“As Detroit goes,” it used to be said, “so goes America.”
Let’s hope not.
Today’s news: the Obama administration is making another $500 million available to Chrysler as it tries to make itself pretty enough to seduce Fiat into taking on all that red ink. And GM will get another $5 billion of your tax dollars “to help . . . restructure outside of bankruptcy.” (What happened to the initial $17.5 billion? Don’t ask.)
But wait a minute. Who wields the funnel that channels your tax dollars to the auto makers? Who was it who stepped in a few weeks ago and gave former GM chairman Rick Wagoner the Order of the Boot? Why, that would be Steven Rattner.
And who is Steven Rattner? Well, he is a big fund-raiser for the Democratic party, for starters. He can afford it. In 2000, he co-founded the private equity fund Quadrangle Group, which at one point was leveraging — er, I mean managing — some $6 billion. What else? Oh yes, according to The New York Times, he “has been described in Securities and Exchange Commission documents as having arranged for his investment firm to pay more than $1 million to obtain New York State pension business.”
Oh dear, Oh dear, Oh dear. That’s just the sort of thing the SEC frowns upon–isn’t it? The Times goes on to note that “There is no indication in the complaint that Mr. Rattner faces criminal or civil charges in connection with the inquiry.” Well, that’s nice. But how do you spell “impropriety,” as in “appearance of”? Last week, The Wall Street Journal reported that Mr. Rattner “was one of the executives involved with payments under scrutiny in a probe of an alleged kickback scheme at New York state’s pension fund.” So I’m sure you will be pleased to know that, according to The Washington Post, President Obama has “full confidence” in his auto task force chief “despite disclosures that the former Wall Street financier was involved in business dealings now under investigation by New York and federal authorities.” It gives you a bit of insight into how things work in the Obama administration, doesn’t it?
One bit of advice, though: Don’t you go trying this at home! We ordinary mortals, untapped by Obama, do not get the sort of forbearance Timothy Geithner gets on his income taxes or Steven Rattner gets from the SEC. The message? Laws and taxes are for us little folk, not the big fellas who run things. They’re too busy firing the heads of public corporations and expropriating more of your and your children’s wealth to bother with little stuff like that.
* * * UPDATE * * * Edward Jay Epstein has more in a post called “None Dare Call it Bribery — Not Yet.”
Like the “shock” expressed by Captain Renault in the 1942 movie “Casablanca” after a croupier hands him a pile of money, the investment houses can express dismay that their agents of influence earned their fees in any nefarious way. After all, the boilerplate in their agreements with their placement agents requires those agents, to quote from the Carlyle contract, to “abide by all laws.”