SEC seeks to ban “car czar” from Wall St.

Remember Steven Rattner, our dear comrade leader’s “car czar?” He was tasked with overseeing the government takeover of GM and Chrysler. He “unexpectedly” resigned last July after 5 months on the job because he believed that the car companies were emerging from bankruptcy and his primary responsibilities were coming to an end – or so we were told. According to this story (from the Washington Post), the bullshit meter is in the red regarding Mr. Rattner’s reason for leaving.

In fact, Rattner was also being advised by his lawyers to make himself a lower-profile target for federal and state investigators who were probing whether he had paid off a middleman to win a lucrative contract from New York’s pension system while he worked on Wall Street, a government source said Wednesday.

But stepping out of the limelight did little to get the bull’s-eye off his back. The Securities and Exchange Commission has pressed recently for a settlement of its investigation that would ban Rattner from working in the securities business for up to three years, two sources familiar with the case said. Such a penalty could spoil his dream of returning to a prominent post in Washington.

Rattner has rejected the SEC’s terms, leaving the agency with a choice between dropping the matter or moving forward with a civil case that would have to prove Rattner’s actions broke the law, those sources said, speaking on the condition of anonymity because the case is ongoing. The SEC’s effort to ban Rattner’s Wall Street activities was first reported by the New York Times.

So Rattner wants to return to government “service.” Will this hurt his chances? Given the culture of corruption in Washington, likely not. It may even enhance his creds with the feds.

Rattner has made no secret of his desire for a prominent post in the nation’s capital. But involvement in a pension scandal would complicate any appointment requiring Senate confirmation. When he agreed to lead Treasury’s auto team, Rattner was among a group of “senior counselors” to Treasury Secretary Timothy F. Geithner, a title that allowed the officials to have influence over policy matters but avoid the scrutiny of a Senate confirmation process.

Rattner began his career as a reporter for the New York Times and leapt to Wall Street in the late 1980s after meeting Robert E. Rubin, a Goldman Sachs executive who later became Treasury secretary. He quickly became known for his investment prowess in media and telecommunication companies and his ability to hold fundraisers for prominent Democrats. He got to know influential financiers, such as Michael R. Bloomberg who is New York’s mayor, as well as top government officials such as Geithner.

The call to come to Washington finally came when Geithner asked him to lead the team overseeing the auto industry bailout. Rattner arrived in February; two months later, details emerged of the alleged influence-peddling scheme.

When Rattner decided to leave in July, Geithner and other senior administration officials agreed it was better to let him go in case the pension probe began to focus on Rattner, a source said. Geithner released a statement at the time that was hopeful of Rattner’s return to Washington.

With tax cheat Tim Geithner, Goldman Sachs, and “prominent” democrats on his side, he probably has little to worry about.

A related article (from the CATO Institute) takes Rattner to task for claiming the bailout of Chrysler and GM was successful.

Rattner’s declaration of “Mission Accomplished”—based on one calendar quarter of mediocre financial results—is a galling display of arrogance and deception, and betrays a disturbing cluelessness about the broader costs and consequences of the government’s heavy-handed intervention.

Rattner’s verdict rests on the singular consideration that “a year after the government-sponsored bankruptcies of GM and Chrysler, both patients are alive and progressing well toward recovery.” But that’s like hailing the stable medical condition of a drunk driver after an accident, while ignoring the injuries to the family in the vehicle he struck.

The impact of the auto intervention on its victims doesn’t factor into Rattner’s analysis.

Rattner’s claim of auto “rescue” success is the product of a straw-man set-up. The most compelling objections to the bailout were not rooted in the belief that the government couldn’t use its assumed power to help GM and Chrysler.  On the contrary, the most compelling objections were over concerns that the government would do just that.  It is the consequences of that intervention—the undermining of the rule of law, the confiscations, the politically-driven decisions, and the distortion of market signals—that animated the most serious objections.

Thus, any verdict on the outcome of the auto industry intervention must take into account, among other things, the billions of dollars in property confiscated from the auto companies’ debt-holders; the higher risk premium built into U.S. corporate debt, as a result; the costs of denying Ford and the other more successful auto producers the spoils of competition (including additional market share and access to the resources misallocated at GM and Chrysler); the costs of rewarding irresponsible actors, like the United Autoworkers union, by insulating them from the outcomes of what should have been an apolitical bankruptcy proceeding; the effects of GM’s nationalization on production, investment, and public policy decisions; the diminution of U.S. moral authority to counsel foreign governments against market interventions that can adversely affect U.S. businesses competing abroad, and; the corrosive impact on America’s institutions of the illegal diversion of TARP funds under two presidential administrations.

Rattner is a sleezeball who fits in well with the corrupt Washington power structure.

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One Response to “SEC seeks to ban “car czar” from Wall St.”

  1. […] the last year: the regime’s “car czar,” Steven Rattner, resigned under a cloud of suspicion, GM (and the Treasury Dept.) lied about paying back its government loans, GM execs who were […]

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