Rattner leaves US autos force, probe intensifies

WASHINGTON/NEW YORK (Reuters) - Steven Rattner will leave as head of the U.S. autos task force, which oversaw bankruptcies at General Motors Corp and Chrysler Group, at a time when a probe into how the private equity firm he co-founded gained New York pension business has intensified.

In announcing Rattner's resignation on Monday, Treasury Secretary Timothy Geithner said that the investor would be returning to private life and his family in New York. A source close to Rattner said he does not plan to rejoin his former firm, Quadrangle.

Rattner, a former journalist, made his name as a media banker and co-founder of media-focused private equity fund Quadrangle, and surprised Wall Street when he took the autos role in the government in February.

Quadrangle and Rattner have in recent months been linked to a corruption probe by New York's attorney general, Andrew Cuomo, into the pensions industry.

A source familiar with the matter said that Cuomo's investigation of Rattner has "intensified" in recent weeks.

"The attorney general's office has been seeking additional documents from Quadrangle concerning the New York pension fund investments," the source said.

Rattner and Quadrangle have not been accused of wrongdoing.

The pensions scandal involved allegations that high powered political lobbyists were paid by private equity firms to pull in pension fund business from New York and other state pension funds.

The investigation has already led to the indictment of several of those involved, including Henry Morris, who was the former state comptroller's top fund-raiser.