Once Upon a Car Part 15

And that debate was drawing closer by the day. By mid-October, the market for new vehicles in the United States had completely unraveled. The annual selling rate had plummeted to ten million units. GM's sales were running 45 percent below those of the year before. Few businesses of any kind could cope with the loss of that kind of revenue. But the auto industry, with its enormous payrolls and fixed costs, was spectacularly ill-equipped to handle it. The banking crisis, the lack of available credit, the abysmal level of consumer confidence-it all added up to disaster.

Rick Wagoner was now convinced that GM was a victim of economic circ.u.mstances beyond its control and that it deserved the a.s.sistance of the federal government. The energy loans couldn't come quickly enough. The merger talks were a sideshow. The collapse was happening too fast for a deal to get done with Chrysler.

The GM board was sh.e.l.l-shocked. "These were unbelievable events taking place in the market," said John Bryan. "The board felt strongly that we needed to put our case before [the government]." Wagoner concurred. "If there hadn't been an explosion in the credit markets and the economy hadn't tanked in an unprecedented way, we wouldn't need any money," he said.

Wagoner was right. The economy and gas prices wrecked the environment to sell cars, and no one could have predicted that. But the car market had been tumbling for months. GM had made some tough decisions to cut costs and scale back production, but it hadn't made them soon enough and it sure hadn't prepared for a cash crunch like this.

The only source of immediate funding was the U.S. Treasury. Bob Lutz was skeptical that GM would get fair treatment in Washington. "Those people down there hate us," he moaned. But the government was doling out billions to financial inst.i.tutions as part of the emergency Troubled a.s.set Relief Program (TARP). Henderson, however, shuddered at the thought of GM going down to Washington with its hand out. "Once you go to the government for financing, Pandora's box opens," Henderson wrote to Wagoner in an e-mail. "And it usually comes with a lot of different things you either expect or you don't expect-which could include, among other things, losing our jobs."

On October 13, Wagoner and two GM directors, John Bryan and Erskine Bowles, went to Washington for a meeting with Treasury Secretary Henry Paulson. Bryan was sent by the GM board specifically because he had a long relationship with Paulson, dating back to when Bryan was chief executive of the Sara Lee food company in Chicago and Paulson was his corporate banker with Goldman Sachs.

Before the meeting began, Paulson took Bryan into his office. Bryan could see that Paulson was totally consumed with the financial crisis and unable to focus on a sputtering car company from Detroit. "He had bigger things going on," said Bryan. "He was just about to bring all the bankers in the world in to inject capital, and he really wasn't ready to sit down and help solve this problem." Paulson also had a philosophical bias against propping up GM. He told Bryan that big industrial companies can drag out their financial problems, as opposed to banks, which have to shut down the moment they can't cover their deposits.

"Hank, I don't think that's the case here," Bryan said. "We've got supplier payments on certain days. And we're running out of money."

Paulson recounted in his book On the Brink that he was reluctant to even entertain GM's request for aid. "I believed that TARP was not meant to bolster industrial companies but to prevent a collapse of the financial system," Paulson wrote. Still, he felt he owed GM an audience, and asked Commerce Secretary Carlos Gutierrez to attend the meeting as well.

Once the meeting started, Wagoner made a pitch for $10 billion in government funding-a $5 billion loan and a $5 billion line of credit. "We need a bridge loan, and we need it quickly," he told Paulson. "I don't believe we can make it past November 7."

But Paulson stopped him right there. "I have no authority to make a TARP loan to General Motors," he said bluntly. Though he understood the gravity of GM's situation, he was turning it over to Gutierrez. The Commerce chief, he said, would work with GM going forward.

The GM contingent was stunned. The Commerce Department had no funding or authority to save the company. But Wagoner could not have picked a worse time to appeal for help. He didn't know that President Bush was dead set against doing anything for GM before the November election. In his memoir, Decision Points, Bush wrote that he vowed not to make a politically charged decision about Detroit while the country was in the midst of choosing a new president. "I didn't think it was a coincidence that the warnings about bankruptcy came right before the upcoming elections," Bush wrote. "I refused to make a decision about the auto industry until after the vote."

