Rattner Scandal Grabs Headlines; Obama Says He Stands By His Man
April 19, 2009 • 2:56PM

The worst thing an official charged with corruption could hear from his boss, especially if his boss is President of the United States, is: "I stand fully behind him." "Stand behind" is usually polite terminology for "about to be pushed off the roof." This is probably what is going through Steven Rattner's mind these days, as the U.S. media has had a field day, today, reporting on the details of Rattner's alleged kickbacks to win lucrative New York State Pension Fund contracts for his Quadrangle LLC private equity fund. Rattner was named in February by President Obama to be Treasury Secretary Tim Geithner's special trouble-shooter for the auto industry. Robert Gibbs, the official White House spokesman told the Los Angeles Times on Friday that the President has full confidence in Rattner, and that Rattner revealed some details about the alleged pay-to-play kickbacks probe when he was first vetted for the job.

But this didn't deter a flood of media coverage, all negative, highlighting Rattner's personal role in the alleged pay-to-play scandal with New York State. The LA Times headlined their Saturday story, "Obama advisor Steven Rattner snagged in pay-to-play inquiry," BusinessWeek asked: "Did Rattner Pay to Play?" and The Business Insider headlined, "Steve Rattner Fallout Potentially Huge." ABC News, which broke the story, identified Rattner as the "senior executive of Quadrangle, named in the SEC complaint, who arranged a kickback of $1.1 million, once a lucrative pension fund contract was given to his firm.

Sources familiar with Rattner's activities, while a founding partner in Quadrangle LLC expressed astonishment that Rattner was chosen for the auto czar job in the first place. "This guy lost at least $1 billion in bad media investments, while running his equity fund. How does that qualify him to bailout the auto sector? Maybe that explains why the government forked over billions of dollars, and now appears ready to see GM shut down altogether. Of course, even if the auto bailout schemes were to work, they would wipe out auto sector jobs, not create any new jobs." The source concluded, "More Wall Street swindlers getting away with murder." He forcasted that by mid-summer 2009, there would be more net job losses under Obama than in the entire eight years of Bush and Cheney. "And Bush and Cheney wrecked the U.S. economy."