Rattner case flaunts lawmen’s timing again

November 18, 2010

Watchdogs may not always have the strongest bite, but give them credit for bark. New York Attorney General Andrew Cuomo woofed loudly on Thursday, filing a lawsuit against former White House car czar Steven Rattner just as General Motors returned to the public markets. It’s not the first time lawmen have flaunted an uncanny sense of timing.

Cuomo arranged the ultimate perp walk. He unveiled his private equity kickback allegations against Rattner as he sat on set at CNBC to discuss live on television GM’s IPO, one of the biggest financial stories of the year and an impressive achievement for which Rattner can claim some credit. The Securities and Exchange Commission crashed the party too, filing its related pay-to-play lawsuit and settlement with Rattner.

The federal regulator has already proven its aptitude for calendar management. The SEC brought its landmark fraud allegations against Goldman Sachs in mid-April, just as momentum was slowing for financial reform, including a provision for self-funding of the SEC. The headline-grabbing accusations also landed just as the agency’s own inspector general issued a scathing report over how the SEC mishandled the Ponzi scheme investigation of Texas financier Allen Stanford.

Rattner has vowed to fight Cuomo, who wants $26 million from the buyout baron and to bar him permanently from the securities industry in New York. He’s paying just a quarter of that to settle with the SEC and accepted a far lesser ban of two years from associating with an investment adviser or broker-dealer.

Financial sheriffs have a pretty poor track record of crime-stopping, as the Madoff and Stanford cases made plain. But they do a pretty good job of making the most of causes celebres after the fact — just ask Martha Stewart or Henry Blodget. And Goldman eventually coughed up $550 million. Rattner may not fear the watchdog’s fangs but whatever the merits of his defense, he should beware the growl.

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