Saturday, October 27, 2012

Obama's Steven Rattner-Quadrangle-GM-Auto Industry Bailout Connection

“Starting in the transition [after the November 2008 election], Obama’s point man on autos was Steven Rattner, a founder of the private investment firm Quadrangle…The widely circulated idea that Obama gave the unions a special break was wrong. As [UAW President] Ron Gettlefinger contemplated a deal that would provide…for the closure of 17 plants, massive new layoffs, wage freezes, cuts in retirement, vacation, and health care benefits, and a promise not to strike for 6 years, he walked the streets of Washington for 2 hours…
“On June 1 [2009] Obama made his…announcement…The U.S. government would pump another $30 billion into GM…buying its ownership stake to roughly 60 percent…In July [2009]…Rattner returned to New York under a cloud. The investment business he founded was being investigated for its role in a pension fund scandal…”
--from The Promise: President Obama, Year One book by Jonathan Alter in 2010

Steven L. Rattner…led the Obama administration’s efforts to restructure the auto industry….He became embroiled in a kickback scandal involving New York State’s pension fund….A former financial reporter for The New York Times who is currently a contributing opinion writer for The Times, Mr. Rattner entered investment banking in the 1980s. He became a deal maker in the media and communications sectors for the likes of Lehman Brothers, Morgan Stanley and Lazard. In 2000, he co-founded the Quadrangle Group, a media-focused private equity firm. In January 2008, Mayor Michael R. Bloomberg chose the firm to manage the investments of his multibillion-dollar fortune….In November 2010, Mr. Rattner agreed to pay $6.2 million in repayments and penalties to settle a suit brought by the Securities and Exchange Commission...The next month, Mr. Rattner agreed to pay $10 million to settle two lawsuits brought by…New York’s attorney general. The suits charged that Quadrangle paid kickbacks to win lucrative contracts managing assets of the pension fund.

“Quadrangle also struck a deal with…the S.E.C., paying $12 million to end its role in the case. The firm acknowledged paying more than $1 million in fees to a political consultant, Hank Morris, in exchange for his help in landing a state investment contract. Mr. Morris pleaded guilty to securities fraud…Mr. Rattner is now the chairman of Willett Advisors, a firm that was spun off…to take over the management of the fortune of Mr. Bloomberg, a longtime friend, when Mr. Rattner left the firm….In 2009….he filed federal disclosure forms that listed his net worth as between $188 million and $608 million….He…specialized in…brokering deals on behalf of companies like Viacom and Comcast...He also…he pursued leveraged buyouts of media companies like the takeovers of Metro-Goldwyn-Mayer and most of the American titles of Dennis Publishing, including men’s magazines like Maxim and Stuff.

Mr. Rattner had also become influential in the Democratic Party, giving millions of dollars to candidates like Hillary Rodham Clinton and Barack Obama. His appointment as the White House’s car czar, in charge of its ambitious plan to reorganize General Motors and Chrysler, was in part the culmination of years of hosting fund-raisers…”

--from the New York Times website

“The government did not have to bail out the auto companies in order to keep workers employed and producing something (whether cars or something else)…. If the government wanted to keep the workers producing cars, it could buy the auto companies themselves...Maintenance of employment does not appear to have been the objective of government policy…The government has encouraged layoffs by requiring deep cuts in company costs as a condition of the bailout. The companies have sought concessions on past obligations from workers and bondholders, concessions on future wages and benefits from workers, and massive layoffs. Under GM’s government-mandated restructuring plan (after the first round of bailouts), the company promised to lay off 47,000 workers worldwide by the end of 2009….Chrysler’s plan promised to cut 35,000….The Obama administration rejected both plans as inadequate, saying that viable restructuring plans for both companies would require deeper cost cutting….

“The government could have nationalized GM or Chrysler for much less than what it handed over in bailout money….Some commentators compared the auto companies to the bankrupt railroads of the 1970s, which were nationalized (as Conrail) and later re-privatized.…From a purely economic standpoint, the government could have easily nationalized GM for much less that it gave out in bailout loans... “
--from a 2009 article in Dollars and Sense magazine

Obama’s Steven Rattner-Quadrangle-GM-Auto Industry Bailout Connection

When the Democratic Obama administration used public funds to bail-out General Motors’ management in 2009, thousands of U.S. automobile industry workers lost their jobs and some of their previously-negotiated benefits; and the average wages for post-2010 newly-hired U.S. automobile industry workers were drastically cut.

Yet if the U.S. automobile industry had just been nationalized by the Democratic Obama administration in 2009 and placed under democratic worker and community control on a non-profit basis, jobs for all UAW workers without any loss in benefits could have been saved or created by the U.S. federal government--without using billions of dollars of U.S. government to purchase stock in the still financially unprofitable, “too big to fail” General Motors transnational corporation of the GM executives and the Wall Street firms and billionaires that still control the remaining shares of GM stock.

One reason Obama failed to nationalize GM and the other financially bankrupt U.S. automobile corporations in 2009 might because he relied on a multi-millionaire Wall Street financier and major Democratic Party campaign contributor named Steven Rattner to formulate his administration’s policy on restructuring the U.S. automobile industry-- instead of just allowing UAW members and the people who lived in communities in which GM operated factories to democratically determine how firms like GM should be restructured.

And, coincidentally, besides arranging the bail-out of GM management in 2009, former Quadrangle and current Willets Advisers executive Rattner has been busy both managing the multi-billion dollar fortune of the Republican Mayor of New York City, Michael Bloomberg, and apparently involved in a Quadrangle kickback/pension fund scandal that violated both Securities and Exchange Commission [SEC] regulations and New York State laws in recent years.

1 comment:

Atlanta Cash For Cars said...

Still waiting for a change in the auto industry... I think its going to be some serious time before we see any real change. We need to first learn how to manage our non-renewable resources before we dive into a auto revolution.

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