More on the windfall profit from auto bailouts
I suppose this website won't be liked by some either- others mileage may vary, more information on Romney's windfall profits:
Read the whole article, but this shows there could have been other outcomes- but it would not have squeezed every cent of profit out for the profiteers:
"Another outcome may have been possible. In June 2009, the Treasury and GM announced a bailout deal they’d crafted over months with the cooperation of the United Auto Workers. GM would take back control of Delphi via a joint venture with Platinum Equity, a buyout firm led by billionaire Tom Gores, a self-described “Michigan man” who grew up in the shadow of Delphi’s Flint plant.
The final Platinum plan, according to Delphi’s official statement posted on Marketwire in June 2009, lists plants in fourteen locations slated for closing, which would have left several of Delphi’s plants still in business, still unionized—and still in the United States. Crucially, the deal would have returned key Delphi operations, including the production of steering columns, directly to GM.
The hedge funders stunned Delphi by refusing to accept the Platinum plan. Harshly criticizing it as a “sweetheart deal,” they demanded 45 cents on the dollar for the debt bonds they had bought on the cheap—more than double what the Treasury-brokered Platinum deal would pay.
Then the Singer-led debt holders swooped in. After the Platinum deal was announced, Elliott Management quietly tripled its holdings of Delphi bonds, purchased at just one-fifth of their face value. By joining forces with Silver Point, Paulson and Loeb, Singer now controlled Delphi’s fate.
Gores, Delphi and UAW officials declined to respond to queries about the deal on the record, but the sworn deposition by Delphi CFO Sheehan (confidential then, but later posted on Scribd.com) lets us in on the tense negotiations culminating in a twenty-hour showdown between Delphi, GM, the UAW, the Auto Task Force and the US pension agency, on the one hand, and Singer’s hedge fund group, on the other. Delphi said it would dump the Platinum deal if the hedge funds would agree to terms that would take care of all stakeholders, including the following stipulation: “Agree on plan structure to maximize job preservation.”
The hedge funders said no, since they had a billion-dollar ace up their sleeve. According to Sheehan, Singer and company’s controlling interest allowed them to force the bankruptcy judge to hold an auction for all of Delphi’s stock. The debt holders outbid the Michigan Man’s team, offering $3.5 billion. But it wasn’t $3.5 billion in cash: under the rules of Chapter 11 bankruptcy, debtors-in-possession may bid the face value of their bonds rather than their current market value, which at the time was significantly lower. Under the Platinum deal, Delphi would have had much more in real money for operations: $250 million in cash from Gores, another $250 million in credit, and $3.1 billion in “exit financing” from GM, all of it backed up by TARP. Still, under Chapter 11 rules, the Platinum bid was technically lower. And that’s how Singer’s funds—which included the Romneys’ investment—came to buy Delphi for the equivalent of only 67 cents a share.
Rattner and GM, embarrassingly outmaneuvered, tried to put a good face on it. As Rattner wrote in his memoir, “In truth we didn’t care who got Delphi as long as GM could extricate itself from the continual drain on its finances and assure itself of a reliable supply of parts.”
* * *
Even before the hedge funds won their bid for Delphi’s stock, they were already squeezing the parts supplier and its workforce. In February 2009, Delphi, claiming a cash shortage, unilaterally terminated health insurance for its nonunion pensioners. But according to Rattner, the Treasury’s Task Force uncovered foggy accounting hiding the fact that the debt holders had deliberately withheld millions of dollars in cash sitting in Delphi accounts. Even after this discovery, the creditors still refused to release the funds.
The savings to the hedge fund billionaires of dropping retiree insurance was peanuts—$70 million a year—compared with the profits they later extracted from Delphi. But the harm to Delphi retirees was severe. Bruce Naylor of Kokomo, Indiana, had been forced into retirement at the age of 54 in 2006, when Delphi began to move its plants overseas. Naylor’s promised pension was slashed 40 percent, and his health insurance and life insurance were canceled. Though he had thirty-six years of experience under his belt as an engineer with GM and Delphi, he couldn’t find another job as an engineer—and he doesn’t know a single former co-worker who has found new employment in his or her field, either. Naylor ended up getting work at a local grocery store. That job gone, he now sells cars online for commission, bringing in one-fifth of what he earned before he was laid off from Delphi.
Even with his wife Judy’s income as a nurse, it hasn’t been enough: the Naylors just declared bankruptcy, and their home is in foreclosure.
After the hedge fund takeover of Delphi, the squeeze on workers intensified through attacks on their pensions. During its years of economic trouble, Delphi had been chronically shorting payments to its pension funds—and by July 2009, they were underfunded by $7 billion. That month, Singer’s hedge fund group won the bid for control of Delphi’s stock and made clear they would neither make up the shortfall nor pay any more US worker pensions. Checkmated by the hedge funders, the government’s Pension Benefit Guaranty Corporation agreed to take over Delphi’s pension payments. The PBGC would eat the shortfall.
With Delphi’s new owners relieved of its healthcare and pension obligations, its debts to GM and its union contracts—
and now loaded with subsidies from GM funded by TARP—the company’s market value rose from zero to approximately
$10.5 billion today.
* * *
But there was still a bit of unfinished business: President Obama needed to be blamed for the pension disaster. In a television ad airing in swing states since September, one retired Delphi manager says, “The Obama administration decided to terminate my pension, and I took a 40 percent reduction in my pension.”
Another retiree, Mary Miller, says, “I really struggle to pay for the basics…. I would ask President Obama why I had no rights, and he had all the rights to take my pension away—and never ever look back and say, ‘Not only did I take it from Mary Miller, I took it from 20,000 other people.’”
These people are real. But it’s clear that these former workers, now struggling to scrape by, were hardly in the position to put together $7 million in ad buys to publicize their plight. The ads were paid for by Let Freedom Ring, a 501(c)(4) nonprofit advocacy organization partially funded by Jack Templeton Jr., a billionaire evangelical whose foundation has sponsored lectures at the Manhattan Institute (the anti-union think tank whose board of directors includes not only Singer but Loeb). The ads also conveniently leave out the fact that the law sets specific ceilings on what the PBGC is allowed to pay retirees—regardless of what they were originally owed.
In June 2011, Charles and David Koch hosted a group of multimillionaires at a retreat in Vail, Colorado. In secret recordings obtained by investigator Brad Friedman, the host, Charles Koch, thanks Singer and Templeton, among others, for each donating more than $1 million to the Koch brothers’ 2012 anti-Obama election war chest.
Of course, it wasn’t Obama who refused to pay the Delphi pensions; it was Paul Singer and the other hedge funds controlling Delphi. The salaried workers’ pensions were, after all, an obligation of Delphi’s owners, not the government. Delphi’s stockholders—the Romneys included—had one easy way to rectify the harm to these pensioners, much as GM did for its workers: just pay up.
Making good on the full pensions for salaried workers would cost Delphi a one-time charge of less than $1 billion. This year, Delphi was flush with $1.4 billion in cash—
meaning its owners could have made the pensioners whole
and still cleared a profit. Instead, in May, Delphi chose to use most of those funds to take over auto parts plants in Asia at
a cost of $972 million—purchased from Bain Capital.[/I]"
Making a post about unions instead of Romney hypocrisy
"“While Romney was opposing the rescue of one of the nation’s most important manufacturing sectors, he was building his fortunes with his Delphi investor group, making his fortunes off the misfortunes of others,” King added."
Gosh Catsdorule, you're trying to confuse people with the facts. The other side who is so for Romney don't want to know the facts. It doesn't matter if it's this or his position and about face on any number of issues or his record as governor of Ma.
Facts.. what are they?
pezk, did you also note that the conversation was taken away from the breathtaking hypocrisy of Romney and skewed towards a rant about unions? The post was not about or for unions- it was about Romney making money on a bailout he opposed. If he had any ethics, he wouldn't have been in there getting his share.
But politics is not about ethics. I did say in that first post that we needed to get rid of all of them and start again.
But what about unions? Didn't they come about because of the sweatshops earlier in the 20th century? Do we really want to go back there?
What about the 50's and early 60's, which I seem to remember as pretty good for business and worker alike and there were certainly unions then? How much profit do you really need and how much do you need to break the backs of hard working Americans?
Are unions perfect? Heck no. They can be corrupt and often co-opted.
Government is a racket. Try this on for size. It's a pretty long read but well worth the insight of how government works- for the profiteers:
“Dillon, Read & Co. Inc. and the Aristocracy of Stock Profits”
For the record, this woman worked under the Bush I administration- and the story is not kind to Democrats, either.
Create a problem, make sure the solution benefits the profiteers, and insure no other solution is allowed. Oh, and since it's government, it's coming out of the people's pocket. But then, that was the whole pupose of the Federal Reserve, which is unconstitutional, by the way. All signed into law by a Democrat.
And while I'm on a roll, one of the biggest lies is that government should be run like a business- there's a reason they're selling that one to you, it's called "profit." Business is the antithesis of government. Government cannot be run like a business, but business can sure profit from government. Like, privatizing a lot of the function of the miliary, then having a couple wars that sure were good for Halliburton, etc. The example of the prisons in Fitts article should explain part of how that works.