Hello sweetheart, get me mergers and acquisitions: the rise of Steven Rattner.

• Author: Weiss, Philip

HELLO SWEETHEART, GET ME MERGERS AND ACQUISITIONS

On a night in August 1982, in a loud New York restaurant off Union Square, Steven Rattner, a London correspondent for The New York Times, and Roger Altman, an investment banker at Lehman Brothers Kuhn Loeb, met for dinner to discuss Rattner's future. The two had become good friends a couple of years earlier when Altman was an assistant secretary of the treasury and Rattner was covering Jimmy Carter's economic policy for the Times. Now Rattner, at the age of 30, had decided he wanted to leave journalism.

Rattner was one of the Times's ablest writers. His rise in the organization had been rapid: at 22, clerk to James Reston, at 23, covering energy, one of the most important stories in the country, at 24, a full member of the Washington bureau, at 29, a foreign correspondent in a prestige bureau. But by the summer of 1982, Rattner felt he needed a change. Coming home on vacation, he had considered several options. He'd stopped in on G. William Miller, the former secretary of the treasury, whom Rattner had covered two years before. Miller now ran a merchant banking firm in Washington. He thought Rattner was a "brilliant guy' and was eager to take him on. There were other ideas: venture capital, for example, and management consulting, though Rattner worried that consulting was like being a business reporter for the Times "without 950,000 daily readers.'

Most attractive was investment banking. The field had lured a stream of former Carter officials: Altman and Peter Solomon from Treasury, Josh Gotbaum and Ralph L. Schlosstein from Stuart Eizenstat's domestic policy office, David Aaron from the National Security Council. Most of them were at Lehman Brothers, which, in contrast to the more hidebound, blue-blooded banks, frequently hired people on the basis of experience (and connections) in government. Peter G. Peterson, the man at the top, had been Richard Nixon's commerce secretary.

Over dinner, Altman lobbied his young friend on behalf of Lehman. It was a good time to become an investment banker. Banking was changing, and Rattner had the personality for its competitive new encironment of short-term relationships. His persuasive skills would be useful for selling clients on deals, Altman told him. Working a client wasn't so different from working a source. Rattner also knew how to handle himself in the presence of important people like Paul Volcker. Finally, Rattner's skill in reporting on complex economic matters would help him on Wall Street. "He could understand the interplay of legal, tax, regulatory, and finance questions, very complex stuff,' Altman says now, "to look at things like a three-dimensional chess game.'

Altman was certainly right about its being a good time for banking. The new spirit of competition brought about by deregulation combined with the rise of a new materialist ethic, especially in Manhattan, had made investment banking glamorous in much the same way that journalism had been in the years after Watergate. Investment bankers and arbitragers like Bruce Wasserstein and Ivan Boesky were bing profiled in mainstream publications like Esquire and The Atlantic. Expanded newspaper financial sections reported on the human drama behind merger battles. Radio stations quoted the gold price between rock songs.

But was this the right world for Rattner? As a student at Brown, Rattner had written idealistic editorials proclaiming that the country's moral fiber was "weak' and denouncing "global . . . corruption and disdain.' It would seem only natural for such a person to wonder aloud whether Lehman Brothers offered avenues for socially useful work. It's possible to imagine circumstances in which it might: raising capital for new companies that would create jobs, for example, or helping workers to buy a factory, as Rattner's friend Josh Gotbaum had done for Weirton Steel while working at Lazard Freres. Indeed, such possibilities might conceivably have promised greater idealistic fulfillment than reporting for the Times. But Altman does not recall that Rattner raised the question of whether investment banking was meaningful work except, he said, "in this sense. He wanted to know whether he'd be fulfilled by banking. Was it overly narrow?' Rattner asked Altman whether investment bankers ever lifted their noses from their spread sheets. He was a young man who had lived abroad and traveled widely. He had a feeling for good art. Altman assured Rattner that he would meet people who shared his intellectual curiosity and cultivation.

Rattner took the job at Lehman. Barely a year and a half later he moved to the New York Times of investment banking, Morgan Stanley & Company, where in 1985 he brought in a stunning $33 million in fees. After just 18 months at Morgan Stanley, he was promoted, at age 33, to "principal,' a partner who cannot vote on firm policy. The jump usually takes six years.

