After autos, Rattner faces next challenge

By Robert MacMillan and Megan Davies

NEW YORK (Reuters) - Steven Rattner is leaving as the head of the White House autos task force that oversaw the bankruptcies of General Motors and Chrysler, only a few months after taking on the job.

His return to his "private life" in New York, as Treasury Secretary Timothy Geithner put it on Monday, comes after GM and Chrysler emerged from swift bankruptcy reorganization proceedings.

He took the job in February, after years building his banking and investing image on media deals and his political capital through Democratic party fund-raising.

Now, another challenge lingers.

Only weeks after taking the autos post, Rattner and the private equity firm he co-founded, the Quadrangle Group, were linked to New York Attorney General Andrew Cuomo's probe into a state pension pay-to-play scheme.

That probe has intensified in recent weeks, a source familiar with the matter told Reuters on Monday.

A U.S. Securities and Exchange Commission complaint this year against two former New York political officials and others allegedly involved in the scheme did not name Rattner, but a source previously told Reuters that a "senior executive" of Quadrangle Group named in the complaint is Rattner.

New York City's pension funds were probing whether Quadrangle "intentionally misled" it about placement agents used to win pension fund business, a spokesman for New York City's comptroller said in April.

Rattner, a former journalist, built his name at Lazard Freres & Co. He cemented it later at private-equity firm Quadrangle, which he co-founded.

He will not return there, a source close to Rattner said, and is considering his next steps.

His departure was a blow to Quadrangle, which said shortly afterward that it was postponing plans to raise a new fund.

Rattner's departure gave investors the right to halt new investments by one of Quadrangle's funds.

New York City and state pension funds later made public that they voted to block new investments by one of Quadrangle's funds, a decision linked to the pension scandal.

ACT, DON'T PONDER

Rattner started angling early for a bigger role in public life, and often shared his thoughts about administration policies, the media and other topics in commentaries that ran in major U.S. newspapers.