The last thing President Obama needs in the wake of widespread “Tax Tea Parties” is the flame-out of another presidential appointment. Though President Obama’s popularity ratings remain high, his choice of appointees may be causing some credibility problems and embarrassment as media outlets report a string of what may be generously termed “indiscretions” on the part of prospective appointees. New Mexico Governor Bill Richardson withdrew himself from nomination for Commerce Secretary while a grand jury investigated state contracts awarded to Richardson’s political contributors. Health and Human Services Nominee, Kathleen Sibelius improved her vetting profile by correcting three years of tax returns and paying back taxes of $7,000. Treasury Secretary Tim Geithner, referred to on conservative blogs as “Turbo-Tax Tim,” paid back $17,000 in taxes he failed to pay the government while working for the International Monetary Fund. The current ethical spotlight is being trained on another Obama appointee, Steven Rattner, chosen to head the government’s auto task force.
Mr. Rattner has not been accused of any crime but was named in a criminal complaint filed by the Securities and Exchange Commission against two men accused in a bribery and kickback scheme involving the New York State Pension Fund. According to the Wall Street Journal and the SEC, Rattner is the “senior executive” mentioned in the complaint, the person who met with a politically connected liaison representing New York pension fund managers. Rattner’s firm, Quadrangle Group, paid middleman Hank Morris $1.1 million as a “finder’s fee” and then received $100 million of New York State’s investment dollars.
Two men have already been arrested and charged in a multi-count indictment which includes money laundering, operation of corrupt enterprises, and bribery. David Loglisci was serving as Deputy Controller under New York Chief Controller Alan Hevesi, also under scrutiny for a variety of violations of state laws and ethical codes. Loglisci is said to have directed Steve Rattner’s investment firm, Quadrangle Group, to hire Hank Morris as a go-between, even though Quadrangle was also paying other representatives to solicit business. Morris got the money from Quadrangle; Quadrangle got $100 million of New York state pension funds to invest, and Loglisci and his brother obtained financial backing from a Quadrangle affiliate for a 2003 B-movie entitled “Chooch.”
What this means for the Obama administration remains to be seen. According to the April 17 Wall Street Journal story “Authorities Investigate Payments By Rattner,” Treasury officials said that Mr. Rattner informed them of the ongoing investigation being conducted by New York Attorney General, Andre Cuomo. The newspaper reported that its calls for comments from car czar Steve Rattner were not returned.