Delayed Release of Auto Bailout Documents by Treasury Dept. Reveals Cozy PR Relationship

Agency Coughs Up Material on Eve of Obama Administration Hoopla

By Christine Hall [1]

June 02, 2011

Washington, DC, June 2, 2011 – Documents released last week by the U.S. Treasury Department indicate that General Motors and the Obama administration coordinated their PR strategy regarding GM’s much criticized 2010 ad campaign, in which the car maker misleadingly claimed to have repaid all its government loans. In May 2010, after GM’s campaign was launched, CEI filed a deceptive advertising complaint with the FTC [2], and GM shortly thereafter stopped running the ads. CEI also filed a Freedom of Information request [3] with Treasury for documents on the ad campaign. Those documents were finally released last week, after nearly a year of delay.

“One year ago, the US Treasury Department aided General Motors in its fraudulent claim that it fully repaid its government loans,” said Sam Kazman [4], CEI General Counsel. “The detailed nature of their cooperation is demonstrated in the Freedom of Information documents that the Department has finally produced. Rather than respond within the 20 day statutory time period, Treasury took nearly a year to release these documents.

“Now the Treasury Department is re-enacting this smoke-and-mirrors routine on behalf of Chrysler,” said Kazman. “Whatever the bailouts may be credited with creating, honesty isn’t one of them.”

The documents produced as a result of CEI’s FOIA request [5] show GM sharing PR strategy with the Obama administration more than three weeks before launching the campaign. The Treasury Department sent some of those documents on to the White House at least two weeks before the launch.

Key points about the FOIA documents:

The timing of the Treasury Department’s response to CEI’s FOIA request appears to be connected to the administration’s current flurry of activity to tout the alleged success of the auto bailout.

The Treasury Department inexplicably took almost a full year to respond to CEI’s FOIA request. (See FOIA document pg. 1.) Yesterday, Treasury Secretary Timothy Geithner wrote a Washington Post op-ed on June 1, 2011 [6] with a similarly misleading statement that Chrysler had repaid its government loans. Tomorrow, President Obama is scheduled to give a speech at a Chrysler plant in Toledo, Ohio, likely trumpeting the auto bailout.

Treasury Secretary Geithner issued a press release touting GM’s repayment on the same day that GM launched its ad campaign. (See pgs. 9-10.) The newly released documents, however, indicate that the interrelationship between the Treasury Department, the White House, and GM on this PR effort was more extensive than previously realized.

Starting on March 30, 2010, three weeks before GM’s planned launch of its ad campaign, Brian Deese from the Executive Office of the President and numerous Treasury officials began exchanging emails relating to GM’s planned announcement. (See pgs. 55-59;97-102.) These emails included draft schedules, draft remarks by GM to be given by its chairman and CEO, Edward Whitacre, and draft press releases from both GM and Treasury. (See pgs. 9-14; 18-24; 36-39; 83-96.) Treasury also had advance copies of GM’s marketing materials for its ironically titled “Trust Campaign.” (See pgs. 73-81.)

Once GM launched its campaign, it was widely ridiculed, and then, as revealed by the documents, Treasury officials began to develop a plan for responding to those criticisms.

In late April, 2010, Sen. Chuck Grassley (R-Iowa) accused GM of repaying TARP loans with other TARP funds. An April 29 email shows Treasury trying to “prepare a response today.” (See pg. 11.)

Then, on May 10, 2010, former auto czar Steve Rattner publicly admitted that “GM may have slightly elasticized the reality of things” in its claims of repayment. The documents show that, in response, Treasury officials privately began to look for ways to respond to Rattner’s criticism. Rattner’s successor, Ron Bloom, wanted “a couple bullet points… for response if this comes up.” (See pgs.61-62.)

The Treasury Department’s role in facilitating GM’s deception may be far greater than the documents reveal, because the Treasury Department withheld some of the documents covered by the FOIA request, including portions of documents shedding light on White House involvement. For example, a blacked out item in the Treasury document release is a March 30 email from Brian Deese in the Executive Office regarding GM’s upcoming campaign. The only item left visible was the opening phrase, “Hi guys.” (See. Pp. 58-59.)