MARK KARLIN, EDITOR OF BUZZFLASH AT TRUTHOUT
You wouldn't know it from the way Paul Ryan has been championing retired non-union workers of Delphi Auto, but his potential boss – Mitt Romney – made a mint off of a hedge fund investment that sent most of Delphi's job overseas and hedge fund principals who blackmailed the government into a huge payoff.
Greg Palast has detailed the ugly story on Truthout (reposted from the Nation). It is also the topic of a United Automobile Workers' (UAW) news conference in Toledo, Ohio, today, as exclusively revealed in a BuzzFlash at Truthout piece by Palast, "UAW Charges Romney With Profiteering From Auto Bailout."
Ryan is claiming to be upset that former non-union Delphi workers are not getting full pensions, which is grotesquely ironic considering Romney made a career of pension destruction that was part of his vulture capitalism formula. Remember also that -- which is Palast's point about Delphi -- the Romneys are still earning more than some 20 million a year in their "retirement" based in large part on investments in firms that cannibalize industry and workers.
Romney's likely multi-million dollar profit is hidden in Ann Romney's so-called "blind trust." In 1994, when Romney ran unsuccessfully against Ted Kennedy for the Senate, Mitt declared: “The blind trust is an age-old ruse.”
The profit from the Romney's Delphi fund investment, through a hedge fund, came about as the result of extorting the federal government, according to Palast's account:
Yet without taking billions in taxpayer bailout funds—and slashing worker pensions—the hedge funds’ investment in Delphi would not have been worth a single dollar, according to calculations by GM and the US Treasury.
Altogether, in direct and indirect payouts, the government padded these investors’ profits handsomely. The Treasury allowed GM to give Delphi at least $2.8 billion of funds from the Troubled Asset Relief Program (TARP) to keep Delphi in business. GM also forgave $2.5 billion in debt owed to it by Delphi, and $2 billion due from Singer and company upon Delphi’s exit from Chapter 11 bankruptcy. The money GM forgave was effectively owed to the Treasury, which had by then become the majority owner of GM as a result of the bailout. Then there was the big one: the government’s Pension Benefit Guaranty Corporation took over paying all of Delphi’s retiree pensions. The cost to the taxpayer: $5.6 billion. The bottom line: the hedge funds’ paydays were made possible by a generous donation of $12.9 billion from US taxpayers.
Of course, once the hedge fund Romney was invested in shook the feds down for billions, they went to work on destroying jobs. Where did they ship most of the work. Why, who would have thunk it? China.
Back to Palast:
Rattner [the auto bailout czar] could not believe that Delphi’s management—now effectively under the hedge funders’ control—would “want to be perceived as holding GM hostage at such a precarious economic moment.” One Wall Street Journal analyst suggested that Singer was treating Delphi “like a third world country.” Rattner likened the subsidies demanded by Delphi’s debt holders to “extortion demands by the Barbary pirates.”
Romney has slammed the bailout as a payoff to the auto workers union. But that certainly wasn’t true for the bailout of Delphi. Once the hedge funders, including Singer—a deep-pocketed right-wing donor and activist who serves as chair of the conservative, anti-union Manhattan Institute—took control of the firm, they rid Delphi of every single one of its 25,200 unionized workers.
Of the twenty-nine Delphi plants operating in the United States when the hedge funders began buying up control, only four remain, with not a single union production worker. Romney’s “job creators” did create jobs—in China, where Delphi now produces the parts used by GM and other major automakers here and abroad. Delphi is now incorporated overseas, leaving the company with 5,000 employees in the United States (versus almost 100,000 abroad).
It's lamentable and unwarranted for the Delphi pensions not to be honored, but if the hedge fund investors who benefited from mugging DC for taxpayer dollars were less greedy, it might have gone another way. A deal might have been worked out to honor the pensions in questions, as should have happened.
Once again, however, the 1 percent picked the pockets of the 99 percent, and Romney had a bankroll to deposit in his offshore accounts as a result.