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  1. #1
    Super Moderator Newmexican's Avatar
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    Obama’s Auto Bailout Was Really a Hefty Union Payoff

    Obama’s Auto Bailout Was Really a Hefty Union Payoff

    By LIZ PEEK, The Fiscal Times
    October 17, 2012

    In the second presidential debate, Mr. Obama attacked early on, saying, “Governor Romney said we should let Detroit go bankrupt.”

    Note to Obama fans: GM did go bankrupt – filing for Chapter 11 protection against its creditors on June 1, 2009. It’s what happened next that the president can take credit for – a handout of $49.5 billion in taxpayer money to GM, some $27 billion of which remains outstanding, and another $17 billion to its financial arm Ally Financial, which still owes $14.7 billion.

    In other words, Obama didn’t save General Motors; American taxpayers did, with an assist from the Federal Reserve. While liberals rant about the bailouts of Wall Street, it is worthwhile noting that of the $417 billion in TARP funds spent to stabilize the economy, only $65 billion has yet to be repaid – and more than half of that is owed by GM and Chrysler. The latest TARP report from the Congressional Budget Office says that the government invested nearly $80 billion in those two auto giants and that taxpayers are still on the hook for roughly $37 billion.

    In the same report, the CBO projects that handouts to Wall Street firms will ultimately net the government a cool $11 billion profit. They say the auto industry, on the other hand, will never pay back taxpayers. According to the congressional bean counters, $20 billion is gone for good.

    Where did that money go? Mainly, it went to paying off debts owed by GM and Chrysler, and – in an historic distortion of our bankruptcy proceedings – to securing the pensions and livelihoods of UAW workers. It turns out the real debt was that of Mr. Obama to organized labor, which had ponied up some $400 million to help him defeat John McCain.

    RELATED: Romney Accuses Obama of Pandering to Big Labor

    The Obama administration strong-armed the auto companies’ creditors into accepting undeniably unfair terms – terms that saw pensions obliterated for non-union workers but saved for those carrying a UAW card. Terms that saw non-UAW shops close but UAW factories stay open. Terms that doled out ownership in GM with political favoritism as a guiding principle.

    These charges are not at issue. In the government-managed reorganization of GM, bond holders (secured bond holders, who normally are at the top of the pay-out chart) were given equity in the carmaker at a price of $2.7 billion per one percent ownership. The government ended up paying $834 million for every one percent it claimed; the UAW paid only $629 million.

    Why did the UAW receive such favorable treatment? The government at the time argued that the UAW was already making sufficient sacrifices. While true that union members gave up cost-of-living increases and agreed to a no-strike rule, they were protected against the kind of pay cuts that would have made GM truly competitive.

    Months earlier, Congress refused an emergency loan to the auto makers because the UAW would not lower pay to compete with foreign car makers operating in non-union U.S. factories. The reality is that the UAW could have been harder pressed. If GM and Chrysler had stopped turning out cars, the union was toast.

    It was not only the ownership share that was skewed towards the UAW. As jobs began to come back, it was the UAW plants that kicked into high gear. Workers at GM’s plant in Moraine, Ohio, who had been laid off in 2007, were not included in the re-hiring. Why? Because they did not belong to the UAW. The Moraine plant was reportedly one of GM’s most productive, but under the terms of GM’s reorganization, its workers were “banned from transferring to other plants,” according to Sharon Terlep at The Wall Street Journal.

    Moraine was not the only non-UAW facility to fall under the knife; a truck plant in Ontario organized by the Canadian Auto Workers also went down.

    The treatment of laid-off workers was not the only favor dealt the UAW. In a growing scandal, Obama’s former auto czar and two Treasury officials appear implicated in the decision to eliminate the pensions of 20,000 non-union workers at GM’s Delphi unit, while protecting benefits for UAW members. Under oath, they blamed the decision to wipe out the nonunion pensions on the Pension Benefit Guaranty Corporation, but emails uncovered earlier this year show that Treasury held meetings on the matter in which the PBGC was not included.

    The auto task force individuals involved have stonewalled Congress and SIGTARP investigators looking into the matter.

    With tens of billions still at stake, taxpayers may wonder, is GM healthy? Certainly the company has staged a comeback. Its costs were indeed lowered, in large part because its debt burden was eased. It is not clear that the structural overhang of overly generous benefits and wages has entirely disappeared. Sales today industry-wide are being boosted by record-low interest rates, thanks to Fed easing, and also by a slightly unnerving boom in subprime lending – especially at GM.

    Through a recently-acquired financing arm, GM subprime loans have accounted for a growing share of total sales – from 4.8 percent in late 2010 to 8.2 percent early this year. The industry average is around 6 percent. Some have charged the firm with hyping sales in order to boost its share price. The stock is currently selling at around $25; only as it moves closer to the breakeven price of $54 is there any chance that the government will sell its shares. Management has complained that being known as Government Motors inhibits hiring; they would like Uncle Sam out of the way. The Obama White House, however, is not about to unload the shares at current levels, broadcasting the resulting losses for the world to see.

