Remember Robin Hood, that English legend who stole from the greedy rich and gave their ill gotten spoils to the deserving poor? If he were alive today he would lower his head in shame for the Wall Street culture of greed who have reversed his legacy into a legend of absolute contempt for the poor and the working middle class families as it steals from them to fatten their already overstuffed wallets. Sounds like an outrageous accusation? One has to look no further than the story of Delphi Automotive to see what is happening in the world of Vulture Capitalism. Much of the story has been told by writer Greg Palast’s excellent article Mitt Romney’s Bailout Bonanza in the magazine The Nation. As you might surmise, the main point of Mr. Palast’s article, written in the midst of the 2012 Presidential race, was pointing our how Mitt Romney personally pocketed millions from the auto industry bailout by the U.S. government. Mitt Romney is defeated, he’ll never again be campaigning for anything. So, I’m done with him. But the story of greed and absolute contempt involved in the vulture capitalism takeover of Delphi Automotive is a story worth retelling.

Delphi Automotive was once the Delco unit of General Motors. It was was spun off into a separate company in 1999. Delphi foundered in a slowing economy and declared bankruptcy in 2005. But Delphi was an absolute critical parts supplier to not only GM but Chrysler as well, and it’s bankruptcy filing was a Chapter 11 reorganization bankruptcy, as the company sought to lessen its debt load and lower its cost structure in order to survive. Sensing an opportunity, vulture hedge funds began to buy up the company’s debt. As Delphi was in bankruptcy the bonds were junk, considered toxic by the banks holding them. So the hedge funds were able to pick up the bonds for pennies on the dollar of their face value. Enter the financial crises in the fall of 2008. Under President Bush’s pleas, Congress passed the Troubled Asset Relief Program (TARP) and some funds were provided to the automakers, primarily their troubled financing subsidiaries that provided financing to buyers of the cars and trucks. Sensing even more of an opportunity the vulture Hedge Funds began circling, buying more Delphi debt at pennies on the dollar until they were in firm control.

In February 2009, less than a month in office, President Obama formed the Auto Task Force with the goal of saving GM, Chrysler, their suppliers and, most important, auto industry jobs. Delphi, which then employed more than 25,000 union workers in 29 plants across the U.S. and the major supplier of parts to GM and Chrysler, was crucial to the plan. The President’s task force held a closed-door meeting held in March 2009 with Delphi management and the hedge funds overlords. They demanded the Treasury and GM immediately, hand over $350 million to Delphi, threatening to withold all parts from GM if they didn’t. The hedge fund debt holders backed up their threat with an analysis that showed if Delphi were unwilling or unable to provide parts to GM, it would take years and tens of billions for GM to replace Delphi’s parts. In other words, if you want to save GM, you start by giving us exactly what we want. They got what they wanted, while GM and the Auto Task Force worked to find a way around the hedge funds blackmail. 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. The Platinum Plan was to close almost half of Dephi’s plants, leaving the remaining plants with UAW union workers, and return control of key Delphi operations to GM. The hedge fund managers flat out refused the deal, initially demanding they be bought out for forty-five cents on the dollar for their debt bonds – more than double what they had paid for them. Tense negotiations followed between Dephi, GM, the UAW, and the hedge funds. Dephi agreed to drop the Platinum Plan and remain under the control of the hedge funds, with one stipulation: Agree to maximize job preservation.

The hedge funds again said No, and forced the bankruptcy judge to hold an auction for all of Dephi’s stock. The hedge funds outbid Platinum Equity’s bid with a bid of $3.5 billion. Except it wasn’t really $3.5 billion. Under the rules of of Chapter 11 bankruptcy, holders of the company’s debt may bid the face value of their bonds rather than their current market value. The hedge funds were given “credit” for over five times what they had paid for those bonds. The bankruptcy judge awarded full control and all of Dephi’s stock for the equivalent of only 67 cents a share. And the hedge funds promised to continue the supply of parts to GM. And then they proceeded to carve up the carcass.

