Thread: FLASHBACK: Obama in 2008: Failure to protect pensions ‘not the America I believe in’

FLASHBACK: Obama in 2008: Failure to protect pensions ‘not the America I believe in’

08/07/2012
By Matthew Boyle /Daily Caller




On the campaign trail in 2008, then-Senator Barack Obama claimed during his campaign that he considers “pension protection” to be “something we ought to put at the top of our priority list.”


“Right now, bankruptcy laws are more focused on protecting banks than protecting pensions,” Obama said then. “And, I don’t think that’s fair. It’s not the America I believe in. It’s time to stop cutting back the safety net for working people while we protect golden parachutes for the well-off. If you’ve worked hard and played by the rules, then you’ve earned your pension. If a company goes bankrupt, then workers need to be our top priority, not an afterthought.”


It appears that Obama has reneged on that campaign promise, though, as emails The Daily Caller obtained and first published on Tuesday show senior White House and Treasury officials were behind the termination of pensions for 20,000 non-union Delphi salaried retirees.


Those emails show that the Treasury Department, led by Secretary Timothy Geithner, was the driving force behind terminating those pensions, a move made in 2009 while the Obama administration implemented its auto bailout plan. The emails contradict sworn testimony in which several Obama administration figures have consistently claimed that the decision to terminate the pensions came from the Pension Benefit Guaranty Corporation (PBGC). The PBGC is a federal government agency that handles private-sector pension benefits issues. Its charter calls for independent representation of pension beneficiaries’ interests.

29 U.S.C. §1342 maintains that the PBGC is the only government entity that is legally empowered to initiate termination of a pension or make any official movements toward doing so.


White House officials and Obama re-election campaign officials have not responded to TheDC’s requests for comment about the president’s pension comments in 2008.

Read more: FLASHBACK: Obama in 2008: Failure to protect pensions ‘not the America I believe in’ | The Daily Caller

Emails: Geithner, Treasury drove cutoff of non-union Delphi workers’ pensions

08/07/2012
By Matthew Boyle /The Daily Caller


Emails obtained by The Daily Caller show that the U.S. Treasury Department, led by Timothy Geithner, was the driving force behind terminating the pensions of 20,000 salaried retirees at the Delphi auto parts manufacturing company.

The move, made in 2009 while the Obama administration implemented its auto bailout plan, appears to have been made solely because those retirees were not members of labor unions.

The internal government emails contradict sworn testimony, in federal court and before Congress, given by several Obama administration figures. They also indicate that the administration misled lawmakers and the courts about the sequence of events surrounding the termination of those non-union pensions, and that administration figures violated federal law.

Delphi, a 13-year old company that is independent of General Motors, is one of the world’s largest automotive parts manufacturers. Twenty thousand of its workers lost nearly their entire pensions when the government bailed out GM. At the same time, Delphi employees who were members of the United Auto Workers union saw their pensions topped off and made whole.

The White House and Treasury Department have consistently maintained that the Pension Benefit Guaranty Corporation (PBGC) independently made the decision to terminate the 20,000 non-union Delphi workers’ pension plan. The PBGC is a federal government agency that handles private-sector pension benefits issues.

Its charter calls for independent representation of pension beneficiaries’ interests.

Former Treasury official Matthew Feldman and former White House auto czar Ron Bloom, both key members of the Presidential Task Force on the Auto Industry during the GM bailout, have testified under oath that the PBGC, not the administration, led the effort to terminate the non-union Delphi workers’ pension plan.

“As a result of the Delphi Corporation bankruptcy, for example, Delphi and the Pension Benefit Guaranty Corporation were forced to terminate Delphi’s pension plans, which means there are Delphi retirees who unfortunately will collect less than their full pension benefits,” Feldman testified on July 11, 2012.

The emails TheDC has obtained show that the Treasury Department, not the independent PBGC, was running the show.

Under 29 U.S.C. §1342, the PBGC is the only government entity that is legally empowered to initiate termination of a pension or make any official movements toward doing so.

One email dated Thursday, April 2, 2009 shows PBGC staffer Joseph House discussing a meeting he and his colleagues were anticipating with the entire auto bailout team the following day.

House emailed PBGC colleagues Karen Morris and Michael Rae that during the Friday morning meeting, the “agenda is everything — lead off with Chrysler, then we’ll get into GM/Delphi.”

Morris had written earlier that day that the PBGC team would “probably get invited to the Monday meeting at tomorrow’s meeting,” and that the Monday meeting would involve “talks” on the GM and Delphi portions of the bailout plan. Those strategies, she wrote, including “pension issues,” would be “kicking off” that Monday.

