Private emails detail Obama admin involvement in cutting non-union worker pensions post-GM bailout

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What was that Obama said about NOT being involved in the everyday decisions at General Motors?

New emails obtained by The Daily Caller contradict claims by the Obama administration that the Treasury Department would avoid “intervening in the day-to-day management” of General Motors post-auto bailout.

These messages reveal that Treasury officials were involved in decision-making that led to more than 20,000 non-union workers losing their pensions. (General Motors not eager to be political talking point in 2012)

Republican Reps. Dan Burton and Mike Turner say that during the GM bailout, Treasury Secretary Timothy Geithner decided to cut pensions for salaried non-union employees at Delphi, a GM spinoff, to expedite GM’s emergence from bankruptcy.

At a Wednesday hearing, the House Oversight Committee’s Subcommittee on Regulatory Affairs, Stimulus Oversight and Government Spending started pushing the Treasury Department for answers on the effects of the bailout and on how much of a role the department played in picking winners and losers.

The key point of the Wednesday hearing was to show that the Obama administration advised GM on how to eliminate the Delphi workers’ pensions. The evidence suggests Geithner’s team played a significant role in that process, despite claims to the contrary.

In 2009 congressional testimony, senior Obama administration official Ron Bloom said the president told the Treasury Department to stay out of the management of these companies and downplayed any administration intervention.

“From the beginning of this process, the President gave the Auto Task Force two clear directions regarding its approach to the auto restructurings,” Bloom said then. “The first was to behave in a commercial manner by ensuring that all stakeholders were treated fairly and received neither more nor less than they would have simply because the government was involved. The second was to refrain from intervening in the day-to-day management of these companies.”

But the emails TheDC obtained show high-ranking Treasury Department officials, including Matthew Feldman of Treasury’s Auto Task Force, corresponding with senior GM officials on how to make certain decisions regarding who was going to win and who was going to lose.

Read entire article @ Daily Caller



Treasury Department quietly plans for failure to raise debt ceiling

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The White House is warning that catastrophe will strike if Congress fails to raise the limit on the national debt: With too little cash to pay creditors, the U.S. government would default. Interest rates would skyrocket. And the economic recovery would collapse.

But behind the scenes, Treasury Secretary Timothy F. Geithner has already begun juggling the books to conserve cash, draining a special account at the Federal Reserve. And with the debt forecast to hit the legal limit of $14.3 trillion in just a few weeks, he has a range of tools at his disposal, including borrowing money from a pension fund for federal workers.

Geithner also has authority to pay investors first for interest they’re owed on the debt, according to a decades-old legal opinion. A growing number of conservatives argue that by making interest payments first, the government could avoid default and the Obama administration’s predictions of economic Armageddon.

But the nation could pay a substantial price in the form of higher interest rates if it relied for long on such evasive maneuvers, the Government Accountability Office said in a recent study. And financial analysts say market confidence could be shattered if Geithner had to cut off pay to combat troops or stop writing Social Security checks — even if he never missed an interest payment.

“I think the failure to meet any commitment would be viewed by the markets as default and would be deeply unnerving,” said Robert Rubin, who, as Treasury secretary in the mid-1990s, prevented the debt from breaching the limit during the longest battle over the issue on record.

“We don’t know” what would happen in the event of default, Rubin said. “But I think it is totally irresponsible to take the risk of trying to find out.”

Markets are already uneasy about the looming battle over the debt ceiling, which promises to consume Congress when lawmakers return next week from their Easter break.

Washington Post

Who Was the Largest Profit Maker in 2009 ?

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I heard this on last Thursday’s program Financial Issues on American Family Radio. When Dan   Celia asked the question of who do you think made the largest profit of anyone in 2009 I was thinking Wal-Mart,Exxon, Goldman Sachs or something like those. But I was wrong, it was the US Treasury Dept. Yes, you heard right, the US Treasury Dept.

Record Profit for U.S. Federal Reserve in 2009

The U.S. Federal Reserve, the central bank for what remains the world’s largest economy, announced on Tuesday that it made a record profit of $52.1 billion in 2009, enabling it to pass on $46.1 billion, another record amount, to the Treasury Department.

The Federal Reserve generated record profits last year, reflecting money made off its extraordinary efforts to rescue the country from the worst economic and financial crisis since the 1930s.

The central bank announced Tuesday it logged a record windfall of $52.1 billion. Of that total, a record $46.1 billion gets turned over to the Treasury Department.

It marks both the biggest profit and payment to Treasury on records dating back to 1914, when the Fed began operating. The previous record payment turned over to the Treasury — of $34.6 billion — was registered in 2007. In 2008, the Fed reported a payment of $31.7 billion.

The Fed’s efforts to end the crisis are separate from the $700 billion taxpayer-funded financial bailout program authorized by Congress in 2008 and overseen by the Treasury Department.