In February 2009, Delphi, claiming a cash shortage, unilaterally terminated health insurance for its nonunion pensioners. The Treasury’s Task Force uncovered “creative accounting” that hide the fact that the debt holders had deliberately withheld millions of dollars in cash sitting in Delphi accounts. Even after they were confronted with this the creditors still refused to release the funds and continue the health insurance previous Delphi management had promised its workers. During its previous economic problems Delphi had significantly underfunded its pension fund for retired workers. The same month the hedge funds won control of Delphi’s stock they announced not only would they not makeup the shortfall in the pension fund, but they would immediately stop paying any and all pension and health and life insurance payments. The government’s Pension Benefit Guaranty Corporation (PBGC) was forced to take over Delphi’s pension payments – at a cost to taxpayers of $5.6 billion. But, by law, the PBGC can only payout only  60% of the promised pension benefits of pension programs it has to take over. Overnight Delphi retirees lost 40% of their pension, and what they did get was paid for by U.S. taxpayers instead of being paid for by the company that promised it in the first place. And the new hedge fund owners boosted their eventual profit by $1 billion dollars.

Critics of the auto industry bailout called a “big payday for the unions”. It wasn’t, it was one big payday for the vulture capital hedge fund managers. All in all, the hedge funds who bought up Delphi debt for pennies on the dollars got a $12.9 billion payday from the US taxpayers. The Treasury allowed GM to give Delphi at least $2.8 billion of (TARP) funds to keep Delphi in business. GM also forgave $2.5 billion in debt owed to it by Delphi, and forgave $2 billion due from the largest hedge fund, Singer and company(the hedge fund eagle eyed Romney invested in), upon Delphi’s exit from Chapter 11 bankruptcy. The money GM forgave was effectively owed to the Treasury, which had by then become the majority owner of GM. And then there’s the PBGC takeover of the pension plan at a cost to taxpayers of $5.6 billion. The hedge fund got Delphi stock for an investment equivalent to 67 cents a share. Today Delphi’s market value is approximately $10.5 billion, a return on investment of over 3,000%! Nice payday for the millionaire and billionaire investors. And what did those unions get? Retirees get 60% of their promised pension with no health or life insurance. The union workers who were still working all lost their jobs. You see, with that $1 billion Delphi saved screwing retirees out of their pensions Delphi purchased auto parts plants in Asia, primarily in China, and now make almost all their parts in Asia with cheap labor that gets none of those pesky benefits like health insurance or pensions. Delphi Automotive, which once employed more than 25,000 union workers in 29 plants across the U.S. now employs 5,000 non-union workers in the U.S., versus almost 100,000 employees overseas.

Pure, simple and evil greed. When is enough enough for these guys?  These millionaires and billionaires got over a 3,000% return on their investment by getting a $12.9 billion payday from U.S. taxpayers, cheating retirees out of their pensions, and moving 25,000 good paying U.S. manufacturing jobs overseas. Take from the poor and give to the rich. Much like what Bain Capital is doing at Sensata Freeport, shutting down a profitable auto parts plant and shipping all the machinery and jobs to China just to extract a bit more profit from their investment. Well, we are a democratic society with a free market economy. We can’t just pass laws demanding these vulture capitalist have at least some shred of decency, they clearly have none anyway.

These hedge funds made over 3,000% profit on their investment in Delphi. You guys just couldn’t stand for a measly 2,800% profit and pay those Delphi retirees their pensions and health and life insurance? American workers who worked all their lives believing that promises made should be promises kept?

You guys couldn’t stand for a measly 2,500% profit and keep many of those jobs right in America? You guys couldn’t stand a measly profit of 2,400% profit and repay some of that $12.9 billion dollars back to U.S. taxpayers?

We are a democratic society with a free market economy. But we don’t have to underwrite Vulture Capitalism. We need to take action to prevent future Delphis and Sensata Freeports from happening. We need to protect American jobs. First of all we need to stop tax breaks for exporting jobs overseas. Mr. Romney was partially correct in the 1st debate when he claimed there are no tax breaks for exporting jobs overseas – there are no specific tax breaks for exporting jobs. But Romney is no dummy when it comes to business and he knows full well that companies can deduct business expenses, lowering their tax liability. And those expenses can include the costs of moving a job to another state or even to another country. We need to change that – moving a job to another country? Sorry, not tax deductible. And like with Sensata Freeport, when companies move operations overseas they often ship the machinery out as well. It would be simple for them to transfer ownership of the equipment to an overseas subsidiary and claim they sold it for $1, enabling them to write off the true value of the equipment as a business expense. We need to change that – moving equipment overseas? Sorry, not tax deductible.