When he left the Times, Rattner was earning about $50,000 a year; last year he is said to have made as much as a million. At Morgan Stanley Rattner specializes in deals involving communications companies. Most of his time is devoted to mergers and acquisitions--helping to buy and sell media properties. In some cases, these efforts may have served to compromise the editorial quality of news organizations that, like The New York Times, have been known for valuing the product more than the bottom line.

In any age, there are certain people who, because they are both very smart and unusually reactive to their society, help illuminate prevailing values through their actions. One thinks of Gerals and Sara Murphy, who presided over a salon of expatriate writers in the south of France during the 1920s, or, on a more frivolous level, Jerry Rubin, who went from yippie to a Studio 54 "networker' in the 1960s and 1970s. Rattner's life hasn't been as glamorous as the Murphys' or as opportunistic as Rubin's, but it seems similarly emblematic of the spirit of the times. Rattner is extremely talented. "I hate to sound like a sap, but he has a brilliant mind,' says Times reporter James Brooke. But Rattner's career path, impressive as it is, has a conformist quality that calls to mind the Woody Allen character Zelig, the "chameleon man' who always took on the coloration of those around him. When journalism defined the spirit and values of a generation, Rattner was a journalist. Now that investment banking defines those things, he is an investment banker. This chameleon quality makes Rattner an instructive case study of the process by which many of today's best and brightest have lost interest in making a difference with their lives. In trying to understand Rattner's life choices, we might help ourselves understand what has gone wrong with our culture.

The nobrainer

"It's tough to be a first child brought up in a place like Great Neck [Long Island] and not be a little hard-driving,' Rattner told me when we met one Saturday afternoon at a delicatessen near Central Park. Especially, one imagines, in a family of achievers like the Rattners. One associate of Rattner suggested that half of Rattner's motivation in life was the desire to please his mother, a forceful woman well known for her preservationist activities on behalf of Grace Church in Greenwich Village. When I called Selma Rattner she wanted to be sure that I didn't overlook the achievements of Steve's sibling--a doctor daughter and an architect son.

Beginning with an artist grandmother who dabbled in the stock market, Rattner's family has tended to mix business with culture. His father, a paint manufacturer on Long Island, also writes serious plays, while his mother has acquired a graduate degree in architecture. In high school Steve was interested in photography, and it was to take pictures that he joined his high school paper. He ended up second in command. "Clearly committed . . . to educational and political reform,' he wrote of the paper in his 1970 yearbook.

At Brown University, he soon got on the Brown Daily Herald. He was a liberal Democrat on a left-liberal paper with countercultural tendencies. Other students wrote about protest marches and Bob Dylan concerts. Rattner wrote about school finances in a sharp, detailed way.

His best college journalism was muckraking. Once he even went through the trash outside a school office. But his stance was never subversive; he was trying to make Brown a better school. He criticized planning that had resulted in a dorm squeeze, mismanagement in the bookstore, and the waste of $1.5 million on unused building plans. He hammered the school for not devoting more resources to undergraduate education, a policy which threatened to turn Brown into a "semiversity.' He was outspoken about the low numbers of minority students in a science program. In 1973 he took over as editor. The photo of his editorial board showed him in a western shirt with his hair down to his shoulders, affecting almost a Dennis Hopper cool.

A major theme of Rattner's writing for the Herald was responsible activism. Again and again he rapped Brown president Donald F. Horning for his isolation, and for a time he ran a box every issue indicating how many days it had been since Horning had last met with students. He tried to whip up student outrage: administrators made big changes "by fiat,' students had abandoned "politics' and "social action' for "apathy.' His final piece was virtually a demand that Hornig resign (he left two years later). He also called for impeachment proceedings against Richard Nixon and spoke of "the murderously protracted and illegal bombings of Indochina and . . . the mockery of the last presidential election.'

Rattner had worked hard, and at year's end the paper seemed punchy. Large photos of nude women showed up out of nowhere on the features pages, and in a parting photo, Rattner and three other staff members were pictured naked themselves, judiciously holding Heralds before them (see page 28)...