It was panic time. The talks between GM and Chrysler got more intense, with JPMorgan Chase applying additional pressure. The two sides were now discussing eliminating as many as forty thousand employees in a merger. At the same time, the banks in Chrysler's debt consortium were weighing in on which executive they would like to see manage the combined companies-Wagoner, Henderson, or Nardelli.

While the negotiations ground on, both automakers continued to cut costs. GM said it was preparing to lay off a large number of salaried workers. Chrysler planned to slash five thousand white-collar employees-a 25 percent reduction-by the end of the year. "These are truly unimaginable times for our industry," Nardelli said in a somber e-mail to employees. And in a move that underscored the dismal situation at Chrysler, Daimler said in a financial filing that it had written down the value of its 19.9 percent stake in its former partner to zero.

The rejection by the Treasury Department forced GM to go to plan B-Congress. The strategy was to lobby the House and Senate leadership to convert the $25 billion in energy loans into an emergency aid package and possibly to get additional money to fund the UAW health care trusts. The industry's point man was John Dingell, the eighty-two-year-old congressman from west of Detroit who chaired the House Energy and Commerce Committee. A group of governors from states with large automotive operations would also be involved. And hundreds of car dealers were being mobilized to support the effort, as well as GM employees and suppliers across the country.

The message was also crystallizing. This plea for help was not simply to save GM or Chrysler, but rather to prevent an economic catastrophe on the order of the Great Depression. A study by the industry-backed Center for Automotive Research began circulating to the media and lawmakers in Washington. The doc.u.ment calculated that more than three million jobs in the United States were related to auto manufacturing, from the plants to the supply chain to the dealers to the communities dependent on the Big Three. The numbers were not necessarily in dispute, but the thesis was frightening. If GM or Chrysler crashed, the entire industry would topple. Even the j.a.panese-owned factories in the United States would be impacted by a disruption in the supply network that made parts for all the companies. This was not just a question of using taxpayer dollars to fix Detroit. It was an investment in the national interest-and woe to the country if the money wasn't there.

By the end of October, Treasury officials were in contact with GM's finance executives on a daily basis about how much cash they had. The Commerce and Energy departments were also in constant discussions with the company, and the White House was monitoring the situation. Major media outlets around the world were covering Detroit as a fast-breaking story. The fate of the American auto industry had become a hot-b.u.t.ton issue in the final days of the 2008 presidential election.

On November 5, 2008, Barack Obama was elected the forty-fourth president of the United States. The victory was greeted by cheers in Big Three auto plants, where union workers had turned out in large numbers for Obama. His election was a rare moment of triumph at Solidarity House in Detroit. For years Gettelfinger had been a vocal critic of the Bush administration's labor and trade policies, and he had invested tons of UAW resources into Obama's campaign. But the union chief was hardly in a mood to celebrate. He had reluctantly been drawn into the GM-Chrysler talks and was more worried than ever that the deal would devastate their workforces. The companies were leaning on Gettelfinger to support the deal or risk seeing two of the Big Three tumble into bankruptcy. He needed counsel and called Steve Girsky, the former GM advisor who was now working for a private equity firm.

"I need your help," Gettelfinger said. "GM and Chrysler want to get together, and they want us to make a decision quickly. Will you come on as an advisor for us?"

Girsky agreed and promptly reached out to Fritz Henderson, Tom LaSorda, and executives at Cerberus and JPMorgan Chase. Girsky thought he knew GM as well anyone on the outside. But he was shocked at how tenuous its financial condition had become. The company was headed for insolvency in a matter of weeks, and a merger wouldn't stop that from happening. Once he got a handle on it, he called Gettelfinger on Election Day from his home in Westchester County, north of New York.

"Ron, you don't need to worry about a GM-Chrysler merger," Girsky said. "You have to worry about something bigger. Your biggest const.i.tuency is going out of business."

