It was Thanksgiving Day 2008. At his Lyme, Connecticut, home, veteran investment banker Todd Snyder and his wife, Phoebe, were getting ready to preside over a dinner for their close-knit extended family when the phone rang. Secretary of Commerce Carlos Gutierrez was on the line with an extra reason for Snyder to give thanks that day.
A top U.S.-based restructuring specialist at Rothschild, Snyder had entered the London-based investment bank in a competition to advise the government on how to handle America’s ailing auto industry. Gutierrez was calling to say that Rothschild would be sole adviser to the government on the biggest industrial rescue in decades.
Thus began the most challenging assignment of the 47-year-old Snyder’s career. For nearly a year he would sleep with his Blackberry under his pillow. Working first with Gutierrez and then with Treasury secretary Henry (Hank) Paulson Jr., the banker helped put in place $13.4 billion in loans for General Motors Corp. and Chrysler from the Troubled Asset Relief Program. The TARP money bought time to deal with the toughest question of all: Was it even possible to restructure the two automakers so they could return to profitability?
Snyder saw early on that GM would have to declare bankruptcy — despite intense initial opposition from the carmaker’s management — to pressure the company, its union and its creditors to accept the new reality. “We were trying to figure out how the administration could stabilize the industry and preserve as many jobs as possible but, at the same time, make a prudent and recoverable investment of taxpayer money,” explains Snyder.
Of all the strenuous persuading he had to do in the GM rescue, Snyder says the toughest talks revolved around the company’s Opel/Vauxhall operation in Europe. He recalls a meeting one night in May on the top floor of Germany’s Chancellery building along with Jens Weidmann, economic adviser to German Chancellor Angela Merkel, and GM representative John Smith, with then–GM CEO Fritz Henderson, the U.S. Auto Task Force’s Ronald Bloom and Magna International CEO Frank Stronach participating via conference call. Magna, a Canadian auto parts supplier, was prepared to purchase a major share of Opel/Vauxhall along with Russia’s Sberbank, provided Berlin would help.
After much animated haggling, at 3:00 a.m. the group agreed on a one-page memorandum of understanding: The Magna-Sberbank consortium would acquire 55 percent of the automaker, GM would retain 35 percent, and Opel/Vauxhall employees would own the remaining 10 percent. Critically, the German government agreed to provide €1.5 billion in bridge financing. Ironically, after all this trouble, GM’s board decided in November to hold on to Opel/Vauxhall because of the automaker’s own improved prospects.
Ostensibly, Snyder’s role in the GM rescue is over. But if the automaker slips back into a near-death state, he might just get a phone call.
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