PrintMarch 11, 2010
Obama's Car Czar in Pay-to-Play probe (updated)
New York is a fiscal basket case. One major reason: the black hole of pension fund promises made to government workers by pliant politicians always eager to serve the public employee unions. These promises are so munificent that they amount to giveaways that dwarf Democratic smear talking points such as the bridge to nowhere.
Compounding the fiscal hole facing many state and local governments is the fact that the pension funds advanced by taxpayers have been invested poorly. Often these investment decisions were made by firms who were more attuned to politics than investing principles. Case in point is the Ariel Fund, headed by John Roger, Barack Obama's friend and political donor and bundler (and ex-husband of the former social secretary of the White House, Desiree Rogers). His fund's performance is mediocre at best, but the company's business is held aloft by municipalities sending him and his team pension money.
Barack Obama has no problem with such gamesmanship. His one-time car czar, Steven Rattner, is knee deep in the much himself and now is looking for a lifeline to pull him out of the ethical quicksand. The Wall Street Journal reports:
Wall Street financier and former auto czar Steven Rattner is in settlement talks to resolve his role in the "pay to play" investigation at the New York state pension fund, according to people familiar with the matter.Mr. Cuomo's investigation of Mr. Rattner focuses on his activities at Quadrangle Group, the private-equity firm he co-founded a decade ago. The New York-based firm obtained a $100 million investment from the New York pension fund three weeks after a DVD company owned by Quadrangle agreed to distribute "Chooch," a low-budget movie co-produced by Mr. Loglisci and his brother, according to court papers.Quadrangle also paid a $1.1 million finder's fee to Hank Morris in exchange for securing the investment from the New York fund. Mr. Loglisici said Wednesday he had "effectively ceded" his authority over the fund's private-equity investment decisions to Mr. Morris, a former top New York political adviser.Mr. Rattner left Quadrangle a year ago to join the Obama administration.A number of money managers have been ensnared by the attorney general's probe. Riverstone Holdings LLC and Carlyle Group paid $30 million and $20 million in restitution, respectively, to resolve their roles in the case. Both firms paid Mr. Morris finder's fees for helping secure investments from the pension fund. In addition, David Leuschen, co-founder of Riverstone, paid a $20 million fine to resolve his role in the investigation. Mr. Leuschen personally invested $100,000 in "Chooch."Three money managers -- Elliott Broidy, formerly of Markstone Capital Group in Los Angeles; Saul Meyer of Aldus Equity in Dallas; and Barrett Wissman, formerly of HFV Asset Management in Dallas -- have pleaded guilty to criminal charges related to the investigation.
Crony capitalism is an economic albatross around our necks. Rattner was a journalist at the New York Times before he decided that he could parlay political donations and personal contacts to run government money. And let's not forget all the other ethical scandals surrounding Barack Obama and his Chicago Boys (Tom Daschle, the super-lobbyist and tax evader; Timothy Geithner and his problems figuring out the Quicken tax software program... the list goes on and will continue to go on).
How is that hope and change going, how is that transparency promise and pledge for clean government going?
Update: Reader Louis Hansell writes:
Who is Steven Rattner?
When the government moved on GM, they essentially abrogated the legal rights of the senior secured debt holders, and gave the company to the union**. The fiduciaries which owned that debt protested. Rattner is the guy who threatened them with 'the IRS, U.S. Treasury, FBI and every other government agency to make the rest of their life hell...' or words to that effect. In true Chicago negotiating style!
You may notice from the article that his defense attorney is Jamie Gorelik. You have written about the 'Mistress of Disaster' before:
Audacity? Yes?
** Last year my Ford was in a recall that involved over 16 million vehicles. The cruise control harness could catch on fire, and there were over 550 incidents, some of which caused deaths well after Ford knew about the problem. Why don't you remember that? Why wasn't that a news story as big as the Toyota story? Ford recalled 16 million vehicles, Toyota 8 million; there were 550 incidents, many times more than Toyota. The Ford numbers are much greater than the Toyota numbers. So why don't you remember the Ford incident? Toyota is non-union. This Toyota story is a co-ordinated effort by the administration as agents for the union (as they did in the GM takeover). Just more thuggery. Did the Secretary of Transportation give a nice sound bite (" I would advise Ford owners to leave their Ford in the garage...") as he did in Congressional testimony about Toyota? This Toyota story is a travesty.
Update: Reader Louis Hansell writes:
Who is Steven Rattner?
When the government moved on GM, they essentially abrogated the legal rights of the senior secured debt holders, and gave the company to the union**. The fiduciaries which owned that debt protested. Rattner is the guy who threatened them with 'the IRS, U.S. Treasury, FBI and every other government agency to make the rest of their life hell...' or words to that effect. In true Chicago negotiating style!
You may notice from the article that his defense attorney is Jamie Gorelik. You have written about the 'Mistress of Disaster' before:
Audacity? Yes?
** Last year my Ford was in a recall that involved over 16 million vehicles. The cruise control harness could catch on fire, and there were over 550 incidents, some of which caused deaths well after Ford knew about the problem. Why don't you remember that? Why wasn't that a news story as big as the Toyota story? Ford recalled 16 million vehicles, Toyota 8 million; there were 550 incidents, many times more than Toyota. The Ford numbers are much greater than the Toyota numbers. So why don't you remember the Ford incident? Toyota is non-union. This Toyota story is a co-ordinated effort by the administration as agents for the union (as they did in the GM takeover). Just more thuggery. Did the Secretary of Transportation give a nice sound bite (" I would advise Ford owners to leave their Ford in the garage...") as he did in Congressional testimony about Toyota? This Toyota story is a travesty.