And then President Obama needs to use “Section 421″ of U.S. Tariff laws to impose a tariff of up to 55% on imports of auto parts from China. Section 421 allows the President to impose tariffs on imports from China when he determines certain products are flooding the U.S. marketplace and overwhelming domestically produced goods. We can call it the “Bain-Delphi Tax”. Let’s see how fast Bain and Delphi change their minds about moving more auto part plants to China when faced with a tariff of 55% to import them back into the U.S. And then we need to change bankruptcy laws that allow to buy up debt for pennies on the dollar and then claim full face value when bidding for assets of the company.  And then there’s those Bush Tax Cuts. Do I want to see the tax rates for the millionaires and billionaires revert back to the 39.5% rate they had under President Bill Clinton and they did just fine? To quote a certain former Alaska Governor: You betcha! And let the tax rate for Capital Gains income revert back to the 28% from the current 15%. Every dollar these hedge funds profited from Delphi were classed as Capital Gains and taxed at only 15%, while working middle class families earning $40,000 per year pay a rate of 25%.

I can already hear the Republicans crying “Class Warfare”! Well, you know what?

UPDATE: The article originally had a picture of a Sensata Technologies factory from what I considered a reliable source reported as being the Sensata factory in Freeport, IL. It was not. Thanks to commenters on this story, the inaccurate picture has been removed. I apologize sincerely for trusting information which I thought was reliable but was not. The original article also had a couple of inaccurate sentences concerning what happened when Chinese workers arrived in Freeport for training and positioning of Chinese & American flags; those have also been edited. Again, my sincere apologies for any information that has been shown to be inaccurate, it was not intentional.

                Photo courtesy of American workers fighting for their jobs at Free Bainport

An American factory is being closed, with all it’s jobs outsourced to China. Not breaking news, but it’s important news in the context of this election. The factory is located in the northwestern Illinois town of Freeport. Before the end of the year the factory will be closed, all it’s workers out of a job. It’s a Sensata Technologies factory. It’s workers used to make auto-senors. Today, they’re training their Chinese replacements. Chinese workers who back home will earn 99 cents an hour, working 12 hour shifts, housed with 2-3 workers crammed  into a single room in barracks. Mitt Romney says America needs to learn to compete with foreign countries in free trade. Compete in what? A race to the bottom? Compete with workers making 99 cents an hour housed 2-3 to a a room, while we need to earn enough to try to pay our mortgages? You can call it “free trade”, but it sure as hell isn’t fair trade. We’re supposed to compete with those wages, those worker conditions, no OSHA rules protecting the workers, no Workman’s Compensation if those workers are injured on the job, no environmental rules against dumping pollution into the air and streams? That isn’t free trade, it isn’t fair trade, that’s completely unacceptable trade. I hope the Obama Administration taxes those Chinese made auto-sensors all to hell with tariffs. Let’s see just how clever Sensata/Bain Capital thinks they are when they have to pay more for those Chinese made sensors than if they’d been made right here in the USA. You can read the stories from Sensata Freeport IL factory workers directly at Bainport.com.

Sensata Technologies is majority owned by Bain Capital. Late last year Sensata/Bain purchased this Freeport IL auto-sensing unit from Honeywell. The very next day after the purchase was completed Sensata/Bain assembled all the workers and told them they would all be losing their jobs, that all the production would be outsourced to China. Was this factory unprofitable, with the “crushing” tax burden Republicans claim is placed on American businesses? Nope. Was this factory unprofitable because of “over paid”, “unproductive” American workers? Nope, this factory was very profitable – Sensata/Bain simply thinks it can be more profitable paying workers 99 cents an hour in China.

