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Obama's Former 'Car Czar' Settles with N.Y. State Obama's Former 'Car Czar' Settles with N.Y. State

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White House / White House

Obama's Former 'Car Czar' Settles with N.Y. State

Steven Rattner cut a glamorous figure in New York and Washington. Now the disgraced Treasury official settles with Andrew Cuomo's office.

Steven Rattner, chief adviser to the Treasury on the auto industry, photographed on May 20, 2009. His settlement with New York Attorney General Andrew Cuomo comes two days before Cuomo will be sworn in as governor of New York.(Patrice Gilbert)

December 30, 2010

Steven Rattner, the White House’s former car czar, has agreed to pay $10 million in restitution to resolve allegations that he took part in a kickback scheme to win business with New York’s pension system when he ran a heralded New York investment firm.

As part of the agreement settling two state lawsuits filed against Rattner, the investment banker is barred from involvement in any public pension fund in New York for five years. Rattner, however, acknowledges no wrongdoing as part of the deal.

“I am pleased to have reached a settlement with the New York attorney general’s office, which allows me to put this matter behind me,” Rattner said in a statement issued by Attorney General Andrew Cuomo’s office. “I apologize if during the course of this process there is anything I did that may have made reaching this agreement more difficult. I respect the work of the attorney general and his staff to ensure that the New York State Common Retirement Fund operates properly and in the best interests of New Yorkers.”

 

Cuomo filed the lawsuits against Rattner on the same day last month that the White House trumpeted General Motors' successful initial public offering—evidence hailed by President Obama that the auto industry bailout, which many Republicans doubted, had not only saved America's car manufacturers but promised to return a profit to taxpayers.

Rattner, a former New York Times reporter turned investment banker, cut a dashing figure in Washington and New York for decades. A backer of Democratic causes, Rattner, 58, and his wife, Maureen White (who was once finance chair of the Democratic National Committee), turned their homes in Manhattan and Martha's Vineyard into salons for the wealthy and politically connected. Rattner was a major backer of both Bill and Hillary Clinton's campaigns as well as those of New York Mayor Michael Bloomberg

Long mentioned as a possible Treasury Secretary in the Clinton or Obama administrations, Rattner came to Washington to play a central role in designing the restructuring of both GM and Chrysler. Cuomo, New York’s governor-elect, had sought $26 million and a lifetime ban from the state securities industry.

Rattner's quarrel with Cuomo over his dealings in the New York State Common Retirement Fund date back several years but heated up in November after Rattner’s old firm, the Quadrangle Group, settled accusations over improper help securing $150 million in investments from the state pension fund. Quadrangle paid a $12 million settlement and also disavowed Rattner’s actions on behalf of the firm. Rattner was in litigation with his own former colleagues, and, at times, the case seemed a world away from the glamorous milieu of investment banking. At one point, Rattner was accused of helping fund a low-budget film about an Italian gangster, titled Chooch, that was the project of the brother of a state pension official.

Today’s settlement comes as somewhat of a surprise. Rattner was defiant in earlier statements and said that he would work to clear his name.

Cuomo said he was satisfied with the outcome of the case.

“I am gratified that we have been able to reach an agreement in this case, as it resolves the last major action of our multi-year investigation,” Cuomo said in a statement. “The state pension fund is a valuable asset held in trust for retirees and supported by taxpayers. Through the many cases, pleas, and settlements in this investigation, I believe we have been able to help restore and protect the integrity of the state pension fund.”

Rattner's Quadrangle Group remains a prominent Wall Street player, a private equity firm that invests heavily in media properties. On Saturday, Cuomo will be sworn in as governor of New York, a position his father, Mario Cuomo, held for three terms. Rattner is the author of a recent book on his tenure as car czar titled Overhaul: An Insider's Account of the Obama Administration's Emergency Rescue of the Auto Industry.

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