Head of Obama Auto Task Force Under Fire

April 17, 2009— -- Authorities are looking at an investment firm co-founded by the head of President Barack Obama's auto task force as part of an investigation into an alleged "pay to play" scheme to secure New York state pension business, but the White House is standing by its man.

Steve Rattner, the head of the auto task force, co-founded the investment firm Quadrangle Group in 2000. According to documents from the Securities and Exchange Commission, in January 2005 Quadrangle paid a fee of more than $1 million after receiving an investment from the New York State Common Retirement Fund.

As part of the probe that has already led to three indictments, authorities are looking into more than 20 investment firms to find out what they knew -- or should have known -- when they paid the fees.

Rattner is not named in the SEC documents, but the Wall Street Journal and The New York Times, each citing sources familiar with the matter, reported that Rattner is referred to in the documents as a "senior executive" at Quadrangle.

In the amended complaint, filed Wednesday, neither Rattner nor Quadrangle are accused of any wrongdoing.

However, the complaint alleges that, in 2004, the "senior executive" at Quadrangle met with the chief investment officer at the pension fund to ask for investments, with Quadrangle then agreeing to pay what became a $1.1 million fee after receiving an investment from the fund.

Aboard Air Force One Friday en route to the Summit of the Americas in Trinidad, White House spokesman Robert Gibbs said the president still has full confidence in Rattner.

"He's not accused of doing any wrongdoing and is not likely to face either criminal or civil charges as it relates to this, and a pending investigation was something that he brought up to us," said Gibbs.

The SEC and the New York attorney general's office had no comment.

The Treasury Department, which oversees the auto task force, also had no comment, although a spokeswoman did note that Rattner informed them of the investigation earlier this winter.

"During the transition, Mr. Rattner made us aware of the pending investigation," a Treasury spokeswoman said.

In a statement, Quadrangle spokesman Adam Miller said, "Quadrangle is fully cooperating, has produced all documents requested and our expectation is that no action will be taken."