But after the Friday meeting, House emailed PBGC staffers Karen Morris and John Menke. “We’ve been disinvited,” he wrote. “It’s for the best.”

“Who uninvited us?” Morris replied.

“Treasury,” House responded.

It’s unclear how many additional meetings about the Delphi pensions took place, and whether PBGC staff were invited to participate in them. But Treasury excluded them from the meeting during which the discussions began, which is likely a violation of 29 U.S.C. §1342. Without a PBGC representative in the room, Treasury officials were legally prohibited from making decision about pensions — or even from moving toward them.

Also running counter to the PBGC’s mandate of independence was another email chain between Joseph House and Matthew Feldman, then a Treasury official and a key member of the Obama administration’s auto task force. Those emails show that the PBGC believed it needed to clear decisions and action plans through senior administration officials.

House wrote to Feldman on Thursday, April 16, 2009, that he wanted a “very brief follow-up” discussion to “ensure that we’re acting responsibly/protective” as they moved toward terminating the pensions of non-union Delphi workers.

“[W]e’ve initiated our internal process here,” House added, seeking Feldman’s agreement, “which includes communications to designated reps at our Board agencies (Labor, Commerce, Treasury). Relatedly, that process contemplates newspaper publication of agency action, which we’re tentatively scheduling for end of next week.”

“Don’t want anyone on the auto-team to be caught flat-footed behind any of this,” House added. “I can give you 60 seconds of color when you have a moment.”

Feldman responded: “Understood. You should do what you need to.”

Four days later, Vince Snowbarger — then the PBGC’s acting director, and now its Deputy Director for Operations — emailed several PBGC officials internally. He relayed that the agency “anticipate[d] taking action to file for termination in both [Delphi’s] salaried and hourly plans before the week is out.”

“Given publication deadlines, this means action as soon as tomorrow,” Snowbarger continued, referring to the requirement to make a public statement in the form of a newspaper announcement.

“The action we are contemplating will preserve our position against those assets while the decisions about Delphi’s future are being decided,” he added.

Snowbarger also wrote that Obama administration officials had given him a green light. “The auto team at Treasury is aware of this potential and have indicated we should do what we need to do,” he wrote.

The emails TheDC has obtained also show the White House was involved in this decision-making process. According to a July 8, 2009, email from House to several PBGC staffers, the Treasury Department’s Feldman was coordinating the process with the White House. That email also went to David Burns, then a principal at the finance restructuring firm Greenhill & Co., and Bradley Robins, Greenhill’s Head of Financing Advisory and Restructuring for North America.

“Just spoke with Matt Feldman,” House wrote. “He apologized for being out of touch most of the day, attributing the radio-silence entirely to GM bankruptcy-case issues.”

“He [Feldman] reported that he has made progress discussing our proposal with a number of key folks in Treasury and at [the] White House, but he has not yet wrapped up his coordination,” House continued. “He indicated that there is an 8 am call tomorrow that he’ll use to close the communication-loop, and he’s confident he’ll have a fully-vetted Treasury view after that call.”

In another series of emails between PBGC’s John Menke and Karen Morris, Feldman — an Obama administration official — emerges as the facilitator of the Delphi pension termination. Menke wrote of the need to obtain a “rubber stamp” from Treasury Department officials before the cutoff was finalized, and from others who were supposed to be excluded from the decision-making process.

Menke emailed Morris on July 14, 2009, laying out details of the final deal that was to deny 20,000 non-union Delphi workers most of hteir pension benefits.

“Terry [Deneen], Joe [House] and Greenhill seem inclined to tell Feldman that this does it for us,” Menke wrote. “Terry is taking it up to Board reps meeting this afternoon and expecting to get a head nod, which he will then have Greenhill convey to Treasury.”

“Feldman will then take it to GM and get their approval, which will either be a rubber stamp or one last chance to nick us on the deal,” Menke added.

Feldman has not responded to TheDC’s requests for comment about the Obama administration’s direct role in driving the the plan to terminate the Delphi pensions. And despite the emails, Treasury spokesman Matt Anderson maintained that the PBGC made the decision — not the Treasury Department.

“[T]he termination of the Delphi salaried pension plan was made by the PBGC in accordance with its standard procedures and applicable laws — not by Treasury,” Anderson said in an email to TheDC. “Although the Delphi bankruptcy was very difficult for its employees and retirees, the actions Treasury took to support the American auto industry helped save more than a million American jobs during a period of economic crisis.”

READ THE EMAILS AT THE LINK!


Note: This story was updated after publication to reflect that Delphi is an independent company and not controlled by General Motors.

Read more: Emails: Treasury drove cutoff of non-union Delphi pensions | The Daily Caller