Sworn in as Archon after his grief stricken brother Michael abdicated to lead the LCAF during the Battle of Nox, while an able military commander Steven unfortunately was completely unable to navigate the world of politics. Relying heavily upon a large number of advisers and the mystical advice of his mentally unstable wife Margaret Olsen, Steven appeared to rule via blind hunches and random whims, making him completely unprepared for a true crisis such as the Loki incident.
Formed in the late 24th century, Loki was an ultra-secret branch of the Lyran Intelligence Corps that combined the ability of a small commando unit with the skills of secret agents to target internal and external threats to the Commonwealth. In practice Loki was effectively a government sanctioned terrorist organization and few outside of the LIC knew of its existence.
In early 2488, Loki snuck aboard a Lyran trading caravan so they could slip across the Draconis Combine border to reach the major DCMS staging world of Vega. Once there the team was to perform a series of disrupting raids against military forces based on the planet before being picked up a year later by another passing Lyran caravan. Normally such a risky and dangerous plan required the approval of the Archon, but the LIC felt the indecisive Archon would not fully understand the full complexities of the mission and made the fateful choice to proceed without telling him.
The plan went smoothly until a botched attempt to hit the Fuson Air Base which resulted in the Loki commander and six of his troops being captured. Instead of executing the commandos as his superiors wanted, the Kurita nobleman in command of the planet so admired their daring that he chose to ransom them back to the Commonwealth, sending his offer direct to a totally unaware Archon.
The now horrified Steven was torn between concern that ransoming Loki would publicly reveal the existence of the unit and that its terrorist activities were officially sanctioned, damaging the high ideals he'd professed to uphold, including the one to protect the life of every Commonwealth citizen from internal and external threats which made the existence of Loki necessary. Unable to come to a course of action, his delay allowed the story to leak out anyway and surprising polls taken after the revelation showed the public backed the existence of unit.
Even with Loki's existence revealed, Steven could still not make up his mind and continued to prevaricate, desperately seeking some consensus. With his personal advisers divided to as a response, Steven turned to his wife. After she proclaimed "the stars were not right for a ransom", Steven publicly declared he had no knowledge of Loki what so ever and would not discuss the matter any further. The Kurita commander's response was a particularly gruesome public execution which he made sure was recorded and widely broadcast in Lyran space. While the Archon was still unsure as to how to respond to this new disgrace, the remaining members of Loki had no such issues, with some members angrily defecting to House Kurita while the rest enacted murderous rampages within the Commonwealth before being hunted down and killed.
The incident made it all to clear to the Lyran public that instead of a strong and focused leader, the nation was guided by a man unwilling or unable to make the hard decisions the position of Archon required, causing a general malaise in the Commonwealth. Many of the nobles of the Lyran realm, particularity the Dukes of Tamar and Skye, took advantage of the Steven's indecisiveness to pass laws to their benefit and aligned themselves with the his wife, increasingly the power behind the throne, while others attempted to champion Robert Steiner in the hope he would grow to become a strong leader.
- House Steiner (The Lyran Commonwealth), p. 26