After autos, Rattner faces next challenge

NEW YORK (Reuters) - Steven Rattner is leaving as the head of the White House autos task force that oversaw the bankruptcies of General Motors GMGMQ.PK 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.

His desire to act instead of ponder comes through in an article he wrote for The Washington Post about the housing crisis a year ago. In the piece he described the approach of the then U.S. administration of President George W. Bush as "tepid" and called for more radical solutions.

"Isn't it better to hold our noses and embrace some of these solutions than to commit to actions that could inflict lasting damage on the mortgage finance business or, worse, bail out bad investments, or, worst of all, allow millions of Americans to continue to face foreclosure?" he asked.

In an interview with Reuters in 2004, Rattner condemned tax cuts introduced by Bush because of the impact on the nation's deficit and on "the balance of fairness" between different groups of people.

Rattner's media ties run deep. A former New York Times reporter, Rattner worked with No. 1 U.S. cable television operator Comcast (CMCSA.O) as an adviser on its failed bid for Walt Disney Co (DIS.N) and as an investor in its purchase of MGM. He also was on Cablevision Systems Corp's (CVC.N) board.

Rattner also has advised Times Co (NYT.N) Chairman Arthur Sulzberger Jr on the newspaper group's troubles in recent years, and struck a deep friendship with the publisher when they reported from the Times's Washington, D.C. bureau three decades ago.

Not everyone was happy about Rattner's appointment to the auto industry task force. The most prominent critic was Ron Gettelfinger, president of the United Auto Workers union, who said he would have preferred someone who "knows something about the auto industry."

Rattner has been closely involved with the Democratic Party. Married to Maureen White, a former finance powerhouse for the party and with whom he has four children, Rattner was an adviser to Sen. John Kerry when he lost to Bush in the 2004 presidential election.

Born July 5, 1952 in New York City, Rattner grew up in nearby Great Neck, Long Island, studied economics at Brown University, where he also worked on the school newspaper.

By age 24, he was working at the New York Times. He abandoned journalism for investment banking in the early 1980s, landing at Lazard while it was under the control of billionaire scion Michel David-Weill and dominated by Felix Rohatyn, who later became ambassador to France.

At Lazard, he navigated a secretive culture and the often hazardous world of egos and "Great Men" who advise the rich and powerful, and became for a while its biggest star.

(Additional reporting by Joan Gralla in New York and John Crawley in Washington, D.C.; Editing by Tim Dobbyn)