Opinion

Geraldine Fabrikant

Steven Rattner and the art of the comeback

By Geraldine Fabrikant
December 21, 2011

By Geraldine Fabrikant

The opinions expressed are her own.

Last spring, several months after Steven Rattner, a cofounder of the private equity firm Quadrangle Partners, settled separate charges totaling $16.2 million that related to a kickback scheme involving New York state pension funds, he hosted a dinner at his sprawling upper east side co-op overlooking New York’s Central Park.

Always an avid courtier of the media, among the guests that night were Charlie Rose, Financial Times U.S. managing editor Gillian Tett, journalists Alexis Gelber and Mark Whitaker and literary agent Amanda Urban as well as Rattner’s friend and champion Mayor Michael Bloomberg.

The dinner came in the wake of his very public battles with former attorney general Andrew Cuomo; a settlement with the government; a series of negative stories in the press; and an ongoing battle with Quadrangle Group, the firm he helped to found. Among other issues, Rattner charged that Quadrangle had held seized money that was owed to him when he left the firm to work as the car czar. Neither Mr. Rattner nor Quadrangle would comment for the story. The case is currently in arbitration (see editor’s note below)litigation. In April 2010 when Quadrangle settled with the Attorney General’s office over the case of attracting pension fund money, it said that Rattner conduct was “inappropriate, wrong and unethical.”  But that battle seemed well in the past to one attendee the evening who said the dinner felt like a coming out party reflecting Rattner’s determination to put the past behind him. It was business as usual, or as one guest recalled it: “the typical Upper East Side dinner party,” filled as it was with brand-name power brokers.

How exactly does one come back from being publicly dragged through the mud? Why do some from the land of the formerly disgraced manage to launder their reputations, while others disappear? Part of the answer is that you’ve got to work at it, and–with the possible exception of Michael Milken, the disgraced junk bond guru, or Eliot Spitzer, the former governor who resigned in the wake of a prostitution scandal—few have worked as assiduously as Rattner has to put themselves back in the limelight. He asked to write for both the New York Times and the Financial Times and actively promoted his book “Overhaul” chronicling his role in bailing out the auto companies.

By many measures, he is succeeding. Rattner, 59, now contributes regularly to both publications . He is frequently on MSNBC’s Morning Joe and has appeared on The Charlie Rose show and other TV programs. But most important, he is involved in managing the fortune of Mayor Michael Bloomberg. Last year it was reported that the Mayor had shifted about $5 billion of assets that were being managed by Quadrangle to a group of former Quadrangle employees led by Alice Ruth who formed Willett Advisors. Mr. Rattner works actively with that team. Forbes this year estimated the Mayor’s total net worth at $19.5 billion.

It is in part the Mayor’s endorsement that assures Rattner access to the top echelons in the city.  “When one of the richest men in the country is your friend and you are working for him, it helps a great deal,’’ said one top Manhattan power broker, who did not want to be quoted publicly speaking about the Mayor or Rattner.

Rattner also remains close to Brian Roberts, whose Comcast Corporation owns CNBC and MSNBC. He has been sighted dining with Mayor Bloomberg and attending the wedding of Benjamin Tisch, grandson of the late billionaire Laurence Tisch. He is also a longtime friend of New York Times publisher Arthur Sulzberger Jr. And some of those high level players who might have missed him in restaurants or opining in the media, can read his opinions on his website or in the emails he regularly sends out to a panoply of power brokers.

Meanwhile the media does not allude to his settlements in his bio when he writes or appears on TV. The New York Times identifies him by saying he was a counselor to the Treasury secretary and lead auto advisor and a longtime Wall Street executive. Asked why the government settlement is not mentioned, a spokeswoman said that the paper was comfortable with the level of attribution. She said that Rattner has approached the paper about “getting op-ed pieces on an ongoing basis. “He has a journalistic background, great connections and very good ideas, so we agreed. Thus far we are very pleased,” she said.

