Emails: Geithner, Treasury drove cutoff of nonunion Delphi workers’ pensions

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 nonunion 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.

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