    Mitt Romney, for the record, advocated for a process not unlike the one that ultimately led to GM’s restructuring – absent the union giveaways. In his 2008 op-ed, which he titled “The Way Forward for the Auto Industry” but which The New York Times published as “Let Detroit Go Bankrupt,” Romney calls for new labor agreements to make domestic car companies competitive, noting the $2,000 per vehicle cost disparity between US makers and their overseas rivals.

    He pushed for a change in management, improved relations between labor and the bosses, which might be helped by getting “rid of the planes, the executive dining rooms,” as well as profit sharing or stock grants, and called for investment in new technologies, “especially fuel-saving design.” Never could he have imagined that his thoughtful assessment of the industry’s future prospects could be held against him. But then, he might never have imagined a campaign so perilously built on distortions and half-truths, and so eager to run away from the reality of the past four years.


    Last edited by Newmexican; 10-21-2012 at 08:34 AM.
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  2. #2
    Super Moderator Newmexican's Avatar
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    Heart of Dixie
    The Autoworkers Obama Left Behind

    By Michelle Malkin • February 29, 2012 08:59 AM

    As long as Barack Obama insists on spinning fables about the auto bailout, I will continue to call attention to the forgotten victims and sacrificial lambs who got screwed. Yesterday’s UAW pep rally in Washington was another exercise in reality denial. I’ll say it again: The Right needs to forcefully counter the Obama machine’s Alinsky story-telling tactics. The leftists who claim to speak for hard-working people who play by the rules won’t put the names and faces and suffering of Obama’s jobs death tollvictims front and center. We must.

    The Autoworkers Obama Left Behind
    by Michelle Malkin

    The White House fairy tale about the Happily Ever After Auto Bailout is missing a crucial, bloody page. While President Obama bragged about “standing by American workers” at a rowdy United Auto Workers meeting Tuesday, he failed to acknowledge how the Chicago-style deal threw tens of thousands of nonunion autoworkers under the bus.
    In a campaign pep rally/sermon billed as a “policy speech,” Obama nearly broke his arm patting himself on the back for placing his “bets” (read: our money) on the $85 billion federal auto industry rescue. “Three years later,” he crowed, “that bet is paying off for America.” Big Labor brass cheered Obama’s citation of GM’s “highest profits in its 100-year history” as the room filled with militant UAW chants of “union made.”

    “Union made” — but who paid? Scoffing at the criticism that his bailout was a massive union payoff, Obama countered that all workers sacrificed to save the auto industry. “Retirees saw a reduction in the health care benefits they had earned,” Obama told the congregation, er, crowd. “Many of you saw hours reduced,” he sympathized, “or pay and wages scaled back.”

    Let’s clear the fumes (again), shall we? The bailout pain was not distributed equally. It was redistributed politically.
    Bondholders standing up for their property and contractual rights got shortchanged and demonized personally by the president. Dealers and suppliers faced closures based on political connections and lobbying clout, rather than neutral efficiency evaluations. And as I first reported inSeptember 2010, in the rush to nationalize the auto industry and avoid contested court termination proceedings, the White House auto team schemed with Big Labor bosses to preserve UAW members’ costly pension funds by shafting their nonunion counterparts.

    These forgotten nonunion pensioners (who worked for the Delphi/GM auto parts company) lost all of their health and life insurance benefits. Hailing from the economically devastated Rust Belt — northeast Ohio, Michigan and neighboring states — the Delphi workers had devoted decades of their lives as secretaries, technicians, engineers and sales employees. Some have watched up to 70 percent of their pensions vanish. They’ve banded together to seek justice in court and on Capitol Hill under the banner of the Delphi Salaried Retiree Association.

    Through two costly years of litigation and investigation, the Delphi workers have exposed how the stacked White House Auto Task Force schemed with union bosses to “cherry pick” (one Obama official’s own words) which financial obligations the new Government Motors company would assume and which they would abandon based on their political expedience. Obama’s own former auto czar Steve Rattner admitted in his recent memoir that “attacking the union’s sacred cow” could “jeopardize” the auto bailout deal.

    Ohio Republican Rep. Michael Turner last month called attention to the glaring conflicts of interest that entangled Obama moneyman Tim Geithner’s multiple meddling roles in screwing over the Delphi workers. Geithner served simultaneously as co-chair of the Auto Task Force, board member of the Pension Benefit Guaranty Corporation (the federal agency overseeing pension payments to bankrupt companies) and Treasury Secretary. The General Accounting Office raised eyebrows at Geithner’s “multiple roles” in the deal-making.

    Thanks to a separate Freedom of Information Act request filed by theCompetitive Enterprise Institute, we already know that Geithner’s department and General Motors closely coordinated their PR strategy and collaborated on making fraudulent claims about GM repaying all of its government loans. The cash-strapped Delphi retirees are suing the transparency-ducking PBGC in federal court to unearth documents that may yield key details of the improper Obama administration influence over Delphi’s bankruptcy organization.

