July 17, 2019

Coming Face to Face with Lee Iacocca

by Thomas J. Healey

As Assistant Secretary of the Treasury for Domestic Finance under President Reagan for two years, I occasionally collided with fascinating, powerful and, at times, overbearing people. One of the most memorable was Lee Iacocca, who died on July 2. He was an irrepressible leader and tireless pitchman for Chrysler Corporation who engineered the automaker’s historic financial turnaround in the 1980s and helped build the modern-day auto industry.

Well before I arrived at Treasury, a bailout was arranged to rescue the teetering auto company, among Detroit’s smallest at the time. As part of the government’s lifeline, warrants to purchase stock in Chrysler were given to the taxpayers via the Treasury. After Chrysler had recovered and paid back early – to widespread applause – its $1.5 billion debt to the Treasury, what remained were the warrants. Because of Chrysler’s unexpected success, those warrants were quite valuable, and I started to organize a process to sell them so that taxpayers would get what they were entitled to.

Iacocca, however, had other plans. He came to Washington to see Treasury Secretary Don Regan, my immediate boss, and pressed his case that the government shouldn’t benefit from the enhanced value of the warrants since it was really the workers and the stockholders of Chrysler who put the company back on the map and made it profitable again. Accordingly, he wanted Treasury to give the warrants back to Chrysler. Regan pretty much ducked the issue by saying, “Gee, Lee, you need to talk to Tom Healey because he’s in charge of it.”

With that, Iacocca went flying down the hall to my office, sat down, and made an impassioned plea for a return of the outstanding warrants. He was, I clearly recall, a very persuasive salesman, foreshadowing the role he would soon play for Chrysler as his larger-than-life presence filled TV screens across America with the pitch, “If you can find a better car, buy it!” After hearing him out in my office, I said, “You know, that’s a very effective argument, but I believe the warrants belong to the taxpayers, and it’s my job to maximize their value for the public.” Iacocca was hearing none of it. He got very angry and lectured me, “The president is a good friend of mine, and I’m going to see him about this.”

I was well aware that President Reagan and Iacocca were close friends. So I wasn’t at all surprised when a week later I got a call from the White House asking me come over for a meeting. When I arrived, I was ushered into the Cabinet Room, and across the table from where I sat was the President and, to his right, Lee Iacocca. The President said warmly, “Welcome, Tom,” but to be honest, I didn’t know him that well. I had worked much more closely with then Vice President George H.W. Bush because of his interest in financial regulatory reform. But the President was always very gracious whenever we did interact. On this occasion, he turned to Iacocca and said, “Lee, you have a strong case to make. Please repeat it for us.” And Iacocca launched into a very good, ten-minute argument on why the Treasury shouldn’t be the beneficiary of the warrants, and Chrysler should.

When he had finished, the President turned to me and asked for my thoughts. “Quite simply, Mr. President,” I said, “As you know, I come from Wall Street where it’s an unwritten rule that when you make a deal, you keep your word.” I went on to make the case that Chrysler agreed to give these warrants to the taxpayers of the United States, who provided the financing, and as the fiduciary agent on behalf of taxpayers at the Treasury Department I believed it was my duty to maximize the value of the warrants on their behalf.

At this point, the President turned to Iacocca and said in a genial voice, “Well, Lee, you know that Tom’s right.” Looking back, that moment encapsulated for me why working for President Reagan was such a wonderful experience. He had a clear, straightforward vision of the world and of right and wrong. Sometimes it might have seemed overly simplistic, but it made working for him easy and rewarding. You could be confident that if you took a position on an issue you knew was right, he had your back.

My persistence on the Chrysler warrants was hardly the end of the matter for the feisty and headstrong Iacocca, however. After returning to my office later that day, I got a call from Don Regan’s secretary asking me to come over immediately. Iacocca was at the airport on his way back to Detroit and, still seething over the confrontation, had called the Treasury Secretary to vent his spleen about me. I’ll never forget the scene: Regan had Iacocca on his speakerphone and without revealing my presence let me listen to the Chrysler chair talk a colorful blue streak, cursing and swearing at the “young jerk” (me) who worked for him and who had the audacity to tell the President of the United States that the warrants belonged to the taxpayers.

It was both an amusing and instructive lesson for me as a newcomer to Washington government and politics. Now, upon the death of Iacocca at age 94, it’s also a fascinating window on the persona of a man who in the not-so-distant past won widespread applause as the country’s most famous CEO – and car salesman.

Thomas J. Healey was Assistant Secretary of the Treasury under President Reagan. He is now a Senior Fellow at the Mossavar-Rahmani Center for Business and Government at Harvard Kennedy School.