In February of 2009, Steven Rattner was selected by the Obama Administration to oversee the federal bailout of General Motors and Chrysler. It was not a popular choice. Rattner was a Wall Street financier with no expertise in the automobile business. The head of the United Auto Workers, the chairman of Ford, and a number of congressmen from Michigan all complained that the White House should have hired someone with an industry background. But, as Rattner makes clear in “Overhaul” (Houghton Mifflin Harcourt; $27), his account of the experience, the critics misunderstood his role. “This was not a managerial job,” he writes. “It was a restructuring and private-equity assignment,” and private equity was Rattner’s forte. He made his living buying troubled and mismanaged companies, turning them around, and then taking them public again—and that’s exactly what the Obama Administration wanted him to do in Detroit. “Overhaul” is not a Washington memoir, even though it is set in Washington, and it involves one of the most deeply politicized issues in recent memory. It is a Wall Street memoir, a book about one of the biggest private-equity deals in history. The result is fascinating—although perhaps not entirely in the ways that its author intended.

Steven Rattner’s vision for G.M. started with new management. Photograph by Michael Kupperman

In the past twenty-five years, private equity has risen from obscurity to become one of the most powerful forces in the American economy. Private-equity firms collectively make hundreds of billions of dollars in investments every year. The industry’s most prominent player, K.K.R., was by 2007 the fourth-largest employer in the world. Traditional investors, like Warren Buffett, scout for companies that the market has overlooked or undervalued, and buy stakes in them with an eye to the long term. Private-equity investors are activists. They acquire firms outright. Then they bring in their own specialists to “fix” the company. Typically, a private-equity firm plans to take its acquisition public again in three to five years, and the theory behind the enterprise is that buying, fixing, and reselling companies can be far more profitable than Buffett-style “buy and hold” investing. In one of the deals that put private equity on the map, Forstmann Little acquired Dr Pepper for six hundred and fifty million dollars in 1984, cut costs and spun off the company’s less glamorous divisions—such as its textile business and its Canada Dry operation—and then took it public again within three years, at a reported gain to investors of more than eight hundred per cent. An investor like Warren Buffett has to think that he is smarter than the market. Private-equity managers aim higher. They see themselves as smarter than the managers of the companies they are buying. It is not a field for someone with any obvious deficits in self-confidence, and Rattner, a cofounder of the Quadrangle Group, was long considered one of the most intellectually able men on Wall Street.

“Team Auto,” as Rattner refers to the group that he assembled to help supervise the bailout, consisted of about a dozen people, some in their twenties and early thirties. They started work in March of 2009. One of the first major issues was whether to save Chrysler. To settle the question, Rattner tells us, Team Auto gathered in the office of Larry Summers, the President’s chief economic adviser. The case against Chrysler was that most of the jobs lost by letting the company fail would eventually be offset by gains made by Ford and General Motors, as those companies picked up Chrysler’s old customers. Letting Chrysler fail would make Ford and G.M. stronger. But did the team really want several hundred thousand jobs to disappear—even if the losses were short-term—in the middle of a severe recession? Chrysler’s failure would also mean that Michigan’s unemployment-insurance fund, for starters, would need to be bailed out. One of Rattner’s team members made a counter-argument: “Given the uncertainty in our economy, it was better to invest $6 billion for a meaningful chance that Chrysler would survive than to invest several billion dollars in its funeral.” Summers put the matter to a vote. The tally was 4-3 in favor of letting Chrysler die. When the vote came to Rattner, he said that it should live. Summers agreed. Chrysler lived.

