Obama’s Top Auto Industry Troubleshooter
After 26 years as one of the most politically connected investment bankers on Wall Street, Steven Rattner finally took a job in Washington — only it is not quite the one friends and business associates thought it would be.
Washington buzzed that Mr. Rattner, a big name in the New York media world who, friends say, aspires to a cabinet post like Treasury secretary, would be named the car czar of the Obama administration. Instead, he is one of 14 people on a committee that is orchestrating the rescue of the giant automakers.
Still, Mr. Rattner, a well-known media banker, is playing a central role as car czar lite, traveling to Detroit to visit plants, meeting with the automakers’ bankers, unions and bondholders, and advising the White House on which companies seem salvageable and how. If he succeeds, he may get a chance at a larger job in the administration.
That is a big if. He has to push the car companies to overhaul decades-old practices, persuade his former colleagues on Wall Street to lower their demands on the automakers’ debt payments and appeal to union leaders who may be turned off by Mr. Rattner’s financial success.
Mr. Rattner said in an interview that he has long been interested in returning to Washington, where he worked as a newspaper reporter 30 years ago, and that he hoped to stay on for some time to work on aspects of the financial crisis.
“In the fall, as the economic crisis intensified, it became clearer and clearer to me that this was a moment of historic importance,” Mr. Rattner said, “and if one was ever to have an interest in serving your country in the area of economic policy, this was the moment.”
Mr. Rattner has been among the most politically connected people in the banking industry. He and his wife, Maureen White, who together have been referred to by New York magazine as the “D.N.C.’s A.T.M.,” have hosted many Democratic fund-raisers at their lavish apartment on Fifth Avenue. They were initially Clinton supporters, but they hosted events for Barack Obama after he sealed the nomination.
Among his friends, it has become a parlor game to guess where Mr. Rattner might be posted next. His current job description as a special counselor in the Treasury Department, according to a White House press release, includes the eventual option of moving on to manage a different aspect of the financial crisis.
Mr. Rattner went to Wall Street in the early 1980s, after his stint as a reporter in Washington, and rose through the ranks at Lehman Brothers and Morgan Stanley before becoming deputy chief executive at the investment bank Lazard in the 1990s.
In 2000, after a power struggle at Lazard, Mr. Rattner co-founded an investment firm, Quadrangle Capital, specializing in private equity investing focused on communications media. Last year, Quadrangle began managing the personal fortune of Mayor Michael R. Bloomberg of New York — a longtime friend of Mr. Rattner’s.
Quadrangle’s funds have performed well, on average, though the firm has canceled plans to start a third fund because of Mr. Rattner’s departure.
Friends of Mr. Rattner say it would be hard to find a better auto industry analyst. Orin Kramer, a hedge fund manager and important Obama fund-raiser, called Mr. Rattner “a superstar.”
Paul J. Taubman, head of investment banking at Morgan Stanley, said “he’s a very fast study.” And Henry Kravis, the private equity financier, said “he’s thoughtful, thorough and smart.”
A former colleague of Mr. Rattner’s pointed to his dealings with Cablevision as an example of his toughness and business savvy. When Quadrangle invested in the cable company in 2002, Mr. Rattner told the Dolan family, which runs the company, that he would not support an expansion into satellite businesses. When the Dolans decided to pursue satellite opportunities, Mr. Rattner did not back down, and Quadrangle sold its position in Cablevision.
One thing that is clear: Mr. Rattner knows how to make money. Not only has he stockpiled a personal fortune, but Quadrangle’s two private equity funds have performed well, despite some soured investments.
The first Quadrangle fund returned 15 to 20 percent, according to one investor. The second, which has yet to use all its capital to complete its investment portfolio, is already showing single-digit gains. Quadrangle also ran a hedge fund that lost 25 percent last year, before the firm closed it and returned investors’ money.
Mr. Rattner’s Wall Street ties slowed the process of his appointment, according to two people briefed on the Obama administration’s discussions. The administration worried that Mr. Rattner might have a conflict in dealing with Cerberus Capital Management, the investment firm that controlled Chrysler, because his firm was involved in a difficult transaction with Cerberus, centering on a magazine company that Quadrangle created in 2007.
At that time, Cerberus led a group of investors that lent money to the magazine company. At the end of last year, the magazine company broke its debt agreements. The situation is now being handled without Mr. Rattner, who has resigned from Quadrangle, and Cerberus is taking control of the magazines.
The Obama administration decided not to have an independent car czar, as was proposed in a House bill late last year. Instead, the administration chose to use a task force, giving President Obama the ability to be more directly involved in seeking solutions to the auto industry’s problems.
Mr. Rattner said his communications media banking background was an asset, as he could approach auto industry issues with a neutral view and help decide how much taxpayer capital to commit and to whom.
“We’re making an investment decision,” Mr. Rattner said. “We’re not running these auto companies. We are helping them restructure and reposition themselves for the future.”
Although Mr. Rattner is friendly with many communications media leaders, he has been wary of the publicity his position has brought and at first resisted requests to be interviewed. He has long had a close friendship with the publisher of The New York Times, Arthur Sulzberger Jr.
As the most powerful member of the auto task force, Mr. Rattner is trying to jolt the industry into action with firm messages, like the one last week to Chrysler that it was unlikely to survive as an independent company.
Mr. Rattner believes General Motors has a greater chance of survival on its own, though he was the bearer of bad news last month when G.M.’s chairman, Rick Wagoner, was asked to step down.
There is no official head of the auto task force, but people in the auto industry say that Mr. Rattner seems to call the shots, and he is the highest-ranking task force official within Treasury. Most of the force is made up of younger people from Wall Street.
Mr. Rattner is viewed as having an afterlife in some other role at Treasury after this auto plan gets set, which should happen in about six months, according to people briefed on the matter.
Mr. Rattner, it turns out, has pondered the auto question before. In the 1970s, he wrote about the government’s rescue of Chrysler as a reporter for The New York Times. This time around, of course, Mr. Rattner does not get to write the article, though he will have great say over how it turns out.