Via Crooks & Liars, the Daily Kos, a story that reads like a horror movie script. A Hostess Employee Tells All About CEO Gutting Pensions, Pay Scales.

Amazingly, Washington did not offer Hostess a bailout. This discriminatory policy may be a constitutional violation — denial of equal protection of the laws. Since the onset of the financial crisis, the government has decided that some systemically important financial institutions are too big to fail. Why, any fair-minded person will ask, was Hostess not TBTF? How can the American government let an 82-year-old brand can die?

Well first, there is the apparently failed oversight “accounting error”:

Inside the Hostess Bankery by Bluebarnstormer
(this is a shortened version see Daily Kos for full story)

“Wonder Bread runs deep in my family,” writes Bluebarnstormer, a blogger on Daily Kos.

“I love Wonder Bread. It has supported our family financially and medically for the last 14 years. When my wife wanted to attend graduate school we found a university near a bakery and moved to Lawrence, KS, home of the greatest basketball team in the history of ever. I will miss the overwhelming smell of baking bread and the friendships I built at both bakeries. Including with engineers, truck drivers, supervisors and managers who have also lost their jobs.

When I received my first paycheck from then Interstate Bakeries [now Hostess Brands] in 1999 it had a memo stapled to it. The memo announced that Wonder had just had the most productive quarter in baking history. It stated that the health of the company and brand had never been better. The break room was buzzing with excitement because our contract was soon to be up for renegotiation and this would surely mean smooth sailing. A few weeks later we got the ‘oops’ letter. Turns out it was all an ‘accounting’ error and the company was failing miserably.

Conveniently though, CEO Charles Sullivan and the board managed to sell their stock before word got out about the bad news. No jail time of course. In fact, Sullivan was brought back as a consultant after his resignation. Enron happened a few years later and at the bakery we were amazed how much attention they got compared to us.”

Then there was the paycheck cut:

“In 2005 it was another contract year and this time there was no way out of concessions. The Union negotiated a deal that would save the company $150 million a year in labor. It was a tough internal battle to get people to vote for it. We turned it down twice. Finally the Union told us it was in our best interest and something had to give. So many of us, including myself, changed our votes and took the offer. Remember that next time you see CEO Rayburn on TV stating that we haven’t sacrificed for this company. The company then emerged from bankruptcy. In 2005 before concessions I made $48,000, last year I made $34,000. My pay changed dramatically but at least I was still contributing to my self-funded pension.”

Yes and when that deal was done Hostess was also under new management [notes Crooks & Liars]… Ripplewood Holdings and GE Capital Corporation had a 50 percent stake in Hostess. Harvey Golub, former American Express and AIG chairman, was the “management” arm of Ripplewood beginning in 2007. And look what happened next.

“In July of 2011 we received a letter from the company. It said that the $3+ per hour that we as a Union contribute to the pension was going to be ‘borrowed’ by the company until they could be profitable again. Then they would pay it all back. The Union was notified of this the same time and method as the individual members. No contact from the company to the Union on a national level.

This money will never be paid back. The company filed for bankruptcy and the judge ruled that the $3+ per hour was a debt the company couldn’t repay. The Union continued to work despite this theft of our self-funded pension contributions for over a year. I consider this money stolen. No other word in the English language describes what they have done to this money.”

Crooks & Liars comments further:

Yes, well. The timing on that is a little weird, because Hostess Brands turned over their pension plans to the PBGC back in 2010. The effect of it is essentially as the writer describes: Their contribution to the pension plans is lost to them. They will receive their PBGC earned benefit under a formula that allows their employer and equity fund owner to profit much at the expense of employees’ pensions.

After securing our hourly cash from the bankruptcy judge they set out on getting approval to force a new contract on us. They had already refused to negotiate outside of court. They received approval from the judge to impose the contract then turned it over to the Union for a vote. You read that right, they got it approved by the judge before ever showing to the Union.

Bluebarnstormer tells “the Rest of the Story…”

“What was this last/best/final offer? You’d never know by watching the main stream media tell the story. So here you go…

1) 8% hourly pay cut in year 1 with additional cuts totaling 27% over 5 years. Currently, I make $16.12 an hour at TOP rate of pay in the bakery. I would drop to $11.26 in 5 years.
2) They get to keep our $3+ an hour forever.
3) Doubling of weekly insurance premium.
4) Lowering of overall quality of insurance plan.
5) TOTAL withdrawal from ALL pensions. If you don’t have it now then you never will.

Remember how I said I made $48,000 in 2005 and $34,000 last year? I would make $25,000 in 5 years if I took their offer.
It will be hard to replace the job I had, but it will be easy to replace the job they were trying to give me.”

This is only the tip of the iceberg. As equity funds have taken more and more control of companies, they have also robbed more and more employees of a living wage, their pensions, while draining the companies’ profits dry and using pension funds for acquisitions and investments that eventually shut down the company.

One need only point to how bankruptcy laws were rewritten to understand how Hostess investors managed to make a killing and protect their investment at the expense of their employees, who paid for it with their hard-earned dollars. No much different than foreclosures and the manipulated misuse of the homeowners’ collateral.

There ought to be a law against that. [Ed. note: “There was. But it conflicted with union busting”]

Thank you Bluebarnstormer for your inside view. America is starting to get a better picture and the preemptive media brainwashing blitz isn’t working as well as it use to.