Next up was General Motors. Team Auto’s idea was to bypass the traditional bankruptcy procedure, in which the entire company would be restructured through a protracted process of negotiation with creditors. Instead, the company would be divided into two. “Old G.M.” would contain the unwanted factories and debts and unused assets—all of which would be wound down and sold over time. The best parts of the automaker would be transferred to “New G.M.,” an entity funded and owned by the American taxpayer. The task of carving out the new entity was enormously complex, and involved rewriting countless contracts with unions, suppliers, and creditors. To minimize disruption to the company’s operations, Team Auto worked with lightning speed. Rattner would rise at five-thirty, be on the treadmill at the gym by six, and in the office by seven. Lunch was a tuna-fish sandwich at his desk. He wouldn’t be back at his rented condo in Foggy Bottom until eight or nine, catching up on the day’s e-mails before heading to bed. One of Rattner’s team members spent his first month on a friend’s couch in Virginia. Another worked around the clock during the week, and then made the five-hour drive every weekend to see his family, in Pittsburgh. None had any time for ceremony. At one point, two members of Team Auto, Brian Osias and Clay Calhoon, called for a sitdown with senior Chrysler executives at eleven on a Saturday morning. “The executives were almost all middle-aged industry veterans,” Rattner recounts. “Osias was thirty-two years old and Calhoon was twenty-six, and both looked younger than their years.” Calhoon announced to the room, “We’re going to sit at this table until we’re done.” They were there until 2 A.M. on Sunday. On another occasion, the Team Auto member Harry Wilson had a meeting with senior G.M. officials, who arrived with a hundred-and-fifty-page document. Rattner writes, “ ‘What’s this?’ Harry asked. ‘The agenda,’ came back the reply. Harry, almost laughing, said, ‘You can’t run a meeting with a 150-page agenda!’ ” He substituted his own. Rattner took the job as Auto Czar in February. He was back home in New York, mission accomplished, by July.

Rattner has since run into some trouble. Recently, an S.E.C. investigation into a “pay to play” scandal involving the New York state pension fund led to sanctions against Rattner, who has reportedly accepted a two-year ban from the securities business. But there is no question that the auto bailout represents one of the signature accomplishments both of his career and of the Obama Administration. In August, G.M. posted its second quarterly profit in a row, its best result in three years. Chrysler, for its part, is now safely in the hands of Fiat, at least for the time being. Two years ago, when the heads of G.M., Ford, and Chrysler came to the Senate in the hope of gaining relief, no one could have imagined such a favorable outcome. At the time, the Center for Automotive Research estimated that the collapse of the Big Three would result in as many as three million lost jobs. So soon after the Wall Street rescue, there seemed little public or political appetite for another taxpayer bailout. The reaction of Richard Shelby, the ranking Republican on the Senate finance committee, was typical. “I don’t believe they’ve got good management,” he said of G.M. “They don’t innovate. They are a dinosaur. . . . I don’t believe the twenty-five billion dollars they’re talking about will make them survive. It’s just postponing the inevitable.” The reason to bring in a private-equity expert is that he would never be so defeatist. To someone like Rattner, there is nothing wrong with giving a dinosaur money if you think you can fix the dinosaur. One might even say that the private-equity investor prefers the dinosaur, because dinosaurs are cheap, which increases the potential profit at the end. And then the world will look at him with awe and say, “Wow, you turned around a dinosaur”—even if, on closer examination, that wasn’t what happened at all.

Steven Rattner never took to Rick Wagoner, the C.E.O. of General Motors. The problem started with Wagoner’s testimony before the Senate, on the day in November of 2008 when he and his fellow auto C.E.O.s flew their private jets down to Washington to ask for taxpayers’ money.

“I do not agree with those who say we are not doing enough to position G.M. for success,” Wagoner said, in his testimony. “What exposes us to failure now is not our product lineup, is not our business plan, is not our employees and their willingness to work hard, is not our long-term strategy. What exposes us to failure now was the global financial crisis, which has severely restricted credit availability and reduced industry sales to the lowest per-capita level since World War II.”

To Rattner, that comment summed up everything that was wrong with G.M. Its leaders were arrogant and out of touch. Their sales forecasts were bizarrely optimistic. Members of Team Auto had “surreal” conversations with the company’s C.F.O., Ray Young. Rattner looked in vain for a sense of urgency. In one of G.M.’s endless PowerPoint presentations, he saw a product-price chart that included no comparison data for G.M.’s competitors. “Why would G.M. present the data in such a useless manner?” he wonders. “Whom were they trying to fool?”

The culprit in all this, Rattner believed, was Wagoner. When the two men met, Rattner was struck by Wagoner’s combination of “amiability and remoteness.” The previous day, Team Auto had met with the Chrysler C.E.O., Robert Nardelli, and his engaged and direct manner had impressed Rattner. But Wagoner “gave listeners very little to grab onto.” Rattner writes:

He made a few opening comments and then turned over the floor to his lieutenants, occasionally interjecting a remark here and there but mostly presiding. While I respected the collegiality this implied, it left nearly everyone with the impression that he held himself aloof. If Rick had taken a more central role it would probably not have affected our assessment of the company, but might have affected our judgment of him. Wagoner, in Rattner’s judgment, simply didn’t have what it would take: