Respectfully submitted by Lawrence Rafferty (rafflaw)- Guest Blogger
If he said it once, Mitt Romney has said it a thousand times. President Obama should have let GM and Chrysler go bankrupt instead of “bailing” them out. (paraphrased) Of course, the discussion usually revolves around how Unions allegedly made out like bandits in the bailout to the detriment of the country and our economy. What has been selectively left out of the discussion was the role played in the bailout by vulture capitalists in reaping an enormous profit from the bailout. According to Greg Palast, the bailout created an opportunity for the vultures to swoop in and make huge profits. All at tax payer expense!
The most prominent venture capitalist who was involved in the bailout bonanza was Elliott Management and its leader, Paul Singer. Mr. Singer and Elliott Management had many prominent investors, including Ann and Mitt Romney. “But Romney has done a good job of concealing, until now, the fact that he and his wife, Ann, personally gained at least $15.3 million from the bailout—and a few of Romney’s most important Wall Street donors made more than $4 billion. Their gains, and the Romneys’, were astronomical—more than 3,000 percent on their investment.” TruthOut.Org
You read that correctly. Mr. Romney and his wife “earned” at least $15.3 million from the bailout because of Singer and Elliott Management’s involvement and ownership of a key supplier to GM and Chrysler. That key supplier was Delphi Automotive. Delphi was originally a subsidiary of GM, but it became a separate company in the late 90’s before filing bankruptcy in 2005. When the government task force began working on the bailout of GM and Chrysler they came face to face with the hungry venture capitalists that now controlled Delphi.
“Obama hired Steven Rattner, himself a millionaire hedge fund manager, to head the task force that would negotiate with the troubled firms and their creditors to avoid the collapse of the entire industry. In Rattner’s memoir of the affair, Overhaul, he describes a closed-door meeting held in March 2009 to resolve Delphi’s fate. He writes that Delphi, now in the possession of its hedge fund creditors, told the Treasury and GM to hand over $350 million immediately, “because if you don’t, we’ll shut you down.” His explanation was corroborated by Delphi’s chief financial officer, John Sheehan, who said in a sworn deposition in July 2009 that the hedge fund debt holders backed up their threat with “an analysis of the cost to GM if Delphi were unwilling or unable to provide supply to GM,” forcing a “shutdown.” It would take “years and tens of billions” for GM to replace Delphi’s parts. At that bleak moment, GM had neither. The automaker had left the inventory of its steering column and other key components in Delphi’s hands. If Delphi laid siege to GM’s parts supply, the bailout would fail and GM would have to be liquidated or sold off—as would another Delphi dependent, Chrysler.
Rattner could not believe that Delphi’s management—now effectively under the hedge funders’ control—would “want to be perceived as holding GM hostage at such a precarious economic moment.” One Wall Street Journal analyst suggested that Singer was treating Delphi “like a third world country.” Rattner likened the subsidies demanded by Delphi’s debt holders to “extortion demands by the Barbary pirates.”
Romney has slammed the bailout as a payoff to the auto workers union. But that certainly wasn’t true for the bailout of Delphi. Once the hedge funders, including Singer—a deep-pocketed right-wing donor and activist who serves as chair of the conservative, anti-union Manhattan Institute—took control of the firm, they rid Delphi of every single one of its 25,200 unionized workers.” TruthOut.org
Does it surprise you that Elliott Management ended health insurance for its retirees and actually forced the Pension Benefit Guaranty Corporation to pick up the $7 Billion corporate pension shortfall in 2009 when it ended paying pensions to its workers? Would it also surprise you that Delphi is no longer incorporated in the United States and has only 5,000 employees in the country while there are almost 100,000 workers worldwide? Doesn’t this kind of job flight to other nations become a foreign policy issue at some point?
According to the Palast article, the Romneys could have profited as much as $115 Million from the auto bailout, depending on the exact amount of their investment with the Singer led hedge funds. I have no problem with investors making money on the risk they take in taking over troubled companies. However, I do have a problem with these very same venture capitalists profiting from taxpayer money while at the same time sending thousands of jobs overseas.
I guess only politicians and vulture fund owners can argue that the country should not bail out large corporations in order to save millions of jobs and actually profit untold millions from that very same bailout! Wouldn’t this bailout windfall be another reason to demand that the Romneys disclose more tax returns? Could this windfall profit be one of the reasons why the Romneys did not disclose any 2009 tax returns? What do you think?