Steve Rattner has always been known for his controlled, rational manner. Even during his tenure as President Obama’s car czar, when he fought unions and bankers to reorganize a bankrupt industry, emotion rarely disturbed his calm. But lately Rattner seems to have found his inner Howard Beale. In interview after interview, he says he’s angry at being “bullied” by State Attorney General Andrew Cuomo, and he isn’t going to take it anymore. Cuomo “has been trashing my reputation for a year and a half,” Rattner told The Wall Street Journal. “I am … in a fighting mode today.” The bottled-up Rattner is clearly enjoying his emotional coming-out. And yet, beyond the cathartic benefits, one wonders, what does he think he can accomplish by further antagonizing Cuomo? Plenty, it turns out.
Accused of using kickbacks to secure business for his private-equity firm from the New York State pension fund, Rattner spent months in fruitless settlement negotiations with Cuomo’s office—from Rattner’s point of view, he was “grin-fucked,” told that all was proceeding when it wasn’t. Then, on November 18, Cuomo filed a pair of suits seeking an eye-popping $26 million in penalties and a lifetime ban for Rattner from the securities industry in New York. Cuomo made the action public the day of General Motors’ triumphal IPO, spoiling Rattner’s time before the cameras. It was also the same day that the Securities and Exchange Commission announced a settlement with Rattner that cost him a mere $6.2 million.
Rattner launched a media offensive. “This episode is the first time during 35 years in business that anyone has questioned my ethics or integrity,” he claimed. He halfheartedly argued his case, saying he was “well on the right side” of the line. But mostly he seemed beat-up and emotional. He had saved the car industry, and now Cuomo seemed intent on ruining his life. He nearly cried on Charlie Rose. As Cuomo launched a counteroffensive (“what he did was just wrong,” says a Cuomo aide), people seemed to feel sorry for Rattner, a first.
And yet here’s the interesting part: In three weeks, Cuomo will be governor. He will not decide Rattner’s fate. “There’s nothing else he can do to me,” Rattner told a friend. So Rattner can look ahead to dealing with Attorney General–elect Eric Schneiderman.
There’s an established playbook here. In 2004, then-A.G. Eliot Spitzer sued Dick Grasso to recoup most of the $140 million paid to the former New York Stock Exchange chairman, an amount a judge demanded he forfeit. For Spitzer, it would become the ugliest fight of his tenure. But after Cuomo took over as A.G., a court overturned an early victory on a technicality, and Cuomo dropped the case. Beyond the legal issues, personal dynamics argued for letting it go. Cuomo and Spitzer simply hate each other, and Cuomo had no interest in burnishing his predecessor’s reputation.
Today, it’s Schneiderman who might be disinclined to continue Cuomo’s crusade. The two started disliking each other during the election. “Andrew didn’t think he could control Schneiderman,” says a source, and so delayed his endorsement. Meanwhile, the New York Post last week ran with a report that Rattner has dispatched lawyers to seek e-mails from the attorney general’s office, hunting for proof of political persecution. Nonetheless, as he told Charlie Rose, he’s “perfectly prepared” to reach a reasonable settlement.” This, too, is a classic strategy. Rattner demonstrates a determination to fight and at the same time offers an out. His calculation is clear, as he told a friend: This suit is a bag of garbage on Schneiderman’s doorstep. Rattner hopes Schneiderman will to want to dispose of it quickly.