By Zachary A. Goldfarb
Washington Post Staff Writer
Thursday, October 14, 2010; 8:08 PM
A federal agreement to settle allegations that former Obama administration auto czar Steven Rattner took part in a "pay-for-play" scandal in New York has been put on hold to coordinate a deal with state authorities, according to sources familiar with the matter.
Rattner agreed this week to pay $6 million and be barred from the financial industry for two years to resolve allegations made by the Securities and Exchange Commission that he bribed a political consultant to win business from New York's pension fund for his former investment firm, the sources said.
But the SEC has postponed finalizing the settlement as New York Attorney General Andrew M. Cuomo seeks his own deal with Rattner, according to the sources, who spoke on the condition of anonymity because the settlements are not final.
Rattner did not respond to an e-mail seeking comment. The SEC declined to comment. Cuomo's office did not respond to a call seeking comment.
Rattner plays but one part in a wide-ranging scandal that has engulfed state officials and financial professionals in New York.
The SEC and Cuomo have recovered tens of millions of dollars in restitution for New York's pension fund, and defendants - including former New York state comptroller Alan Hevesi - have faced civil and criminal charges.
Before joining the Obama administration, Rattner ran the Quadrangle Group, a prominent private-equity firm. Rattner and his old firm have grown estranged, with his former colleagues criticizing his behavior in the pension case. Quadrangle agreed to settle SEC and state allegations in April.
Rattner has earned hundreds of millions of dollars in his three decades on Wall Street, forging friendships with some of New York's elite. Since leaving the Obama administration, he has signed up as the money manager for N.Y.C. Mayor Michael R. Bloomberg (I). The ban isn't likely to affect that role, a source familiar with the matter said.
Rattner joined the Obama administration in February 2009 to help tackle the restructuring of General Motors and Chrysler. He left five months later, saying the majority of the work had been done. At the same time, details of his alleged participation in the "pay-for-play scandal" in New York were coming to light.
Rattner, who has spent the majority of his career on Wall Street, resisted for many months a settlement that would ban him from the securities industry. He agreed to a ban this week. As is customary in such settlements, he won't admit or deny wrongdoing.
The SEC and Cuomo, who is running for governor, have closely coordinated their announcements in the New York pension fund case and other high-profile investigations. Indeed, the SEC delayed announcing a case against Goldman Sachs earlier this year because it could have conflicted with a Cuomo announcement in the New York case.
SEC Chairman Mary Schapiro said in testimony to the agency's inspector general, "I was a little worried that the attorney general would be very upset if we announced multiple cases the same day."