Alan Mulally wasn't entirely sure why he was sitting next to Rick Wagoner, Bob Nardelli, and Ron Gettelfinger in Nancy Pelosi's office on November 6. But he knew he had to be there.

Wagoner had already been to Washington to ask for aid, and Mulally was aware that the energy loans could be a component of an a.s.sistance package for Detroit. But Mulally didn't have a clue about what would happen next. "I was generally aware that Rick was talking to the Bush administration," he said. "We were all in on the conversation now. But it was all being led by GM being clearer that they were moving toward a crisis."

The GM-Chrysler merger talks died in Pelosi's office when Gettelfinger started protesting the jobs at risk in such a deal. How could Washington give taxpayer dollars to two messed-up car companies that were cutting tens of thousands of American jobs?

The meeting also raised problems about the energy loans. Pelosi was not at all interested in redirecting that money away from fuel-efficient cars to pump up the balance sheet at GM. She would rather challenge the White House to give the industry money under the TARP legislation. The House Speaker also said if the government gave the industry any a.s.sistance, it would come with strings attached, such as limits on executive pay, strict oversight rules, and possibly a requirement to give stock to the government to secure the loans. A subsequent meeting with Senate majority leader Harry Reid, a Democrat from Nevada, underscored the message. If Detroit wanted help, it had better be prepared to have Washington intimately involved in its affairs going forward.

Mulally soaked it all in. His instincts had been right when Wagoner came to the Gla.s.s House. GM was on the edge, and that was dangerous. If General Motors collapsed, Ford could be in serious trouble very quickly. Mulally got queasy just thinking about it. Ford didn't need government money. But it could not afford to stand by while GM crashed. He had come too far to let its mistakes derail his plan.

The automakers' third-quarter results came out the day after the meeting with Pelosi. GM had lost $2.5 billion and consumed almost $7 billion in cash. Ford's numbers were just as bad, but it still had substantial cash reserves and a valuable line of credit to tap into. GM, on the other hand, was balancing on a tightrope over shark-infested waters. The merger talks had been suspended. "It's fair to say that liquidity is the top priority for the company," Wagoner said in a ma.s.sive understatement. But GM would not under any circ.u.mstances file for bankruptcy, he said. That would scare off car buyers and make things worse. "We have no plans for anything other than running our business," he said.

Bankruptcy was Wagoner's blind spot. He always cited studies that said consumers would not purchase a new vehicle from a bankrupt carmaker. But the theory had never been tested. The same day that GM and Ford reported earnings, President-elect Obama held the first meeting of his economic transition team at the Hilton Hotel in Chicago. Jennifer Granholm had been chosen as one of its members. The Michigan governor's role was to promote manufacturing, as well as to safeguard the interests of midwestern autoworkers. There were some heavy-duty policy makers in the room: former Treasury secretary Robert Rubin, former Federal Reserve chairman Paul Volcker, and Lawrence Summers, who was in line to become the president's chief economic advisor. As the discussion about the auto industry went around the table, some members of the transition team uttered the phrase "quick-rinse bankruptcy" in reference to GM.

"Bankruptcy is not an option!" Granholm said loudly. "We cannot allow them to go bankrupt. No one will buy cars from a bankrupt company. There are studies that show this."

She noticed that no one else in the room backed her up.

On November 10, Obama met with George W. Bush in the White House. At one point, their historic conversation turned to the troubles in Detroit. The president-elect asked for some a.s.surance from Bush that he would not allow the industry to collapse before Obama took office in January. "I told Barack Obama that I wouldn't let the automakers fail," Bush said in his memoir. "I won't dump this mess on him."

The next day, the House and Senate Democrats crafted a seven-page bill to make the Big Three eligible for $25 billion in TARP loans. But the bill immediately met resistance from the White House and Republicans in Congress. Some lawmakers suggested that the auto CEOs should resign in exchange for aid. All the att.i.tudes and opinions about Detroit were seeping into the discussion: poor management, crummy cars, overpaid workers, too many gas-guzzling trucks. A New York Times columnist, Thomas Friedman, asked, "How could these companies be so bad for so long?" The Wall Street Journal weighed in with a banner headline: "Just Say No to Detroit."

