Rattner Resigns as Obama's Point Man on the Auto Industry
Tuesday, July 14, 2009
Steven Rattner, the Wall Street financier who led the Obama administration's efforts to save General Motors and Chrysler, is resigning as the head of the autos task force to return to New York, the Treasury Department announced yesterday.
The departure surprised some of his colleagues and came a week after the task force finished leading the two automakers into and out of rapid bankruptcy restructurings, along the way investing billions in government funds into the companies and their suppliers.
"With the emergence of both General Motors and Chrysler from bankruptcy, we enter a new phase of the government's unprecedented and temporary involvement in the automotive industry," Treasury Secretary Timothy F. Geithner said in a statement. "We are extremely grateful to Steve for his efforts in helping to strengthen GM and Chrysler, recapitalize GMAC, and support the American auto industry."
Ron Bloom, a senior member of the autos task force and former adviser to the United Steelworkers, will assume leadership of the group.
The government's multibillion-dollar bailouts of the two automakers have been controversial, and the tally for General Motors alone has reached $50 billion.
Rattner and Bloom are credited with simultaneously forcing significant reductions at the bloated companies, and doing so in far less time than many experts predicted.
"Steve's expertise was a key contributor toward a new GM emerging in record time," General Motors chief executive Fritz Henderson said in a statement.
Some company officials and legal analysts had suggested that reorganizing the companies through bankruptcy could have disastrous consequences. The "b-word" would scare consumers out of showrooms, they said, and the court process could drag on for years.
But both companies moved substantially through bankruptcy in less than six weeks.
Through the bankruptcy proceedings, the autos task force has compelled the companies to slim down, cutting workers, closing dealerships and shelving brands. The purpose was to enable the companies to survive with their reduced market shares and the weakened economy, the task force said.
Rattner "did a remarkable job," said Jeremy Anwyl, chief executive of Edmunds.com. "The medicine that the task force doled out to the automakers was relatively severe but in retrospect was appropriate. GM had been trying to restructure for years and because of the insistence of the government, they've finally been able to do it. You have to step back and give him a lot of credit."
It was unclear yesterday what Rattner, a New York Times reporter turned investment banker and dealmaker, would do next.
His short tenure as head of the autos task force came under a cloud in April, when details of alleged influence-peddling surfaced.
At the center of the two-year investigation by the Securities and Exchange Commission and the office of New York State Attorney General Andrew M. Cuomo are millions of dollars in payments made by investment firms including Quadrangle Group, the private-equity firm founded by Rattner in 2000, to middlemen known as placement agents, who helped the firms win investments from the pension fund of New York state and other local governments.
In SEC filings, a "senior executive" at Quadrangle, whom sources have identified as Rattner, is described as having been directly involved in arranging a $1 million-plus payment to a middleman. Rattner headed Quadrangle until February, when he was tapped to join the Obama administration's auto task force.
The White House has said that Rattner brought up the investigation while he was being vetted and that no charges were expected to be filed against him.
A person close to Rattner who spoke on the condition of anonymity said that he would not be returning to Quadrangle. Rattner has long held political ambitions, and Treasury's statement yesterday left the door open for his return to the public sector.
"I hope that he takes another opportunity to bring his unique skills to government service in the future," Geithner said.