Rattner to Leave Auto Task Force

Updated from July 13

Steven Rattner, who had led the Obama administration's auto task force, is headed home.

Rattner "has decided to transition back to private life and his family in New York City," said Treasury Secretary Tim Geithner, in a prepared statement. Rattner will be replaced by Ron Bloom, who had been a senior adviser to the task force.

"With the emergence of both General Motors and Chrysler from bankruptcy, we enter a new phase of the government's unprecedented and temporary involvement in the automotive industry," Geithner said, as "the government transitions its role away from day-to-day restructuring to monitoring this vital industry and protecting the substantial investment the American taxpayers have made in GM, Chrysler, and GMAC."

Rattner and Bloom were key advisers to Geithner as the government pushed GM and Chrysler through quick bankruptcies, helping the auto giants shed unsustainable debt levels, large health care obligations and uncompetitive wage levels.

GM received about $50 billion in loans and bankruptcy financing while Chrysler got about $15.5 billion in federal aid. Under the new structures, the U.S. government will own about 61 percent of General Motors and 8 percent of Chrysler.

The Treasury Department said Rattner had decided to return to private life and his family in New York City. Geithner credited Rattner for his work to strengthen the two companies. "I hope that he takes another opportunity to bring his unique skills to government service in the future," Geithner said.

GM chief executive Fritz Henderson said in a statement that Rattner's "expertise was a key contributor toward a new GM emerging in record time."

Rattner's government service was clouded by an influence peddling investigation back in New York. Authorities have said Rattner, a Wall Street financier who co-founded the Quadrangle Group LLC in 2000, was unlikely to face charges in the probe of a giant state pension fund that provides retirement benefits for more than 1 million government employees.

A person familiar with the state attorney general's investigation said it had intensified in recent weeks and investigators had sought more information about Quadrangle's role in the pension fund. The person, who spoke on condition of anonymity, was not authorized to speak publicly because of the sensitivity of the investigation. Alex Detrick, a spokesman for New York Attorney General Andrew Cuomo, declined comment.

Rattner had hinted that changes were coming, telling reporters last week that the "task force will inevitably get smaller as this becomes more of a monitoring function."

Bloom, who advised union workers as the steel industry downsized, will be tasked with helping the government shift from a restructuring negotiator to the hands-off owner of General Motors and stakeholder in Chrysler's new alliance with Italian automaker Fiat.

Bloom told the Senate Banking Committee last month that the government was a "reluctant shareholder" and would leave day-to-day decisions to the companies' executives and board of directors. But he said the government's role was necessary to prevent the large companies from liquidating and shedding tens of thousands of jobs during an economic downturn.

"As the president made clear, we will manage this investment commercially and exit our position as quickly as is practical," Bloom said.

Copyright 2009 TheStreet.com Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed. AP contributed to this report.

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