In the Motor City, the entire community felt like it was being held up to ridicule and scorn. "I never knew," wrote Detroit Free Press columnist Susan Tompor, "that Detroit was a dirty word."

Meanwhile, GM was edging closer to disaster. It said in a federal filing that "its ability to continue as a going concern" was in doubt, and that it could run out of cash by January. In that event, the company would be unable to pay suppliers and employees, meet loan covenants, or cover its health care obligations. And without government a.s.sistance, there was no way to prevent it. "We do not have other traditional sources of liquidity available to fund these obligations," the company said.

Something had to give, and it would begin in the hearing rooms on Capitol Hill.

The sun was rising on November 18 as Rick Wagoner and Steve Harris walked across the tarmac at the Detroit airport to board a Gulfstream IV jet. Once they were on the plane, they settled into deep leather seats and within minutes were en route to Washington, D.C.

Harris had been at Wagoner's side for years as GM's vice president of communications. Now he would help his boss prepare for the biggest public appearance of his thirty-year career-testifying before the Senate Committee on Banking, Housing, and Urban Affairs. Alan Mulally, Bob Nardelli, and Ron Gettelfinger were on their way to the same hearing, but separately. The first time they would see each other that day was when they sat down side by side in Room 538 of the Dirksen Senate Office Building.

When the GM plane touched down, Wagoner and Harris were driven to the company's Washington offices. The plan was to hold a "mock hearing" over coffee and sandwiches, and to prepare Wagoner for questions from the Senate panel. His tutors were Ken Cole, GM's chief lobbyist, and Stuart Eizenstat, an attorney who had served as domestic policy advisor to President Carter when Chrysler received federal loan guarantees from Congress back in 1979.

Cole started off. The mood about bailouts was nasty, he said. Virtually every member of Congress had been skewered back home by const.i.tuents angry about the TARP loans for the banks and the insurance giant AIG. "This is not going to be a pleasant process, Rick," Cole warned. "It's going to be more like theater, a necessary pain you're going to have to get through. They're going to be taking free shots at you."

Then it was Eizenstat's turn. He didn't know Wagoner, but he knew that GM had lots of enemies-Republicans who were anti-union, southerners with Asian car plants in their states, liberals who despised SUVs. The list went on and on. He feared that Wagoner was going to be bombarded with animosity. Eizenstat wanted Wagoner to relax and show the human side of GM. "Rick, I think you've got to just speak from the heart," he said.

Harris had to jump in here. Wagoner never spoke extemporaneously. He followed scripts religiously. More important, Harris was sure there would be questions about money. Wagoner had to be prepared to tell the Senate panel how much cash GM would need to survive. "Rick, do you have a specific number?" he said. "I mean, how much do you need?"

Wagoner seemed hesitant. "Maybe a range," he said.

Another GM staffer, Greg Martin, knew this was a vital point. "They are going to want to know what the number is," he said.

Cole emphasized that the GM chief executive had to hold his own when the tough questions came. "Explain to us why you need this money," he said. "How you got into this mess . . . how you're going to get out of it . . . how you're going to pay us back."

The session went on for ninety minutes. At one point, Wagoner asked if a conference call had been set up with Mulally and Nardelli. When the three chief executives got on the phone, Wagoner asked them how long their statements were and whether they were bringing doc.u.ments. Other than that, there wasn't much discussion and no coordination.

Harris had a sinking feeling. Cole wanted Wagoner to be ready for battle. Eizenstat thought he should be emotional. n.o.body seemed to know exactly what GM was asking for. And Mulally and Nardelli had their own agendas. "This is a s.h.i.tty game plan," Harris said to himself.

