One of President Obamas first acts in office, in February 2009, was to form the Auto Task Force with the goal of saving GM, Chrysler, their suppliers and, most important, auto industry jobs. Crucial to the plan was saving Delphi, which then employed more than 25,000 union workers.
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 Rattners memoir of the affair, Overhaul, he describes a closed-door meeting held in March 2009 to resolve Delphis 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 dont, well shut you down. His explanation was corroborated by Delphis 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 Delphis parts. At that bleak moment, GM had neither. The automaker had left the inventory of its steering column and other key components in Delphis hands. If Delphi laid siege to GMs parts supply, the bailout would fail and GM would have to be liquidated or sold offas would another Delphi dependent, Chrysler.
Rattner could not believe that Delphis managementnow effectively under the hedge funders controlwould 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 Delphis 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 wasnt true for the bailout of Delphi. Once the hedge funders, including Singera deep-pocketed right-wing donor and activist who serves as chair of the conservative, anti-union Manhattan Institutetook control of the firm, they rid Delphi of every single one of its 25,200 unionized workers.
Of the twenty-nine Delphi plants operating in the United States when the hedge funders began buying up control, only four remain, with not a single union production worker. Romneys job creators did create jobsin China, where Delphi now produces the parts used by GM and other major automakers here and abroad. Delphi is now incorporated overseas, leaving the company with 5,000 employees in the United States (versus almost 100,000 abroad).
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