Car Czar Rattner Owned $1 Million in Chrysler shares
It was revealed this week that Obama’s auto task force chief Steven Rattner owned up to $1 million in shares of Chrysler’s parent company, Cerberus, when he accepted a role in the administration which would oversee the carmaker’s bankruptcy.
The head of the Obama administration’s auto task force, former financier Steven Rattner, was worth at least $188 million when he signed on at the Treasury Department in late February, including a sizable holding in an investment fund operated by the owner of Chrysler LLC.
According to a copy of his federal financial-disclosure form, Mr. Rattner held between $500,000 and $1 million worth of shares in Cerberus Institutional Partners LP Series 2, a fund managed by Cerberus Capital Partners, which bought Chrysler from Germany’s Daimler AG in 2007. Mr. Rattner is a key player in the administration’s bid to rescue Chrysler through a Chapter 11 bankruptcy reorganization that will wipe out the value of Cerberus’s shares.
…Mr. Rattner, who declined to comment, resigned as a managing partner of Quadrangle Group, a New York private-equity firm he co-founded, to run the auto-rescue effort. Federal financial statements require officials to list the value of their assets broadly. Mr. Rattner’s net worth falls between $188 million and $608 million.
Rattner used his influential position within the administration to steer an extra $5 billion to Chrysler after it had already gotten $4 billion from the government.
General Motors Corp. and Chrysler LLC may need “considerably” more than the $21.6 billion in aid they requested, which was based on optimistic recovery plans, said Steven Rattner, the Treasury’s chief auto adviser.
The U.S. Treasury announced late Thursday it is investing another $7.5 billion in GMAC LLC and the government has named two members of GMAC’s board of directors, but the government won’t exercise its right to take a majority stake in the Detroit-based financing company.
GMAC, which was converted to a bank in December, then merged with Chrysler Financial. Cerberus skimmed off its best assets along with billions in taxpayer contributions as it let the automaker sink into bankuptcy.
As Chrysler heads to bankruptcy court today in New York City, it becomes the highest profile failure for the private equity industry and its former owner Cerberus. But there is a slender silver lining for the New York money men.
As part of the automaker’s decision to file for Chapter 11 bankruptcy protection, Cerberus will retain the assets of Chrysler Financial, the auto financing arm. It will work through the existing portfolio, which will hopefully generate a modest income stream as the loans come to maturity.
More importantly for Cerberus and its investors, Chrysler Financial’s future business will be folded into GMAC, the auto finance company that the private equity firm bought from GM in 2006.
Earlier this year, Rattner was caught in a pay to play scandal involving the New York state pension fund. His firm Quadrangle Group gave $1.1 million in kickbacks to Democratic fundraiser Hank Morris after it got a $100 million investment from the pension fund.
Hank Morris is a noted Democratic strategist and was a top adviser and chief fundraiser for Mr. Hevesi; Mr. Cuomo has indicted him for money laundering and bribery. Former Liberal Party boss Raymond Harding had aided in Mr. Hevesi’s election. When men like these come knocking on investment-house doors, the message is pay to play.
Mr. Morris and associates are alleged to have made $30 million selling access to the fund. Mr. Harding helped to clear a state Assembly seat for Mr. Hevesi’s son, and was allegedly rewarded by being allowed to pocket $800,000 as a pension placement agent. The indictment says Mr. Morris was aided by former deputy comptroller David Loglisci, who made clear to investment firms that they should hire Mr. Morris and who signed off on the subsequent pension fund investments.
In Mr. Rattner’s case, SEC documents say he met with the brother of Mr. Loglisci to discuss acquiring the DVD rights to “Chooch,” a low-budget movie that Mr. Loglisci and his brothers were producing. Quadrangle, through an affiliate called GT Brands, agreed to acquire the rights for about $89,000. Several weeks later, Mr. Loglisci told Mr. Rattner that Quadrangle would be getting a $100 million investment from the pension fund. Quadrangle then paid $1.1 million in finders fees, most of which went to Mr. Morris.
In another pay to play scam it was reported in April that Rattner’s firm Quadrangle gave Hank Morris’s Searle & Co. $150,000 in kickbacks for $10 million from the Los Angeles Fire and Police pension fund.
Los Angeles retirement plan managers say they’re baffled over fees paid by Quadrangle Group LLC to a key player named in New York’s pension fund kickback probe for helping the private equity firm land work in California.
Quadrangle paid Searle & Co. $150,000 in connection with the Los Angeles Department of Fire and Police Pensions fund’s $10 million investment with the New York firm, which was co- founded by Steven Rattner before President Barack Obama appointed him to oversee the auto industry rescue.
After the SEC this month said Quadrangle paid Morris a “finders fee” related to a New York pension fund investment, Quadrangle told the Los Angeles fund that it also had paid placement fees to him for work there. The Los Angeles fund publicly disclosed the fee April 24.
The choice of putting Wall Street insiders like Steven Rattner in the inner circle of the White House exposes the hypocritical rhetoric of the Obama Democrat administration. A far cry from the campaign promises of fiscal responsibility, the rodents which he has surrounded himself with are running a money laundering scheme out of the White House. In little over 3 months after getting the keys to the Treasury, they have scurried about in a frenzied feeding binge spending the public’s money on everything they can get away with. The slick messaging of change surrounding the president’s swearing in ceremony is washing away to reveal the sleaze which remains at the core of the donkey party.