Just before 3:00 P.M. Wagoner walked into the Senate hearing room, which was jammed with reporters, legislative staffers, TV crews, and congressional aides. The room was set up like a courtroom, with the senators at one end and the witness table facing them. Wagoner sat beside Nardelli, who was next to Mulally, who was next to Gettelfinger. Then the gavel came down, and Senator Christopher Dodd, Democrat from Connecticut, brought the hearing to order. He looked out at the packed room and wondered aloud if a football stadium might have been a better venue. "If I had known the interest," he said, "I would have held this at RFK."

Each senator made an opening statement. Some were brief, some long. And after twenty minutes, Wagoner started feeling uncomfortable. The questioning hadn't even started yet, and he had to use the bathroom. All that coffee was a big mistake, he thought. This is going to be rough.

Chapter Twenty-Eight.

Why aren't you making money?"

Richard Shelby, a Republican senator from Alabama, was making Rick Wagoner squirm. Shelby had already painted Detroit with a broad, brutal brush-the Big Three were failures, they needed life support, they were begging for help after s.c.r.e.w.i.n.g up their businesses for years. Now he was breaking down the chief executive of General Motors with the bluntest questions possible.

"Because, well, I think two reasons," Wagoner said. "Our . . . our financial results reflected quite significant costs to restructure and . . . and that . . . that has cost . . . cost cash for sure. But hopefully the amount we have going forward, we won't have to decrease our capacity another 30 or 40 percent."

"What have you spent on restructuring, sir?" Shelby asked in a slow southern drawl.

"Sorry?" said Wagoner.

"What have you spent in the last five years on restructuring?" said Shelby. "You spent billions of dollars."

"We have," Wagoner said. "We've spent a lot. I can't give you the exact number, but I can-"

Shelby cut him off. "You can't give us a figure."

Wagoner tried to rally, but it wasn't working. When he lapsed into corporate-speak, he seemed evasive. And when he spoke plainly, it just sounded lame.

Shelby asked why the American people should expect success from Detroit after all its troubles, and Wagoner wasn't able to hit the pitch. "Well, I mean I would say, Senator Shelby, if you look at the actions we've taken this . . . this is hard stuff, and it's required a lot of . . . a lot of good cooperation with the unions," he said.

It got worse and worse. All three CEOs and Ron Gettelfinger tried to get the senators to understand that what was happening in the auto industry was a national calamity. Wagoner's opening statement had sounded scary. "This is all about a lot more than just Detroit," he said. "It's about saving the U.S. economy from a catastrophic collapse." Gettelfinger chimed in with his own grim prognosis. "Without question, in our mind, it is dire, it is critical, it is a crisis," he said. Bob Nardelli wasted no time casting blame elsewhere. "We're asking for a.s.sistance for one reason," he said. "To address the devastating automotive industry recession caused by our nation's financial meltdown." And Alan Mulally just seemed out of step, reciting facts about Ford's turnaround while making a formal speech about these trying times. "We believe we must join our compet.i.tors today in asking for your support," he said, "to gain access to an industry bridge loan that would help us navigate through this difficult economic crisis."

What the executives didn't appreciate was that the twenty-one senators on the panel-eleven Democrats and ten Republicans-were already well aware of how big the auto industry was, how many jobs it represented, and how vital it was to the nation's economy. That was not the issue. The senators were only interested in cause and effect: If the taxpayers loaned billions to these companies, what would they do with the money? How would the industry fix itself? Why should America trust Detroit now?

It was a bipartisan humbling, as senators from both parties took turns dressing down the four witnesses. Bob Corker, a Republican from Tennessee, bore in on which company would get what: "Of the $25 billion that you've asked for, how much of it have you guys decided is going to GM?"

"We felt that, given our proportionate market share of that-" Wagoner began.

"Well, just give me the number," Corker said.

Wagoner tried to answer. "Which would be in the $10 billion to $12 billion that, that we would have a-"

Corker cut him off. "And how much is Ford getting in this three-way pact?" he asked.

"Seven billion to $8 billion," Mulally said.

"Seven billion to $8 billion? So it's $7 billion to $8 billion, and $10 billion to $12 billion. Those are the numbers?" Corker said in an exasperated tone.

