Internal Treasury Department documents described as “highly confidential” and obtained by The Daily Caller show a greater level of involvement in the Delphi pension scandal from senior officials in the Obama administration than has been previously acknowledged.
A July 2009 document prepared by the Pension Benefit Guaranty Corporation (PBGC) titled “Treasury Talking Points re: Delphi” shows coordination between high-level players inside the PBGC and Treasury Department. The document was an attachment to a July 7, 2009 email from PBGC’s Joseph House to Treasury’s Matthew Feldman, Oren Haker and Paul Nathanson.
The talking points show that the PBGC thought the “[v]ast majority of individual’s [sic] covered by Delphi [pension] Plans” were “career GM ‘brethren’ distinguishable only by the 1999 spin-out” of Delphi from its former parent company, General Motors.
Only those “brethren” who were union members, however, saw their pensions preserved in the 2009 auto bailout. Nonunion Delphi retirees lost theirs. (RELATED: TheDC’s complete coverage of the Delphi pension scandal)
It’s unclear whether Treasury also held the view that only Delphi’s spinoff differentiated one group of employees from the other. But a congressional source familiar with investigations into the Delphi pension scandal told TheDC that “[b]ased on documents received in the course of this years-long investigation, it would not be surprising if Treasury worked in concert with PBGC to draft this particular document.”
Ohio Republican Rep. Mike Turner, has been leading the charge in Congress. He has made the same argument, that Delphi workers and retirees who lost their pensions in the bailout filled the same role as unionized employees of GM itself.
Testifying as a witness during a House Education and Workforce Committee hearing on Dec. 2, 2009, Turner said that “all of these retirees, regardless of labor affiliation or not, worked alongside each other during their careers. They should not be treated differently in their retirement.”
Despite the “highly confidential” viewpoint, held by the PBGC and possibly by Treasury, that those working for Delphi and GM should be viewed equally, the two agencies terminated pension plans belonging to both hourly and salaried Delphi retirees on July 31, 2009, just weeks after the “talking points” memo was distributed.
On Sept. 10, 2009, unionized hourly workers and retirees saw their pensions topped up and made whole.
But 20,000 nonunion salaried Delphi workers and retirees still don’t have the benefits they spent their careers accruing.
The “talking points” document also shows that on July 10, 2009, three days before General Motors exited bankruptcy, the company coordinated its messaging with Treasury and the PBGC about the hourly and salaried Delphi pension plans that would soon be terminated.
In particular, the three parties acknowledged that the pending pension agreement would not “impact Tranche C recoveries” — technical language that shielded from adverse outcomes any corporation that loaned capital to Delphi during its bankruptcy.
“Tranche C” investments become far more valuable when companies come out of bankruptcy and resume normal accounting. A promise that their capital would not take a hit in Delphi’s final restructuring was particularly helpful to Silver Point Capital, a firm tied to then-Treasury official Matthew Feldman.
Silver Point Capital and Elliott Capital Management earned a combined $1.3 billion on the Delphi deal, according to the New York Post. Those profits came in late 2011 when Delphi emerged from bankruptcy and launched its initial public offering.
The document obtained by TheDC shows that Feldman had the “highly confidential” document before the details of the deal contained within it were publicly announced.
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. Feldman returned to the same law firm after leaving the Obama administration and remains there today. Silver Point is presently among his clients.
Harry Wilson, who worked on the bailout with Feldman at Treasury, was a partner at Silver Point before joining the administration. While Wilson’s name has shown up on other emails and documents related to the Delphi scandal, he was not a recipient of the email with the talking points attached.
A second email chain TheDC has obtained shows PBGC officials internally complaining about how “GM has refused to release the draft of the ‘PBGC Settlement’ to us.’”
“What a pleasure to negotiate with these folks,” PBGC’s John Menke added in the email, presumably with sarcasm.
PBGC’s Joseph House then forwarded that email to Treasury’s Feldman, commenting: “Seriously?”
“I’ll take care of it now,” Feldman responded.
A source close to congressional investigations into the Delphi pensions told TheDC that this email shows “Feldman clearly takes it upon himself to provide PBGC with the document.”
This second email chain came earlier in the afternoon of July 7, 2009 — the same day PBGC sent Feldman that internal talking points memo.