New emails obtained by The Daily Caller contradict claims by the Obama administration that the Treasury Department would avoid “intervening in the day-to-day management” of General Motors post-auto bailout.
These messages reveal that Treasury officials were involved in decision-making that led to more than 20,000 non-union workers losing their pensions. (General Motors not eager to be political talking point in 2012)
Republican Reps. Dan Burton and Mike Turner say that during the GM bailout, Treasury Secretary Timothy Geithner decided to cut pensions for salaried non-union employees at Delphi, a GM spinoff, to expedite GM’s emergence from bankruptcy.
At a Wednesday hearing, the House Oversight Committee’s Subcommittee on Regulatory Affairs, Stimulus Oversight and Government Spending started pushing the Treasury Department for answers on the effects of the bailout and on how much of a role the department played in picking winners and losers.
The key point of the Wednesday hearing was to show that the Obama administration advised GM on how to eliminate the Delphi workers’ pensions. The evidence suggests Geithner’s team played a significant role in that process, despite claims to the contrary.
In 2009 congressional testimony, senior Obama administration official Ron Bloom said the president told the Treasury Department to stay out of the management of these companies and downplayed any administration intervention.
“From the beginning of this process, the President gave the Auto Task Force two clear directions regarding its approach to the auto restructurings,” Bloom said then. “The first was to behave in a commercial manner by ensuring that all stakeholders were treated fairly and received neither more nor less than they would have simply because the government was involved. The second was to refrain from intervening in the day-to-day management of these companies.”
But the emails TheDC obtained show high-ranking Treasury Department officials, including Matthew Feldman of Treasury’s Auto Task Force, corresponding with senior GM officials on how to make certain decisions regarding who was going to win and who was going to lose.
“Have you guys begun a dialogue with the UAW over your desire to see the hourly plan terminated?” Feldman asked GM’s Rick Westenberg and Walter Borst in June 2009. This email shows Feldman and the Treasury Department were involved in GM’s day-to-day management.
“One concern I have is that while the PBGC [Pension Benefit Guaranty Corporation, a federal agency that handles private-sector pension benefits issues] is likely to agree to terminate, it’s not clear what position they will take on the Benefit Guaranty,” Feldman continued in that email, demonstrating his involvement in union negotiations. “At a minimum this could get messy and the UAW should probably be brought into the loop.”
The exchanges go on to clearly demonstrate that the administration had a controlling stake in GM’s management timeline.
Borst replied that GM had not “begun conversations with the UAW pending hearing back from you and the PBGC. We can begin that dialogue but our reading of the benefit guarantee is clear that it’s for the benefit of the retirees and not the PBGC. The UAW may not be available to us this week as GM is in the summer shutdown.”
Feldman responded by reminding Borst the steps required to eliminate Delphi’s pension plans.
“Keep in mind we need the PBGC’s help to terminate this plan so we will have to deal with the PBGC,” wrote Feldman. “If you think there is a way to cause its unilateral termination (outside of Delphi going down an 1113 process) let me know.”
Another email chain TheDC has obtained shows that Treasury Secretary Tim Geithner’s employees were advising GM executives and communications officials on how to craft their public messages and press releases.
In response to GM sending her a draft of a press release about the company ceasing operations at several factories nationwide, the Treasury Department’s Jenni Engebretsen wrote to GM officials on Friday, May 29, 2009: “We would ask that you move the reference to Treasury down to the third paragraph, taking it out of the lede. Please let us know if this presents any issues.”
GM’s director of policy and Washington communications replied to Engebretsen: “No problems. Done.”
Engebretsen then asked: “If there is an updated version at some point over the weekend we’d appreciate a final copy. Many thanks.”
These emails show the Obama administration was not only active in guiding GM executives’ decisions, but Treasury Department officials were influential in crafting GM’s message to the public.
With Engebretsen asking GM to move references to the Treasury Department out of the press release’s lede paragraph, it suggests the Obama administration wanted to publicly downplay its role in the GM bailout and the Delphi workers’ subsequent loss of their pensions.