The lack of preparation and coordination among the four was obvious. But more startling was the absence of composure and confidence. Wagoner had led the industry to Washington without a coherent plan or a polished script. The hemming and hawing was bad enough, but the obtuse responses and seat-of-the-pants calculations just fed the stereotype of Detroit as a circus wagon of b.u.mbling fools. Of course it wasn't true. These were extremely smart executives known for precision and decision making that affected hundreds of thousands of autoworkers. But that was hardly coming through.

When Wagoner said GM had spent $103 billion on health care and pensions over the past fifteen years, he got incredulous looks instead of sympathy. He was a t.i.tan of industry back home. But in the halls of Congress, he was just another corporate suit asking for a bailout. n.o.body cared about the Volt-not when GM was burning through $2 billion in cash a month and asking for $12 billion from the U.S. Treasury.

"I'm inclined to be helpful," said Robert Menendez, a Democrat from New Jersey. "But I've got to have a fundamental understanding of why this number wasn't just picked out of the sky."

After three hours, Christopher Dodd, the panel's chairman, mercifully drew the hearing to a close. He knew this performance would not sway enough votes in the Senate to give Detroit anything. "I would love to tell you that in the next couple of days this is going to happen," Dodd said. "I don't think it is. You heard a lot of negative reaction to any ideas [about] providing help at this table."

As soon as the hearing ended, Wagoner jumped up and hustled toward the door. A GM security officer had been blocking the bathroom down the hall so Wagoner could get in there first. When he came out, Wagoner, Steve Harris, and the GM guys dashed into waiting cars and headed back to the company office.

On the way there, Harris tried to process how badly it had gone. "This was a Rick I had never seen before," he said later. "The stuttering, the stammering . . . he was so taken off guard." Wagoner seemed more himself when it was over. He did several TV interviews and went to dinner with Ken Cole and some members of Congress. At no point did he call Mulally or Nardelli to talk about the next day's House hearing.

The Senate treatment was gentle compared to the reception from the House Financial Services Committee on Wednesday morning, November 19.

Steve Harris braced for the worst when he learned that ABC News had filmed the GM, Ford, and Chrysler corporate jets on the ground in D.C. Flying private planes to Washington to ask for billions of taxpayer dollars would go down in the hall of fame of public relations disasters. Representative Gary Ackerman, a Democrat from New York, seized on the imagery. "There's a delicious irony in seeing private luxury jets flying into D.C. and people coming off of them with tin cups in their hands," Ackerman said. "It's almost like seeing guys show up at the soup kitchen in high hat and tuxedo. Couldn't you have downgraded to first cla.s.s or something, or jet-pooled?"

It went downhill from there. Peter Roskam, a Republican from Illinois, homed in on executive compensation and asked each CEO if he would work for $1 a year in exchange for government loans.

"I don't have a position on that today," Wagoner said.

Mulally, who made $21 million in salary and bonuses in 2007, wasn't going there at all. "I understand the point of the symbol," he said. "But I think I'm okay where I am."

The hearing was tense, long, and oppressive for the four men at the witness table. Everything about Detroit was criticized-moving jobs to Mexico and China, paying union workers too much money, flying around in fancy jets, building big trucks that sucked up gas, acting as if autoworkers were somehow better than other people.

"The vast majority of my const.i.tuents are not making anywhere near what GM, Ford, and Chrysler are paying their employees," said Republican member Spencer Bachus of Alabama. The pent-up hostility was amazing. "My const.i.tuents do not trust you," declared Michael Capuano, a Ma.s.sachusetts Democrat.

There was an alarming absence of goodwill or support, except from the midwestern members with auto plants in their districts. And the give-and-take was abysmal, all captured live on cable TV. Even on the second day, Wagoner still couldn't be specific about how much money GM needed. "It's going to depend," he said. "The amount is going to be significant."

