Auto negotiator faces cloud in past

NEW YORK (AP) — Steven Rattner had but one assignment when the president brought him to Washington in February. But it was a big one: Save the American auto industry.

The job has consumed the 56-year-old investment banker. Working long days out of a basement office in the Treasury, the task force Rattner leads with former steelworkers official Ron Bloom has orchestrated near-complete overhauls of two of the nation’s most storied companies, General Motors Corp. and Chrysler LLC.

The stakes are high, but so is the potential prize. Along with potentially saving thousands of jobs, Rattner, whose career already includes star turns as a New York Times reporter, Wall Street brainiac and Democratic Party fundraiser, could be in line for a permanent place in the administration and maybe in U.S. history.

And yet, his big moment has occurred under a cloud. Back home in New York, Rattner has emerged as a player in an influence-peddling scandal involving a giant state pension fund that provides retirement benefits for more than 1 million government employees.

The case has already led to criminal charges against six people, including the retirement system’s former top investment official.

Authorities say Rattner is unlikely to face charges, but the probe has raised unanswered questions. Among them: Did the banker cross an ethical or legal line in the winter of 2004-05 as he tried to persuade state officials to make a major investment with his private equity firm?

The influence-peddling scandal is an unexpected twist in the story of one of New York’s most influential people.

After graduating from Brown in 1974, Rattner began a career in journalism close to the top, as an assistant to New York Times columnist James Reston. He excelled at the paper, covering business and working in the Washington, D.C., bureau, where he struck up an enduring friendship with Arthur O. Sulzberger Jr., now the Times’ publisher.

Rattner surprised colleagues by quitting journalism for Wall Street at age 30, but the decision paid richly. He rose to the No. 2 position at the New York office of the esteemed banking firm Lazard Freres.

By the time Rattner left Lazard to launch his own firm, the Quadrangle Group, in 2000, he was a star in several orbits.

His success made him rich. On a recent financial disclosure form, Rattner listed his net worth at between $188 million and $608 million.

But in the autumn of 2004, Rattner was entering some unfamiliar territory — trying to raise money from public pension funds. And there, remarkably, he found himself short on clout.

At the time, the Quadrangle Group was trying to find capital for a new $2 billion fund that would invest in media and communications companies.

The New York State Common Retirement Fund, then worth $150 billion and overseen by Comptroller Alan Hevesi, was a rich potential investor. Looking for an inside track, Rattner hired one of Hevesi’s close advisers, the political consultant Hank Morris, to lobby the comptroller’s office for the investment deal.

Quadrangle would ultimately pay Morris more than $1.1 million. It also used him as a so-called “placement agent” in connection with pension fund deals in New York City, Los Angeles and New Mexico.

The White House has expressed support for Rattner and Capitol Hill players in the auto negotiations say the scandal doesn’t appear to have distracted him.