"I knew I was in really deep trouble." That was Lee Iacocca's words describing how he found Chrysler upon being hired as its president in November 1978, following his ejection from Ford Motor Co. Brought in by then-chairman John Riccardo, what Iacocca discovered was a company on the express road to collapse; it was building too many cars that customers didn't want, then paying to stockpile them followed by hefty incentives to dealers and customers. By July 1979, Riccardo and Iacocca were forced to reveal the depth of the despair; Chrysler was on track to lose more than $1 billion that year, and would go bankrupt without government help. On this day in 1979, Iacocca succeeded Riccardo as chairman — in part because the government pushed for him — and became the public face of the company as he sought a $1.5 billion rescue.
In their 1985 book "New Deals: The Chrysler Revival and the American System," future cabinet member Robert Reich and John Donahue described how Carter administration officials wanted to make sure Chrysler didn't see the government as easy pickings, with Treasury Secretary G. William Miller forcing Iacocca to file monthly reports like some junior vice-president:
''I told him, 'One thing I'll do that will end up as a benefit to you is make you hate the Government so badly that the idea of getting them off your back will motivate you to make this a success.'"
Thanks to Iacocca and hits like the K-Car and minivan, Chrysler would repay its government loan seven years early and in full. Three decades later, General Motors executives would learn the same lesson the government taught Iacocca — that agitation with the government's lingering controls such as pay limits and the label "Government Motors" is a feature of a bailout, not a bug.