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.