By the end of the hearing, the legislation to loan TARP money to the Big Three was dead. The Democratic and Republican leaderships had both given up. "We have to face reality," said Senate majority leader Harry Reid. The votes simply weren't there. House Speaker Nancy Pelosi said the CEOs had failed badly to make their case. "Until they show us the plan, we cannot show them the money," she said. Congress was adjourning. The ball was back in the White House's court. If anyone was going to save Detroit now, it would have to be George W. Bush.

The Big Three were going home empty-handed, without a penny. Wagoner seemed drained and shaky afterward. "This is all part of what we signed up for when we made this request," he said. "I still remain hopeful."

Mulally was just relieved to get out of the hearing room. "My G.o.d," he said. "I never want to go through that again."

Gettelfinger, who had watched in amus.e.m.e.nt as the CEOs were lambasted for corporate jets and fat paychecks, had the best line on his way out the door. "I have a plane to catch," he said.

The feeling in Detroit was like horrible indigestion, a combination of humiliation, anxiety, and anger. The American automakers were part whipping boy, part laughingstock. Sat.u.r.day Night Live skewered the Big Three bosses in a skit about how their lousy cars broke down on the way to Washington. Editorial writers and conservative talk shows urged Congress to let the companies die a natural death. The New York Post ill.u.s.trated its coverage of the hearings with a photo of the Three Stooges and a collapsed jalopy. A Wall Street Journal op-ed piece suggested the U.S. government broker a sale of Detroit's a.s.sets to healthy, foreign carmakers such as Toyota or Volkswagen.

Bob Lutz was so mad he could hardly see straight. How could Wagoner have let those politicians bully him like that? "The performance of the three CEOs led by Rick was disgraceful," he said. "It convinced the American public that these guys are idiots. They can't even come up with an argument." He was livid that he'd been instructed not to talk about it in public. "I've been muzzled," he moaned. "If I was testifying, I wouldn't take any of that s.h.i.t. I'm going to tell my story. It can't possibly alienate them any more than they already are."

Fritz Henderson felt he had witnessed a grisly accident and was now in the wreckage. "It was a mess, it was a disaster," he said. "It was pretty much what I thought it would be."

Steve Feinberg watched the hearings by himself in his office in New York. None of the Cerberus executives wanted to be with him. "I watched it alone," he said, "in utter horror."

At Ford, the executives, engineers, and secretaries huddled around televisions for every minute of the proceedings, cursing and yelling at various members of Congress as they ran roughshod over Mulally and the rest of them. "We were all mad," said Mark Fields. "It was appalling. We're paying these people to represent us?"

At first, Jim Farley was shocked at the venom directed at Detroit. "Why do these people hate us so much?" he said. Then it dawned on him that these emotions were important and were something that Ford could capitalize on. "The luckiest thing that can happen to us is if the country starts debating about our industry," he said. "It's cool, because we can say we're different than the other two."

Bill Ford got a frantic phone call right after the hearings from Jennifer Granholm, who was watching it in her hotel room in Tel Aviv while on a trade mission to Israel. "Bill, you have got to go down there and be the face of the industry!" she cried. "You have to get out there and tell Congress and the world that we are not afraid of being green, that we know what's important."

Bill had already been besieged with phone calls from Ford family members and suppliers and dealers, begging him to attend the second hearing in Mulally's place. He was as offended as anyone by the reception Ford had received in Washington. But he could not overstep Mulally. He was the CEO-for better or worse. "I couldn't do that to Alan," he said to Granholm. "It's his job, and I can't take it from him."

Nancy Pelosi held out a slim hope of financial aid for the Big Three the day after the hearings. If Detroit could come up with comprehensive plans to fix their businesses by early December, the Democrats would give the legislation one more shot. "We want them to get their act together," said Senator Reid. "The key here is accountability and viability."

Wagoner seized on the offer like a drowning man clutching a life preserver, even though if a new bill was pa.s.sed, the money might not be there in time to save GM. "It's something that would be nerve-racking for us," he said back in Detroit. "But it's the reality we face."

Meanwhile, the GM board finally decided it was willing to consider "all options"-including bankruptcy.