Another week, another New York Times op-ed urging Democrats not to move left. The culprit this time is Steven Rattner, self-described “Wall Street financier” and, for a brief time, the lead adviser to President Obama’s Auto Task Force, who in a column yesterday warns his fellow centrists of “the freight train coming at us from the left” and enjoins them to turn away “candidates from the fringe of our party.”
Rattner’s argument isn’t really important: it’s the same one that’s been made and debunked a hundred times by now, in a variety of outlets. No, to understand Rattner’s dire warnings, you really only have to know one thing about him.
The reason Rattner’s time with the Obama administration was so brief, and the likely reason he missed out on his coveted post as treasury secretary, is because at the time, Rattner’s former private equity firm, Quadrangle, was being investigated by the New York attorney general for a zany kickback scheme set up to obtain investments from the state’s largest pension fund.
According to the SEC, which later investigated him, Rattner used his contacts in the entertainment world to arrange for the DVD distribution of a low-budget movie produced by David Loglisci, the retirement fund’s chief investment officer, and his brother. The film, entitled — what else? — Chooch, told the story of a talentless softball player from Queens who goes on vacation in Cancun only to be abducted and stranded in the Mexican desert.
Despite the promise of a prison escape, a chicken coop explosion, and a donkey ride, the indie film grossed just $30,792 before being pulled seven weeks into its run. It currently has a remarkable 0 percent rating on Rotten Tomatoes, with critics panning it as “really just an outline for a movie,” “an absolute chore to sit through,” and a film that looks like it’s a “neighborhood project . . for someone’s anniversary or birthday party.” (TV Guide’s Ken Fox at least called it “pleasant enough,” while the Village Voice’s David Blaylock praised it for its avoidance of “Sopranos stereotypes,” though he did note that its “depiction of Mexicans veers toward the offensive.” Can’t win ’em all.)
Not surprisingly, the DVD distributor Rattner put Loglisci’s brother in contact with, GT Brands, was not enthusiastic; its CEO told Rattner he found the brother “very unrealistic and naive,” and informed him he would “take a pass.” Rattner urged him via email to treat the brother “carefully” given what was involved, and told him to “dance along” while Rattner figured out if he needed the distribution deal to get the money. You will, no doubt, be shocked to learn that GT Brands agreed to distribute the movie — and at a discounted rate no less.
Rattner also paid New York state comptroller Alan Hevesi’s top political adviser fees of $1 million for his services as a “placement agent,” even though he was already dealing directly with Loglisci, and even though Quadrangle was already working with an actual placement agent. Three weeks after the distribution deal was signed, Loglisci told Rattner the retirement fund would make a $100 million investment into the company. After the adviser pressured Rattner to arrange an additional $50,000 for Hevesi’s re-election campaign, this investment increased to $150 million. Naturally, Rattner neglected to disclose any of these activities.
Everybody won: Hevesi got his re-election money; Hevesi’s advisor got his kickback; Quadrangle got its hands on the state’s pension fund money; Rattner received $3 million in management fees; Logliscli’s brother made $88,000 from the Chooch DVD.
Everybody, that is, except New York’s retired public sector workers, who had their future pension funds recklessly invested so that Rattner could line his pockets and a few thousand more people could be subjected to Loglisci’s brother’s awful movie.
Eventually, Rattner was caught and forced to pay $6.2 million to the SEC — or roughly somewhere between 1 to 3.3 percent of his net worth at the time — as well as being banned from Wall Street for two years, after which he was allowed to reapply. He later paid a $10 million settlement and agreed to avoid “appearing in any capacity” before a New York pension fund for five years. The attorney general (a slightly younger but just as ambitious Andrew Cuomo) had originally sought $26 million worth of restitution in lawsuits that were subsequently dropped as part of the settlement.
To its credit, the SEC opted to retain the Wall Street ban on Rattner after he tried to have it removed in 2013 (even if it only did so by changing its decision to drop the prohibition at the last minute). Still, he got off easy. Rattner paid a comparatively small amount of money to kill the lawsuits, and two years later was welcomed back into the Wall Street social scene with open arms.
Rattner’s indiscretion was quickly forgotten. Obama tapped him to campaign for his re-election, he became a published author, he did the rounds on “Morning Joe” and other cable news shows as an economic expert, and his writing graced the pages of esteemed papers like Bloomberg, the Financial Times, and the New York Times, for whom he remains a regular columnist today. As then-New York mayor Michael Bloomberg explained: “Steve is a good friend . . I never heard anyone say they wouldn’t invite Steven Rattner to a party because of what was happening.” Indeed, Bloomberg did more than invite Rattner to a few parties — he asked him to oversee and manage his many billions of dollars, which Rattner still does to this day.
What is the lesson of this strange, strange tale? For one, it’s that men like Rattner never see the kind of justice regularly meted out to the less powerful, who may lose years, even decades of their lives in jail for being found with trivial quantities of even mild drugs, or be locked in a cycle of imprisonment and destitution for something as petty as being too poor to pay a small fine.
But it’s also that men like Rattner have every reason to fear the ascension of a Bernie Sanders or a “fringe” political movement. With a left-wing president in power and a mobilized base in the streets, those of Rattner’s ilk may finally find themselves having to face justice, rather than being rewarded for their crimes with professional admiration and plush government positions.
Rattner doesn’t want the Democrats to move left because he has every incentive, personally and professionally, not to. In the immortal words of the Chooch poster, there’s more than one way to spell “jackass.”