Mitt Romney recently said on the campaign trail in Ohio: “How is it China’s been so successful in taking away our jobs?. Well, let me tell you how: by cheating”. Well, Mitt Romney should know. From the New York Times:

The tale of Asimco Technologies, an auto parts manufacturer whose plants dot eastern China, would seem to underscore Mitt Romney’s campaign-trail complaint that China’s manufacturing juggernaut is costing America jobs.  Nine years ago, the company bought two camshaft factories that employed about 500 people in Michigan. By 2007 both were shut down. Now Asimco manufactures the same components in China on government-donated land in a coastal region that China has designated an export base, where companies are eligible for the sort of subsidies Mr. Romney says create an unfair trade imbalance.

But there is a twist to the Asimco story that would not fit neatly into a Romney stump speech: Since 2010, it has been owned by Bain Capital, the private equity firm founded by Mr. Romney, who has as much as $2.25 million invested in three Bain funds with large stakes in Asimco and at least seven other Chinese businesses, according to his 2012 candidate financial disclosure and other documents.

A confidential prospectus for one of the Bain funds, obtained by The New York Times, promotes China as a “great investment”. It cites that Chinese manufacturing wages are 85 percent lower than what Americans earn. According to 2012 candidate financial disclosures and public records, Romney has as much as $250,000 in the Bain Capital Asia Fund and as much as $1 million each in Bain Capital Funds IX and X, all Cayman Islands entities used by Bain to make sizable investments in China.  Among those funds’ holdings is $234 million that Bain invested in 2009 in Gome Electrical Appliances, a major Chinese retailer that was accused by Microsoft this year of selling computers with pirated software. Mitt Romney is an astute businessman, and he sure knows a thing or two about how China has taken away our jobs by cheating – because Mitt Romney has profited handsomely from that very cheating.

Well, to be fair, Mitt hasn’t always profited handsomely from some of his Chinese investments. In 2008 Bain planned to team up with a Chinese technology giant Huawei to buy 3Com, a network equipment maker that supplies software and equipment to the Pentagon and other federal agencies. The deal collapsed, resulting in a a lawsuit, when the Bush administration released  intelligence reports indicating that Huawei, which was founded by a former People’s Liberation Army officer, posed national security problems. Just this week the (Republican) House Intelligence Committee report released Monday said Huawei continued to have troubling connections to the Chinese government.

But wait a minute, you say? Romney no longer has any connection to Bain Capital, his holdings have been in a blind trust since he became Governor of Massachusetts in 2003? Well, Mitt Romney is an astute businessman, and he knows a thing or two about how blind trusts work. Let him explain it to you:

The blind trust is an age old ruse. You can always tell the blind trust what it can and cannot do. You give a blind trust rules.

Age old ruse notwithstanding, ABC New is reporting Mitt Romney’s Blind Trust Not So Blind:

But government ethics experts and election lawyers told ABC News that Romney’s trust might not be quite as blind as he has long maintained. That’s because Romney placed his quarter-billion dollar family fortune in the hands of his personal lawyer and longtime associate Bradford Malt. Federal officeholders are required to either fully disclose all their financial holdings and any possible conflicts of interest, or place their holdings in a blind trust. Robert Kelner, a Republican election lawyer in Washington, D.C. with no ties to a current presidential campaign, explained the federal rules governing those blind trusts. “The Office of Government Ethics requires that a financial institution be appointed as the trustee and that the financial institution not be controlled by or have done business with the candidate,” said Kelner. “It would preclude you from hiring your favorite lawyer as the trustee.”

Romney filed his financial disclosure report this past August. It revealed that his “blind trust” had invested over $1 million in the Solamere Founders Fund. Solamere is managed by Tagg Romney, Mitt’s son.

Romney claimed in the first debate that “his plan” will create 12 million jobs in the next four years. Mitt Romney is an astute businessman – he didn’t tell us where those jobs would be created. Who do you trust to continue rebuilding our economy for the next four years? The guy who thinks that because Chinese manufacturing wages are 85 percent lower than America’s it’s a fantastic investment opportunity? The guy who said “Let Detroit go bankrupt”? Or the guy that said our automakers were too important to let them fail?

                         Made in the USA