Originally set up to shore up banks, money from the publicly-derided program also has been doled out to rescue other types of companies, including General Motors, Chrysler and GMAC. President Barack Obama is weighing a levy aimed at recovering tax dollars from government-rescued financial institutions.

The bigger profit reported by the Fed came from $46.1 billion in earnings from the securities it held last year.

Such income went up as the Fed’s holdings of securities mushroomed.

The Fed launched several securities-buying programs last year to help revive the economy. Its goal is to drive down rates on mortgages and other consumer debt.

Under one program that ended last year, the Fed snapped up $300 billion worth of government debt. Under another program, the Fed is on track to buy $1.25 trillion in mortgage securities from Fannie Mae and Freddie Mac, and an additional $175 billion in debt issued by the mortgage giants. Those programs have boosted the value of securities held by the Fed.

The Fed faces a risk, however. The Fed could lose money if the central bank had to sell those securities and their prices were to fall. The Fed might need to sell the securities to sop up some of the unprecendented amount of money pumped into the economy during the crisis.

The Fed is funded from the interest earned on it vast portfolio of securities. It is not funded by Congress.

After covering its expenses, the Fed gives what is left over to the Treasury Department.

Besides the income from its securities, the Fed said it earned $5.5 billion from holdings related to the takeover of investment firm Bear Stearns and insurance company American International Group. The Fed also earned $2.9 billion from loans extended to banks, investment houses and others.

Fed posts record $52B profit for 2009 with $46B going to Treasury

Furthermore currency swap arrangements with 14 other central banks around the world and investments held in currencies other than the dollar brought in $2.6 billion. One of the economic experts who spoke to the Washington Post about what was then the anticipated Fed profit for 2009, was Vincent Reinhart, a scholar at the American Enterprise Institute and a former official at the Fed. He said:

This shows that central banking is a great business to be in, especially in a crisis. You buy assets that have a nice yield, and your cost of funds is very low. The difference is profit.

Treasury Won’t Say If It Has Refused to Allow Banks to Give Back ‘Bailout’ Money


To me this proves that the story in the opinion page of the Wall Street Journal by Stuart Varney and the testimony of Judge Andrew Napolitano on the Fox News Channel a few days ago was true…even tho some questioned it because it did not give out the name of the bank because of fear of an threatened audit. Judge Napolitano called it extortion by the government for control.

Treasury Won’t Say If It Has Refused to Allow Banks to Give Back ‘Bailout’ Money

( – The Treasury Department won’t reveal the names of financial firms that are seeking to return the funds they received late last year and this year under the Troubled Asset Relief Program (TARP)–funds the firms no longer want and would like to give back to the Treasury in return for the federal government surrendering the ownership interests it took in the firms.

Despite repeated requests for the information from, Treasury spokesman Jason Williams wouldn’t say how many financial instutitions want to give the money back in exchange for getting their stock back.

Williams said the government would only release the names of those banks that have successfully returned the money.

“We don’t release the names of those who have applied until we approve the allocation,” he said.

The Treasury Department also will not say whether it has refused any requests from financial institutions to repay the money they took from the government.

One institution, TCF Financial, which is based in the Minneapolis suburb of Wayzata, Minn., said it has been waiting since early March to hear whether Treasury will return the stock it owns in TCF in return for getting the money back.

“In truth we just haven’t heard one way or another, so they’re still looking at it and reviewing it and we hope to get an answer soon,” TCF spokesman Jason Korstange told

TCF, which is the largest bank to have attempted to return taxpayers’ money, wants to give back $361.2 million in bailout funds it says it didn’t need in the first place.

If successful, it would more than double the amount of public money returned to Treasury.

Korstange said that TCF was approached by Treasury to participate in its Capital Purchase Program because it is a healthy bank, but that recent changes in the program and statements from political leaders cast its participation in a negative light.

Korstange said his bank wants to return the money because of “all the changes” that have been forced on TARP.

Treasury came to the bank with the money, he said, not vice versa.

After Congress began considering additional limits on executive pay and closer inspections of participating banks, TCF decided to get out as soon as it could.

“Once that happened, the politicians decided they could run the banks (and) that they could tell us all the things we can and cannot do,” Korstange said. “So we just said, ‘Hey, we don’t need this, we didn’t need it at the beginning, and we’ll give it back to you.’”

Two other firms have announced they have applied to return the money they received from TARP–Sun Bancorp of Vineland, N.J., and Shore Bancshares of Easton, Md.

The other banks who have sought to return the money echoed TCF’s concerns, saying that congressional and administration actions have changed the rules and “stigmatized” their participation, creating a competitive disadvantage, especially executive compensation requirements and proposed federal regulation.

One Small Problem With Geithner’s Plan: It Will Bankrupt The Banks

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One Small Problem With Geithner’s Plan: It Will Bankrupt The Banks