News Release

How Romney and Vulture Funds Milked the Auto Bailout

GREG PALAST [email]
Investigative reporter Palast wrote the just-published piece “Mitt Romney’s Bailout Bonanza: How Mitt and Ann made millions — and Mitt’s hedge fund donors made billions — from the auto-industry rescue that he condemned.”

The piece states: “Mitt Romney’s opposition to the auto bailout has haunted him on the campaign trail, especially in Rust Belt states like Ohio. There, in September, the Obama campaign launched television ads blasting Romney’s November 2008 New York Times op-ed, ‘Let Detroit Go Bankrupt.’ 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.

“It all starts with Delphi Automotive, a former General Motors subsidiary whose auto parts remain essential to GM’s production lines. No bailout of GM — or Chrysler, for that matter — could have been successful without saving Delphi. So, in addition to making massive loans to automakers in 2009, the federal government sent, directly or indirectly, more than $12.9 billion to Delphi — and to the hedge funds that had gained control over it.

“One of the hedge funds profiting from that bailout — $1.28 billion so far — is Elliott Management, directed by Paul Singer. According to The Wall Street Journal, Singer has given more to support GOP candidates — $2.3 million — than anyone else on Wall Street this election season. … He’s not only an informal adviser but, according to the Journal, his support was critical in helping push Representative Paul Ryan onto the ticket.

“Singer, whom Fortune magazine calls a ‘passionate defender of the 1%,’ has carved out a specialty investing in distressed firms and distressed nations, which he does by buying up their debt for pennies on the dollar and then demanding payment in full. This so-called ‘vulture investor’ received $58 million on Peruvian debt that he snapped up for $11.4 million, and $90 million on Congolese debt that he bought for a mere $20 million. …

“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. Romney’s ‘job creators’ did create jobs — in China, where Delphi now produces the parts used by GM and other major automakers here and abroad.”

Palast’s past investigations of vulture funds have appeared on BBC Television’s Newsnight. His latest book is Billionaires & Ballot Bandits: How to Steal an Election in 9 Easy Steps.