Prior to political appointment, Obama official angled for gains from GM bailout

Matthew Boyle Investigative Reporter
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New email evidence obtained by The Daily Caller indicates that a now-high-ranking Obama administration political appointee was far more intimately involved in behind-the-scenes discussions during the General Motors bailout than previously believed.

Josh Gotbaum is director of the Pension Benefit Guaranty Corporation (PBGC), an independent U.S. government agency created to monitor pension payments and ensure payouts promised by failed companies. TheDC has uncovered that before his appointment, Gotbaum — then a private investor — corresponded with Obama auto czar Ron Bloom on at least one occasion, angling for a slice of the pension pie at Delphi.

Delphi, a GM company, is one of the largest automotive parts manufacturers in the world. The email TheDC obtained shows that Gotbaum wrote to Bloom in July 2009 asking whom he and other investors should contact in the Treasury Department when trying to buy Delphi’s assets.

“Know you folks are busy, but hope you and/or another non-conflicted person will agree to hear proposals for Delphi from the lenders, who are potential acquirors as well as holder of the traditional DIP lender rights,” Gotbaum emailed on July 9, 2009. “Bernie Knight, Treasury’s Ethics Counsel, told us that we could not communicate with Messrs [Matt] Feldman or [Harry] Wilson, but that we could meet with others without a conflict.”

When Gotbaum sent the email, he was an “operating partner” with Blue Wolf Capital Management, a company whose website boasts its ability to “work with complex organizational restructuring,” “understand complex government regulations,” and “work with unions.”

When Barack Obama nominated Gotbaum to head the PBGC, he touted his work at Blue Wolf in a press release. While before it was unclear what, if any, role Gotbaum had in the bailout and the subsequent pension-restructuring programs, the new email makes it clear that Gotbaum made an attempt to gain control of the pensions the PBGC now handles — with the goal of turning a profit.

It’s also clear that Gotbaum had a relationship with White House and Treasury Department insiders, appearing to engage in crony capitalism.

After Treasury bailed out GM, pensions for Delphi retirees had to be sorted out.

Emails previously acquired by TheDC show that Obama administration officials, including Wilson and Feldman, were intricately involved in picking which groups of Delphi workers kept their pensions, and whose were cut severely.

The Treasury Department advised GM on how to cut pensions back for Delphi salaried retirees who weren’t union workers. United Auto Workers members’ pensions were left virtually untouched and United Steelworkers members felt significantly smaller losses than Delphi’s non-union, salaried retirees.

A few months after Gotbaum sent the email, Obama nominated him to head the PBGC, which had just assumed control over Delphi salaried retirees’ pension plans.

Democratic Sen. Sherrod Brown of Ohio blocked the president’s nomination of Gotbaum’s for months, saying “we owe it to Delphi retirees to take all steps possible to secure their pensions. That’s why I’m urging the Obama administration to encourage General Motors to meet its obligations to Delphi retirees.”

Gotbaum refused to provide answers to Congress or to Delphi workers on his involvement with the bailout. So during the following summer, Obama bypassed the congressional approval process and “recess appointed” him to lead the PBGC.

Sen. Brown issued a harsh response to the appointment: “I am extremely disappointed … Mr. Gotbaum has already made it clear that he must recuse himself from issues related to the Delphi bankruptcy and the Delphi pensions. There are both salaried and union Delphi retirees who have yet to receive the pensions they earned and deserve, and that issue should have been addressed before this action was taken.”

Obama also announced last week that he plans to appoint Harry Wilson to a PBGC advisory committee position. Wilson, who was a high-ranking Treasury Department official during the bailout, lost a 2010 bid for Comptroller of New York state after running as a Republican. Wilson’s Democratic opponent, Tom DiNapoli, continually slammed him for his lack of answers to questions about his involvement in the bailout and pension plan restructuring.

Seton Motley, president of Less Government, told TheDC that these nominations reek of political favoritism. Motley adds that he thinks it looks like Obama is rewarding people for favoring union workers and bashing non-union workers.

“A great way to get an Obama Administration gig, apparently, is to first sell out and financially ruin non-union workers,” Motley said.

Ohio Republican Rep. Mike Turner told TheDC that the newly discovered email and the continued appointment of the same figures into high-ranking positions isn’t anything new from the Obama administration. He said these are just more examples of what appears to be political favoritism, and crony capitalism having happened all throughout the bailout.

“I think this continues to raise concerns that there were backdoor deals where the administration was picking winners and losers,” Turner said in a phone interview

After a June oversight hearing, Turner sent Bloom a list of questions he expects answers to. Since then, Bloom has left the Obama administration. Turner told TheDC he is sending Treasury Secretary Tim Geithner a letter on Tuesday asking him to answer all those questions even without Bloom on board.

Turner is worried that Geithner and the White House will try to escape answering the questions yet again, using Bloom’s departure as an excuse.

White House officials didn’t answer multiple requests from TheDC for comment on this issue. And, the administration continues to ignore information requests from Congress and from the Delphi workers who lost their pensions. Turner said that’s not acceptable.

“The administration, obviously, needs to provide both to Congress and to Delphi retirees who filed suit,” Turner told TheDC. “They’re elected officials and they’re responsible to the people here, but they’re acting like they’re responsible to no one. As the Congressional committees have asked for documents, they’ve denied them or been slow to provide them and when we’ve asked questions of Bloom, [investment firm] Neuberger [Berman] and [Treasury Secretary Tim] Geithner, they’ve refused to answer them.”

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Matthew Boyle