In 2000, Rattner took three colleagues with him and founded Quadrangle Capital Partners, a private-equity firm focused on media and telecommunications investments, his specialty.
Private equity is an investment banker’s revenge. After all is said and done, investment bankers are attendants paid on commission. In private equity, Rattner would be a decision-maker, often buying and sometimes running companies, a true actor for the first time. He’d also be rich and not merely investment-banker rich. “Private equity is the best business known to man,” says one former investment banker. Every year, Quadrangle pocketed 1.75 percent of the money it raised, plus 20 percent of the profit from investments. Eventually, Quadrangle raised $3 billion, which tossed off, when fully funded, a brisk $52 million a year, and that was before realizing any profits.
In the Quadrangle years, Rattner overcame whatever inhibitions he’d felt about the display of wealth. He owned four cars, a plane that he flies himself. (“Did you drive or fly here?” is a joke he and the mayor share.) The subway guy had gone baronial. He had a 15,000-square-foot home on Martha’s Vineyard, a homestead in horsey North Salem, and that splendid Fifth Avenue apartment at an address where Astors and Guggenheims had once lived.
Every business leverages its strengths, and Quadrangle’s strength was Rattner’s relationships, The four partners were supposed to be equals, “but people weren’t just buying into Quadrangle,” says one fund manager. “They bought Rattner.” Indeed, Quadrangle was brand Rattner, and it relied on his reputation and his Rolodex, one of the best in New York. He needed it. The fund had no track record, and it was through Rattner’s contacts that Netscape founder Marc Andreessen, McCaw, and Diller invested. Eventually Rattner raised $1 billion.
Soon Rattner’s vision of Quadrangle’s future expanded to a many-tentacled investment institution, a smaller version of Blackstone, the giant private-equity firm. In 2002, he snatched a group of disgruntled distressed-debt traders from his former employer, and the new fund quickly became a standout at Quadrangle. Quadrangle also launched an equity fund, even briefly discussed a real-estate fund; by 2004, Rattner was on the road raising a second fund. Later, he’d take steps to raise a third fund and venture into the asset-management business, with the billionaire mayor as the fund’s only client, testament to Rattner’s relationships.
With the blossoming of Quadrangle during the boom years, Rattner had achieved most of what he’d envisioned after his conversation with Bob Rubin. But he wasn’t yet the person he wanted to be. At Quadrangle, colleagues had confronted him about his manner. He was distant and haughty and they didn’t like it. So Rattner hired an executive coach, Art Gingold, and worked with him for a couple of years until he left for Washington. It was essentially a likability course. “He took to the feedback as diligently as anybody I’ve coached,” says Gingold, who declined to discuss personal details. “He studied, almost memorized it. He really took it to heart.” Gingold helped Rattner change his behavior, and gave him pointers. Now Rattner walked down to people’s offices. In meetings, where he’d been business-only, he now opened with, “Good morning, how was your weekend?” He took junior people to lunch. “It sounds simple and obvious, but wasn’t [to him],” says Gingold.
Rattner emerged warmer, but he had other goals. The crucial next step in the Rubin plan was Washington.
Rattner arrived in the capital in February and quickly divvied up task-force responsibilities with Ron Bloom, whom he’d recruited to be his second in command. They were an odd couple. Rattner’s image had long ago been set in stone: He was the relentlessly acquisitive financier who reported a net worth of between $200 million and $600 million, making him one of the wealthiest in the Obama administration. Bloom, too, had once been an investment banker—he and Rattner had crossed paths at Lazard—and, though with less fanfare, he too had earned millions. But Bloom was a recovered banker. For the past dozen years, he’d worked for the steelworkers union.
Bloom had an easier time making up his mind than Rattner. “This was the easiest decision I’ve ever made in my life,” he told me. “This is the mother of all restructurings. It’s important, consequential, it matters to America. How could you not want to do this?”
Rattner understood how different he and Bloom are, but he worked at getting along. While upending the car industry, Rattner tried out his new personality skills. This was a fresh start with people who didn’t yet have a view of him, he told a friend, and he fought his tendency to be cool and remote. He was proud of himself; the guys really seemed to respect and to like him.