It was a call that, in a sense, Steven Rattner had been waiting for most of his life. It was the week between Christmas and New Year’s, and he was vacationing in Europe when Secretary of the Treasury Tim Geithner got him on his cell phone. Geithner isn’t chatty, and came right to the point: He wanted Rattner to head the task force charged with saving the American auto industry, “if they could get him,” as one White House official put it. The assignment was one of the most difficult jobs in the American economy and, as such, a huge honor for an enlightened capitalist like Rattner.
Rattner had already had three highly successful careers, first as a journalist, then an investment banker, and finally the head of a private-equity fund—“a New York financier” was the shorthand used in the papers. He was already a power in politics; Rattner and his wife raised millions, and any Democrat of ambition beat his way to their door. Mayor Bloomberg picked him to manage his money. His network, too, encompassed the top tier of the Obama administration, as well as most of boldface Washington. He’d known Geithner, along with the president’s chief economic adviser, Larry Summers, for years; they were, in effect, residents of the same small neighborhood, as Rattner sometimes thought of it.
For a man like Rattner, government service was the necessary next step. It would crown consummate financial competence with high moral purpose. Without it, the triumph of ambition would not be quite complete. And yet Rattner hesitated. He’d long been a matchless careerist who, as one admirer said, “never made a misstep.” He wasn’t one to leap impetuously. The decision would be evaluated in terms of gradations of risk, a business problem.
To help him, Rattner turned to his friends, fellow residents of the neighborhood. Arthur Sulzberger Jr., publisher of the Times, who counts Rattner among his closest friends and counseled him, says, “This was something he had to do. He would have kicked himself if he hadn’t, though on a personal level, I hated to lose him [to Washington].” Bloomberg, whom Rattner considered a very close friend, voted no. Why would Rattner want to get mired in bureaucracy? “You’re out of your mind,” he told Rattner.
Rattner, too, worried about the fallout. Would he be tainted if he failed? After careful reflection, he assessed the risks as middling. “Nobody’s going to blame me for the downfall of the American automobile industry,” he told a friend. He leaned toward taking the post. And yet it was difficult to make the leap. It was Barry Diller, CEO of IAC, who helped to nudge him over the edge. “It’s an adventure, but only if you take it. Don’t be afraid of failing,” he said.
Several weeks after taking Geithner’s call, Rattner arrived at a response, the one most everyone expected all along. “What am I saving myself for? If not now, when?” he asked a friend, with theatrical flourish.
Six months after taking the job, Rattner (who declined to comment for this story) had helped to perform a seeming magic trick, rewriting the understanding between the car companies and the unions while bending the companies’ financiers—his friends and peers—to his will. With what seemed a cool, almost arrogant confidence—his casual dismissal of GM CEO Rick Wagoner reflected this quality—he had played a large role in restructuring the American car industry, accomplishing what few had thought possible a few months earlier, and in record time.
Then, on July 13, Rattner announced that he was stepping down. His resignation took most of Washington and New York by surprise. Though the work of the task force was winding down, Rattner had let friends know that he’d planned to stay in Washington, a financial samurai ready to attack the next problem the president set before him. The announcement was accompanied by praise for his performance, but the applause was almost drowned out by a scandal Rattner had left behind in New York. He hasn’t been accused of anything, yet Rattner had become ensnared in a “web of corruption,” as it was sometimes called, in order to get state pension money for his private-equity firm to manage.
In Rattner’s conception, money was necessary but not sufficient. He wanted to be useful, to give back—noblesse oblige, after all. But Rattner’s previous life pulled him back, and faced with the reality of politics, where appearances matter, Geithner and Summers didn’t push for him to stay. “If this thing gets worse, and it sounds like it might, if they jam him,” explains a Treasury source, reflecting the view at the top, “and [New York attorney general Andrew] Cuomo makes things hotter, it’s untenable. Everyone decided it was better for him to go.”