But a report issued July 19 by the Office of the Special Inspector General for the Troubled Asset Relief Program came to a different conclusion.
That report found that the automakers originally proposed modest dealership cuts. The task force then pushed GM and Chrysler to cut more dealerships and accelerate the pace of terminations. The report also concluded that the rush to use Chapter 11 of the U.S. Bankruptcy Code to close 2,200 dealerships made little or no sense.
Rattner is promoting his new book, Overhaul: An Insider's Account of the Obama Administration's Emergency Rescue of the Auto Industry.
He said he expected dealer blowback from the cuts, but not the congressional intervention that followed. That intervention culminated in federal dealer arbitration legislation signed by President Barack Obama in December 2009.
Said Rattner: "What shocked me is that we're in a country with almost 10 percent unemployed, with huge budget deficits and a wealth of problems, and of all the things that Congress decides to spend time on, they decide to spend time on the dealers. It was really disappointing to me when Congress passed that legislation."
He added: "To the extent that these two companies are forced to keep dealers that don't make economic sense to the company, all it will do is reduce the value of the automakers themselves. Essentially, Congress is taking money out of the taxpayers' pockets and giving it to the dealers."
As part of its spring 2009 bankruptcy, Chrysler decided to cut 789 dealerships, or about a quarter of its 3,200 dealerships at the time. Just 32 of 108 dealers who filed for arbitration to be restored won their cases this year.
GM planned to cut its more than 6,000 dealerships to 3,600. But with reinstatements and arbitration wins by dealers, GM wound up with 4,500.
Rattner said it was clear from talking with experts and studying Toyota and Honda dealership numbers that GM and Chrysler needed to cut dealerships. He said the domestic manufacturers had too many marginal dealerships that ate marketing budget and couldn't offer modern, attractive stores.