Rattner, who led the Obama administration's efforts to rescue the automotive industry in 2009, also agreed to a two-year ban from working as an investment adviser, the New York Post reported Thursday.
His legal troubles are not over. New York State attorney general Andrew Cuomo filed two lawsuits against Rattner Thursday.
"Steve Rattner was willing to do whatever it took to get his hands on pension fund money including paying kickbacks," said Cuomo in a statement.
Rattner is charged with taking part in a "pay to play" scheme involving New York's $125 billion Common Retirement fund, while working at investment firm Quadrangle Group.
The kickbacks allegedly included a $50,000 campaign contribution to former New York Comptroller Alan Hevesi's reelection campaign.
After the campaign contribution was made, the retirement fund's chief investment officer David Loglisci increased its investment at Quadrangle from $100 million to $150 million, the Post said.
New York state is seeking a $26 million settlement and a lifetime ban on Rattner working in the securities industry.