    As ebullient UAW officials hooted and hollered on Tuesday, Obama smugly attacked Republicans for “anti-worker policies” and their “same old you’re-on-your-own philosophy.” The Delphi workers know better: One union’s government-subsidized, government-manipulated “success story” is the rest of the workforce’s nightmare.
    The Delphi retirees have not given up their fight. You can now follow them on Twitter at @DelphiRetirees and on Facebook here. They are asking for your support with their petition seeking pension equity with their UAW counterparts.

    October 6 2010 Document drop: Another federal investigation launched into Delphi Disaster
    September 24 2010 The Delphi disaster: Judge refuses to dismiss non-union pensioners’ charges
    September 22 2010 Special Report– The Delphi disaster: An economic horror story Obama won’t tell
    UAW Bailout: White House Kneecapped White-collar Pensioners
    Nonunion Delphi Retired Employees Get Shaft in Auto Bailout
    Oversight Committee Republicans Question Politicization of Delphi Bankruptcy Deal
    Boehner and Wicker Request GAO Report to Investigate Delphi Pension Treatment
    Delphi pension dispute due for federal probe

    Michelle Malkin » The Autoworkers Obama Left Behind

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  3. #3
    Super Moderator Newmexican's Avatar
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    Heart of Dixie
    Then there is this from September.
    Emails: Obama officials enriched former firms, possibly themselves with auto bailout
    Matthew Boyle

    Emails obtained by The Daily Caller show that former senior Treasury Department officials who orchestrated the 2009 auto industry bailout enriched their former employers and likely made personal financial gains from parts of the deal they negotiated. At issue is the termination of pension plans belonging to 20,000 non-union salaried retirees from Delphi Corporation.

    Such self-dealing while an appointed member of a White House task force would violate federal law as well as an Ethics Pledge that an executive order from President Barack Obama said would apply to all appointees in the executive branch of the federal government from the date of his inauguration.

    During the auto bailout, now former Treasury official Matt Feldman, Obama Auto Task Force adviser Harry Wilson and other administration officials drove the Delphi pension cutoffs for non-union retirees. Their actions violated a federal statute that identified the quasi-independent Pension Benefit Guarantee Corporation (PBGC) as the only government entity legally empowered to initiate termination of a pension or make official movements toward doing so.

    Since the bailout began, those officials have contradicted themselves in court filings, congressional testimony and press reports by claiming the PBGC, not they themselves, made the Delphi-related decisions. Internal emails TheDC published recently, however, indicate otherwise.

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

    Financial gain is one possible motivation for the actions of Feldman, Wilson and others.

    “Politics appears to have played a role, but now we see a financial bias that could have played a role in the decision-making that could have benefitted their current and future business partners,” Ohio Republican Rep. Mike Turner told The Daily Caller in a phone interview.

    “The more information we get about who was involved and who made these decisions, it’s clearer that bias was involved both politically and financially. This was just wrong. If the Delphi pensions had been made whole, it would have been a less financially attractive transaction for Wilson’s and Feldman’s past and future business and law partners.”

    The New York Post has reported that the hedge funds Silver Point Capital and Elliott Capital Management earned a combined $1.3 billion on the Delphi deal. Those profits came in late 2011 when Delphi emerged from government-mandated bankruptcy and launched its initial public offering.

    Silver Point Capital’s ties to Wilson and Feldman may indicate something beyond a successful hedge fund investment.

    Wilson, a Republican, was a Silver Point partner until August 2008 and later joined Obama’s Treasury Department. He was cited as a conservative who approved of the auto bailout process in an effort to give it a bipartisan feel.

    He ran in 2010, as a Republican, for the office of New York state comptroller. His Democratic opponent, Tom DiNapoli, accused him of having “stand[ing] to personally benefit” from his role in the auto bailout.

    “It certainly appears that Mr. Wilson steered the bailout to ensure that his former firm will make billions off his inside job at the Auto Bailout Task Force,” DiNapoli told the Buffalo News.

    “Harry Wilson must explain his role in this deal. He must disclose how much he’s going to profit directly or indirectly from the taxpayer-funded bailout he negotiated. New Yorkers have the right to know just how much more money he’s going to make from the restructuring of GM. What Harry Wilson did is tantamount to self-dealing.”
    (RELATED: Private emails detail Obama admin involvement in cutting non-union worker pensions post-GM bailout)

    Despite his August 2008 departure from Silver Point, personal financial disclosure forms Wilson filed with the New York Public Integrity Commission show the firm paid him at least $250,000 in 2009. The Buffalo News reported that he was on track to earn still more from Silver Point in 2010 and in 2011.

    Feldman came to the Treasury Department from Willkie Farr & Gallagher — the law firm that represented Silver Point Capital as it angled for a cut of the bankrupt Delphi’s debt load.

    He returned to the same law firm after leaving the Obama administration and remains there. Silver Point is presently among his clients.
    Read the emails:

    Read more: Emails: Obama officials enriched former firms, possibly themselves with auto bailout | The Daily Caller[/COLOR]
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