The Financial Times says only that Rattner writes a monthly column. An FT spokeswoman said that the paper had covered the story and does not feel it is “unfamiliar territory to its readers,” she said. She added that Rattner’s experience in both the public and private sector gives him a unique perspective.

Yet when Rattner was at Quadrangle, the firm paid an advisor to help win pension fund business. Both the advisor, Hank Morris and the ex-controller Alan Hevesi, went to jail. Court filings also allege that Rattner had arranged for the distribution of a film made by the brother of the fund’s chief investment officer. Rattner settled with both the SEC and the attorney general without admitting wrongdoing.

As a result of the settlement Rattner cannot appear before a New York state pension fund for another four years. At the time of the settlement he was not allowed to be paid for his work at Willett Advisors, although that ban has since been lifted.

For now, Rattner has landed on his feet, working for Mayor Bloomberg. But his history on Wall Street has not been without some particularly ugly battles. Not only is he still fighting with Quadrangle but during his years at Lazard, Rattner and high profile banker Felix Rohaytan clashed. Ultimately Rattner and several associates left to form Quadrangle.

As to his writing, Rattner is not without critics. Some journalists at both the New York Times and the Financial Times believe that Rattner should not be permitted to write for them after his controversies with the government. And the columns themselves get some negative reviews. Bruce Greenwald, a professor of finance at Columbia University Business School finds that they offer nothing new. “They are mostly tired conventional wisdom,” he said.

Steven Mintz, a professor who writes the blog “Ethics Sage” argues that at the least, the media should have waited for a cooling off period during which Mr. Rattner could resurrect his name with positive contributions to society. “The inescapable conclusion is that he did pay off a political advisor,’’Professor Mintz said.” The question must be asked: why should the public trust anything he says?”

But Henry Blodget, the former internet analyst who runs the Business Insider website said that not to publish Rattner’s writing would be like saying that he is guilty.

Still, there might yet be some parts of Rattner’s past beyond his reach. As counselor to the U.S. Treasury secretary and lead auto advisor, Rattner and the auto task force worked to salvage General Motors and Chrysler. While that effort was widely hailed as a success, another government appointment, several veteran political players say, would be difficult if it required Congressional approval.

Blodget believes that even though Rattner settled and paid $16.2 million, he is using the right long term strategy to forge a comeback. (In 2003 Blodget himself was banned from the securities business and paid a $2 million fine after being charges with civil securities fraud by the SEC.)  “He was right not to fight for years in the court system,’’ Blodget said. “From the point of view of someone who was accused of that, it is painful to settle because people take it as a sign that you are guilty. But the truth is that as any lawyer will tell you, of the many bad alternatives, biting the bullet is the best thing to do,’’ said Blodget.

Not all of the fallen choose such a public rehabilitation. Consider Jack Grubman, the former telecommunications analyst at Salomon Smith Barney, who now runs The MacGee Group, a consulting firm. Grubman was banned from the securities industry eight years ago, after the Securities and Exchange Commission found that he has issued research reports that misled investors. His reputation was severely damaged as well when it was found that he upgraded AT&T, a company on which he had been publicly negative, and that soon afterward Salomon benefited in fees from an offering of shares in its subsidiary. In addition, he bragged in an e-mail that, in return for the upgrade, Sanford Weil, then Chairman of Citigroup, helped get Mr. Grubman’s daughters into school at the 92nd Street Y. Grubman has received next to no publicity since and did not return a call seeking comment.

Sometimes it helps to get into another line of business. In the 1980s Michael Milken, then at Drexel Burnham Lambert, plead guilty to securities law violations. Since serving nearly two years in prison and paying $600 million in fines, Mr. Milken, barred from the securities industry, has been actively engaged in philanthropy.

When he assumed the auto czar role, Rattner had to resign from boards on which he served. Presumably he will resume that role, and he has a fortune, estimated to be at least several-hundred million dollars, at his disposal and will possibly use some of that money for philanthropy. As to whether he hankers for another post in government, he can always argue that once was enough and he does not want it anyway. The way things have been going for him lately, he may not need it.

