The rehabilitation of Steve Rattner

February 20, 2013, 1:54 AM UTC

FORTUNE — Well, it’s official: Steve Rattner’s reputation has been rehabilitated, just two years after settling with federal and state authorities over allegedly participating in a kickback scheme to get public pension fund investments for his private equity firm.

From Andrew Ross Sorkin at The New York Times:

As Mr. Rattner sat across from me in Midtown Manhattan two weeks ago, his re-emergence as power magnate was well under way. He is the overseer of Mayor Michael R. Bloomberg’s fortune of billions of dollars — you could call Mr. Rattner a money manager but that doesn’t capture the scope of it. He has appeared as a pundit about the economy on television (MSNBC’s “Morning Joe,” ABC’s “This Week” and “Fox News Sunday,” among others) and in newspapers (The Financial Times, Politico and The New York Times). And to take the story full circle, the Obama administration, which had eased Mr. Rattner out of his role [as car czar], appears to have re-embraced him, even using him to campaign for the president last fall.

As someone who extensively covered the private equity corruption scandal in which Rattner was implicated, Sorkin’s story left a bitter taste in my mouth. Not because I begrudge Rattner the chance to rebuild his professional life, but because he did so through the enabling embrace of powerful pals who pretend that he did nothing wrong in the first place.

The most egregious example is Michael Bloomberg, a public official who has casually dismissed the allegations against Rattner as little more than media inventions. Even when both the SEC and then-New York AG Andrew Cuomo brought charges against Rattner, Bloomberg continued to turn a blind eye. And then, as if to prove his loyalty was to his friends rather than to the people he represents, Bloomberg let Rattner’s new firm manage his vast personal fortune.

And then there was what Bloomberg told Sorkin:

“Steve is a good friend. You stick by your friends. And I don’t worry about what people say… I never heard anyone say they wouldn’t invite Steven Rattner to a party because of what was happening.”

Really Mr. Mayor? That’s your standard? Party invites? I guess you don’t hang out with Rattner’s former partners at Quadrangle Group, who blame him for their firm’s demise. Or Quadrangle’s investors, many of whom feel the same way.

Again, once again, this wasn’t idle gossip. It was government lawsuits that Rattner paid millions and millions of dollars to make go away. Or, put another way, it was way worse selling a Big Gulp full of Mountain Dew.

The real legacy of Steve Rattner’s legal troubles won’t be to dissuade future private equity executives from (allegedly) trying to bribe public pension officials. It will be to make such executives pick the right friends first.

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