
on the day before Thanksgiving, I was about to leave my office to take one of my sons to a matinee of
Speed-the-Plow
on Broadway when the phone rang. It was Larry Summers, who'd just been named chief economic adviser to Barack Obama, the President-elect. "I'm calling with a hypothetical question," Larry said. "If you were asked to take on a six- to twelve-month assignment for the administration, would that be something that could work for you?" I replied that such an arrangement would be complicated, but all the same, it was something I'd be happy to consider.

For most of my career, I had majored in Wall Street and minored in Washington. I'd built a career in investment banking and private equity, limiting my involvement in politics to fundraising, serving on a few think-tank boards, and writing the occasional op-ed. While I'd flirted with government service in the past, the beginning of this new administration seemed like a compelling moment to step up. Our country was facing the greatest financial and economic crisis since the Great Depression; when would the skills of a finance guy like me possibly be more useful? If I hung back this time, what would I be saving myself for?

I hadn't worked in D.C. since the days of Jimmy Carter, and then not as a government official but as a reporter for the
New York Times.
I'd fallen into the job in 1974, starting as a news clerk for the
Times
"s legendary columnist James "Scotty" Reston. Arriving in the capital two months before Richard Nixon's resignation was a dizzying experience for a twenty-one-year-old college graduate. A few years later I was a full-fledged Washington correspondent, responsible for covering what in the face of
OPEC
and stagflation were the two most important domestic issues facing the Carter administration: energy and the economy.

Then came the election of Ronald Reagan. Some of the stories I wrote were deeply skeptical of supply-side economics, to the point where I found myself attacked on the
Wall Street Journal
editorial page. My superiors decided that this would be an excellent moment for me to move to London to cover European economics.

Neither London nor journalism outside Washington was particularly satisfying, however. I grew restless. Although I had leaped at the opportunity to work with Scotty Reston, I had never set out to be a journalist. I'd been raised in the New York suburbs in a nonpolitical, business-oriented family. My father, who had seen his family's fur business go bankrupt during the Depression and now ran our family's paint-manufacturing company in Queens, had urged me toward a professional education. I'd even applied and been accepted to business school and law school, both of which I'd deferred to stay at the
Times.
Now I felt the journalistic frustration of peering through the glass instead of running something or building something in the real world.

I could have tried returning to Washington as a public servant. But the private sector was a more realistic option in those days of Republican ascendance. Several friends I'd known in Washington had shifted to investment banking. That industry had nowhere near the glitz or notoriety it would gain within a few years, but listening to those who had entered the fray, it sounded like an exciting, challenging way to marry some of the variety and competitiveness of journalism with a chance to do more than report.

Money wasn't my main motivation—I was single and earning more than $60,000 a year, with both a cost-of-living allowance and a generous expense account—and it took me a while to realize how weird I sounded saying that on Wall Street. When asked in job interviews why I wanted to become an investment banker, I would speak somewhat airily about doing something different from journalism. My prospective employers would look at me quizzically. The more forthcoming ones told me that this was too tough a profession to take on unless I had a real drive to get rich. So I learned to play up a passion for moneymaking and to mention the limitations of living on only a five-figure income.

"I understand completely," said one of my last interviewers. "I don't know how anyone can live on sixty thousand dollars a year." At that time, someone making that much ranked in the top 10 percent of all earners.

In my early years on Wall Street, I had no time for politics or policy. I devoted my waking hours to work and tried to be a good family man. The best thing that had come out of my time in London was meeting my wife, Maureen White, another American expat. When we decided we wanted children, we somehow managed to have four in four years' time (one set of twins).

Not until the mid-1990s, after I'd risen to a senior post at the investment bank Lazard Frères, was I able to focus again on Washington. I began to write op-eds. I became involved with several think tanks and started donating to candidates I liked.

Maureen and I had met the Clintons on Martha's Vineyard in the early years of Bill Clinton's presidency. Our relationship was cemented in 1995 when Vernon and Ann Jordan arranged for us to stay over in the Lincoln Bedroom, on the second floor of the White House. We were so naive about fundraising that we took the Jordans at their word when they said that the Clintons wanted to "meet a few new interesting people."

That year, we dove into Clinton's reelection effort—raising money, courting business support, and attending events. After the election, Maureen became the U.S. representative to
UNICEF.
I had conversations with Treasury Secretary Bob Rubin and his then-deputy Larry Summers, but their needs and my availability never coincided.

Maureen and I worked hard for our friend Al Gore in 2000, and then again for John Kerry in 2004, because we could not bear George W. Bush's policies. At the time, I wasn't thinking of a Washington job; I had made a commitment to the three partners with whom I started a private investment firm, the Quadrangle Group, in 2000, promising that I would not leave for at least five years. And I was enjoying helping our little firm grow and thrive.

When Hillary Clinton ran for President in 2008, the decision to support her was easy. I admired her enormously and thought that she was the best qualified to be President. But as the campaign unfolded, it became clear that on substantive policy grounds, she and Obama were almost indistinguishable. So while I was proud to be a Clinton supporter, I always felt that Obama would also be fine. In August 2007, I ran into him at a Martha's Vineyard golf club and mentioned that if he became the nominee, I'd be pleased to help in any way I could. (At that moment, I suspect neither of us thought that outcome was likely.)

We stayed with Hillary to the bitter end; I've always believed that the girl you bring to the dance is the girl you stay with. But when she dropped out in early June 2008, Maureen and I were happy to support Barack. As always, we tried to keep a low profile and help where we could, mainly in fundraising, business outreach, and cultivating other potential supporters, particularly those who had been for Hillary.

Election night 2008 was a celebratory moment for us. Of course, almost immediately the jockeying and speculating over appointments began. I wanted to serve and felt that now the timing was right: my kids were nearly grown, and Quadrangle was coming up on its ninth anniversary and I had capable partners. But I knew from observing previous transitions that Obama would pick his most senior advisers first. Any potential role for me would be a notch down.

I had not concealed my interest in Washington, so I didn't think I needed to do much to advance myself. I'd seen would-be officeholders put themselves forward shamelessly—and futilely. Any job I would want would be decided on merit, another reason for not trying too hard. My prospects were helped by my relationships with people involved in the transition, including its overall head, John Podesta, a former chief of staff to President Clinton. In charge of the personnel process was Mike Froman, a former Treasury chief of staff, a law school classmate of Obama's, and a good friend of mine. My partner from Quadrangle Josh Steiner, himself a former Treasury chief of staff who had been caught up in the Whitewater scandal, had been asked to help with the economic-policy portion of transition planning. One of the few people I talked to openly during this period, Josh urged me not to be passive. "Very few people get drafted for these jobs," he said. So I visited briefly with Podesta and Froman to register my interest in serving in the new administration.