PHOTO: Steven Rattner, Former Head of U.S. Treasury Department’s Auto Task Force, speaks at the Council on Foreign Relations in New York, November 19, 2009. REUTERS/Brendan McDermid

Editor’s note: This column originally said that the case between Rattner and the Quadrangle Group is in litigation; it is in arbitration.

Comments
9 comments so far | RSS Comments RSS

Mike Milken, a ‘philanthopist’?–for ploughing money into cancer research to save his own butt?

As a former Detroiter, a low and angry point in my lifetime was watching Rattner, the baby-faced Wall Street pouf, dismiss Rick Wagoner, the head of a company that actually makes something.

What has Steven Rattner ever done except bribe people–whether through political fundraising or ‘pay to play’ pension fund investing?

Rattner’s ‘rehabilitation’ will be in inverse proportion to the intelligence of the rest of the populace.

Posted by ginevradibenci | Report as abusive
 

Unlike Rattner, unless we’ve missed it, Henry Blodgett has put his past right out front, something we respect immensely. His bio at Business Insider pulls no punches.

Rattner’s approach to rehab has been like Amy Weintraub’s “no, no, no.” Some guys ought to just go off, and we think he’s one of them. We have no interest in reading what he writes. We’ll read what’s written about him and, if he does some good for society instead of his pocketbook, we’ll give him another look.

Posted by WeWereWallSt | Report as abusive
 

Steven Rattner & Mike (gulf stream) Bloomberg. Are they by chance dating or are they just a fun couple like Mike and Diana Taylor? Such absolute 1% trash. One convicted and the other should be?

Posted by Boils | Report as abusive
 

The appropriately named Rattboy woulda gone to jail if the USA/NYC had a justice system. Alas it don’t.

Posted by Boils | Report as abusive
 

Maybe Jon Corzine should start having intime dinners with Mayor Bloomberg too!

Posted by frenchsouvenirs | Report as abusive
 

Several prominent 1% Titans have gone on the offensive this week in both Bloomberg and the FT. The Bloomberg journo skewered them subtly on Wednesday. It’s a great read.

Our take on that is here: http://www.WeWereWallStreet.com/Two-thou sand-dollar-Ballys.html

The FT ran a story yesterday that was FT in tone, but has dozens of readers’ comments that do the heavy lifting.

We remember when being a “millionaire” was impressive. Guys with billions in the bank, made by zero-sum trading and saved by taxpayers, really should take their rhetorical beatings without whining.

Posted by WeWereWallSt | Report as abusive
 

A RATTNER IN SAGE’S CLOTHING

Mr. Rattner is that which he is, as are the rest of us. For better or worse, we must evaluate his verbal behavior on its own merits not on the personal defects of its author. His piece today (23DEC2011) in FT/Comment is an example. It’s worth a perusal.

Posted by Moss_GR | Report as abusive
 

Thank you, Ms Fabrikant. Times reporters should stand tall on the compromise of their profession and speak out against the likes of Steven Rattner.
However, I understand that in conservative NYC, Mike Bloomberg can hurt journalists who speak against him. Perhaps that is the inhibiting force that allows S. Rattner to blather on about obvious economic issues, with no proper interrogation about his abuse of fiduciary trust and subsequent lies about his acts—all the while betting on the short memory of the public.
His commentary consists of qualified half-statements, always–tuff any editor addresses better in any newspaper. He is a Democratic supporter with a BA in economics, and history of writing mediocre news coverage. Hardly someone qualified to handle world class issues.
It is also humorous to see that after eschewing journalism for high finance, he needs the media after all– to whitewash his crimes and put his face on television. Maybe journalism, not hundreds of millions in assets, will save his reputation and allow him access to public trust and investments.

Posted by Analist | Report as abusive
 

Finally an article that at least acknowledges the possibility that Ratner is unethical or possibly even a crook. To us little people, it is a little unusual that the people being bribed are prosecuted and the people doing the bribing walk. In any case, his moral compass is evidently acceptable to the New York glitterati, as well as the Obama administration. Money talks.

Posted by nastwood | Report as abusive
 

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