Steven Rattner

Former White House Auto Industry Task Force member Steven Rattner is being sued by New York State Attorney General and Governor-elect Andrew Cuomo for allegedly paying kickbacks to win investments in the state's pension fund.

Cuomo is seeking $26 million from Rattner, and to bar him from trading securities in New York for life, an agreement that might hamstring Rattner if he can't do securities work in New York any longer.

Rattner, who recently penned a book about his time on The Obama task force ("Overhaul," [Houghton-Mifflin-Harcourt, 2010]) that guided General Motors and Chrysler through bankruptcy, already settled a related case against him brought by the Securities and Exchange Commission, which brought a civil lawsuit against the private equity executive and former New York Times reporter.

Rattner's former investment firm, Quadrangle, settled with New York State and the SEC last April, which was accompanied by a statement by Quadrangle saying Rattner's conduct was "inappropriate, wrong and unethical." Quadrangle agreed to pay $7 million to Cuomo and $5 million to the SEC without admitting or denying wrongdoing.

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According to an SEC complaint filed in Manhattan federal court, Rattner and Quadrangle won $150 million in investments from the state pension fund in 2005 and 2006 as part of a "pay-to-play scheme" in which Rattner allegedly directed favors and compensation to pension officials in order to secure the business.

Rattner, who spoke in Detroit on November 15 at an Automotive Press Association lunch to promote his book, and advocate for GM's IPO this week, wouldn't address the matter, saying only that the matters were "unresolved." Yesterday, Rattner issued a statement: "While settling with the SEC begins the process of putting this matter behind me, I will not be bullied simply because the attorney general's office prefers political considerations instead of a reasoned assessment of the facts... This episode is the first time during 35 years in business that anyone has questioned my ethics or integrity."

Rattner's biggest legal problem will be that his former firm, plus the pension officials whom he allegedly bribed, have all flipped on him, giving details of his involvement to SEC and New York State officials.

Rattner's book on the auto bailouts is the most complete account, which is not surprising since he was an insider. It is a very worthwhile read for auto industry and Capitol Hill insiders, though the casual auto enthusiast may find the detail and minutiae tedious.

The former journalist-turned Wall Street tycoon has high marks and regard for Fiat-Chrysler CEO Sergio Marchionne, but not so much for former GM CEO Rick Wagoner. He also depicts former White House chief of staff Rahm Emanuel as being whistle to both the idea of bailing out GM, as well as the UAW. "F**k the UAW!," Rattner quotes Emanuel as saying in one meeting.

That one may come back to haunt Emanuel, who is now running to be the next Mayor of Chicago, traditionally a very strong union town with UAW plants nearby.

[Image: David Guralnick, AP]