Geithner Sacrificed Pensions Of Non-Union Delphi Retirees

Tyler Durden's picture

Back in 2009 when the government sacrificed GM and Chrysler bondholders just so labor unions (read voters) can be made whole, the media, for various reasons, decided not to pursue the decision-making process that left some workers with their pensions wiped out, while others were made whole and suffered no losses (with a comparable lack of investigation being conducted as to the decisions that shuttered some Chrysler dealers, but left others operating, a topic Zero Hedge had some say over). In fact, as the Daily Caller reminds us "The White House and Treasury Department have consistently maintained that the Pension Benefit Guaranty Corporation (PBGC) independently made the decision to terminate the 20,000 non-union Delphi workers’ pension plan...Former Treasury official Matthew Feldman and former White House auto czar Ron Bloom, both key members of the Presidential Task Force on the Auto Industry during the GM bailout, have testified under oath that the PBGC, not the administration, led the effort to terminate the non-union Delphi workers’ pension plan." Turns out they lied... Under oath.

The Daily Caller has more on this less than shocking revelation: "Emails obtained by The Daily Caller show that the U.S. Treasury Department, led by Timothy Geithner, was the driving force behind terminating the pensions of 20,000 salaried retirees at the Delphi auto parts manufacturing company. The move, made in 2009 while the Obama administration implemented its auto bailout plan, appears to have been made solely because those retirees were not members of labor unions."

In other words, since the sanctity of the labor union would be untouched with their pension loss, those workers were expendable. Not so much the unionized workers, and potential re-voters. Of course this reminds us of an analysis presented here previous debating whether Labor Unions are the "New, Old Superpacs." Because while one or two billionaires may have enough money to buy a lot of GM and Chrysler bonds if they so desire, a million UAW workers collectively are more than capable of inverting the superpriorty waterfall structure embedded in every bankruptcy which in turn could easily make said billionaires into millionaires or far less.

DC continues:

The internal government emails contradict sworn testimony, in federal court and before Congress, given by several Obama administration figures. They also indicate that the administration misled lawmakers and the courts about the sequence of events surrounding the termination of those non-union pensions, and that administration figures violated federal law.

 

Delphi, a General Motors company, is one of the world’s largest automotive parts manufacturers. Twenty thousand of its workers lost nearly their entire pensions when the government bailed out GM. At the same time, Delphi employees who were members of the United Auto Workers union saw their pensions topped off and made whole.

Somehow, despite potential evidence to perjury, we doubt the the outgoing Trasury Secretary who has at most a few more months in his current position before he shifts to a cushy position in some university or Wall Street bank, will lose much sleep over the prospect of appearing in court and having to defend why he may have lied to Congress. After all, as the head of the Eurogroup will gladly remind us every so often, "when it becomes serious, you have to lie."