SIGTARP 13-003 August 15, 2013 

Treasury’s Role in the Decision for GM To 

Provide Pension Payments to Delphi Employees 
Office of the special inspector general 

 For the Troubled Asset Relief Program 

1801 L Street, NW, 4th Floor 

Washington, D.C. 20220 

 

SIGTARP 13-003 August 15, 2013 

August 15, 2013 

MEMORANDUM FOR: The Honorable Jacob J. Lew – Secretary of the Treasury 

FROM: The Honorable Christy L. Romero – Special Inspector General 

 for the Troubled Asset Relief Program 

SUBJECT: Treasury’s Role in the Decision for GM To Provide Pension 

Payments to Delphi Employees (SIGTARP 13-003) 

We are providing this report for your information and use. It discusses the U.S. Department of the 

Treasury’s (“Treasury”) role in the decision for the General Motors Corporation to top up the pension 

payments of certain Delphi Corporation hourly employees. 

The Office of the Special Inspector General for the Troubled Asset Relief Program conducted this audit 

(engagement code 024), under the authority of Public Law 110-343, as amended, which also 

incorporates the duties and responsibilities of inspectors general under the Inspector General Act of 

1978, as amended. 

We considered comments from the Department of the Treasury when preparing the report. Treasury’s 

comments are addressed in the report, where applicable, and a copy of Treasury’s response is included 

in the Management Comments section in Appendix D. 

We appreciate the courtesies extended to our staff. For additional information on this report, please 

contact me or Mr. Bruce S. Gimbel, Acting Assistant Deputy Special Inspector General for Audit and 

Evaluation (Bruce.Gimbel@treasury.gov / 202-927-8978). 
Treasury’s Role in the Decision for GM To Provide Pension Payments 

to Delphi Employees 

SIGTARP 13-003 August 15, 2013 

Summary 

The U.S. Department of the Treasury’s 

(“Treasury”) injection of Troubled Asset 

Relief Program (“TARP”) funds in General 

Motors Corporation (“GM”) and Chrysler 

Group LLC (“Chrysler”) was the only bailout 

with a President’s Designee overseeing the 

companies’ restructurings – the Presidential 

Task Force on the Auto Industry (“Auto Task 

Force”). The Auto Task Force delegated the 

responsibility for GM’s restructuring to four 

primary officials who were part of an Auto 

Team led by Steven Rattner. GM’s 

bankruptcy would be one of the largest and 

fastest bankruptcies in our nation’s history. A 

new company, “New GM,” emerged from 

GM’s bankruptcy in July 2009, with Treasury 

owning 61% of its common stock. New GM 

purchased substantially all of GM’s assets 

while leaving behind many of its liabilities. 

One of the liabilities that New GM agreed to 

honor related to the pensions of certain 

former GM employees paid an hourly wage 

and represented by certain unions, and who 

had worked in GM’s automobile parts division 

that was spun off into Delphi Corporation 

(“Delphi”). The four Treasury Auto Team 

officials made it clear to SIGTARP that the 

decisions made and Treasury’s role related 

to Delphi pensions had to be viewed in the 

broader context of GM’s restructuring. 

What SIGTARP Found 

The existence of Treasury’s Auto Team and 

the role these Treasury officials played 

sharply contrasted with the role played by 

Treasury officials under other TARP 

programs. The four Treasury Auto Team 

officials played a direct role in GM’s 

decisions and operations up to and through 

GM’s bankruptcy. As GM’s only lender and 

later GM’s largest investor, Treasury’s Auto 

Team had significant leverage and influence 

on GM’s decisions leading up to and through 

the bankruptcy, first exerted by replacing 

GM’s then-chief executive officer (“CEO”) 

Rick Wagoner with Treasury’s choice, Fritz 

Henderson. According to Mr. Henderson, 

this sent a message to GM executives and 

was an early indicator that Treasury, as the 

main investor in GM, would have significant 

influence over GM’s decisions and 

operations. After Treasury rejected GM’s 

restructuring plan, GM developed a new plan 

with significant influence and leverage from 

the Auto Team. One GM official said, 

“Ultimately it was that GM is not in control. 

And GM is totally dependent.” 

Although the Auto Team’s role was supposed 

to be advisory for matters not requiring 

Treasury’s consent under the TARP loan 

agreement, in practice, it was more than 

advisory. The TARP loan agreement gave 

Treasury the explicit right to approve 

transactions over $100 million and new 

pension obligations, but the Auto Team’s 

influence went far beyond that right. 

SIGTARP found that the Auto Team used 

their leverage as GM’s largest lender to 

influence GM to make decisions in areas that 

did not require Treasury’s consent, in line 

with Treasury’s preferences. Auto Team 

officials told SIGTARP that they “had to 

carefully manage GM,” that “we, the 

Government, were ultimately holding the 

purse strings” and “GM realized that there 

was no other available source of money.” 

When an Auto Team official was asked by 

SIGTARP how they conveyed their 

preference, given that ultimately GM could do 

its own thing, the official said, “Well they 

could, but then they couldn’t exist. I mean, as 

I said, as the lender we had a fair amount of 

leverage.” 

Driven by broader concerns about the auto 

industry, Treasury’s Auto Team directed 

GM’s restructuring toward bankruptcy, first 

through replacing the CEO who opposed 

bankruptcy, second by “highly” suggesting to 

GM that they felt “pretty strongly” that a 

“Section 363” bankruptcy was the best 

approach. Third, although CEO Henderson 

hoped to avoid bankruptcy through a bond 

exchange, the Auto Team, who opposed the 

exchange, communicated to GM their 

preference for 90% bondholder participation, 

a “very high” level of acceptance making 

bankruptcy more likely. When the exchange 
Treasury’s Role in the Decision for GM To Provide Pension Payments 

to Delphi Employees 

SIGTARP 13-003 August 15, 2013 

failed, Treasury agreed to fund GM’s 

bankruptcy. 

Treasury’s Auto Team created a condition on 

funding GM’s bankruptcy that would serve as 

pressure on GM and would drive prebankruptcy negotiations and decisions. 

Treasury conditioned giving GM $30.1 billion 

in TARP funds on a “quick-rinse bankruptcy” 

that would end in 40 days because Auto 

Team officials thought that was the best way 

to save the automobile industry, concerned 

that GM could not survive a lengthy 

bankruptcy and GM’s failure would have 

broader systemic consequences. Neither 

Treasury nor GM believed that the company 

could survive a lengthy bankruptcy; however, 

GM thought that the 40-day timeline was not 

realistic, with its lawyer telling the Auto Team 

that it was “impossibly aggressive. It’s never 

been done.” Treasury had leverage to set a 

timeframe that did not seem realistic to GM, 

and had never been done before. If GM’s 

bankruptcy was not completed in time, GM 

risked losing its only source of financing and 

its purchaser in bankruptcy. 

Treasury’s influence over GM deepened after 

Treasury decided to fund GM’s bankruptcy 

and become the majority owner of New GM. 

With their leverage as the purchaser of GM’s 

assets in bankruptcy, Treasury’s Auto Team 

had significant influence on GM to make 

specific decisions that were in keeping with 

Treasury’s preferences. One Auto Team 

official called Treasury’s leverage 

“considerable” because the alternative was 

“catastrophic,” adding that he meant 

liquidation. GM’s then-chief financial officer 

(“CFO”) Ray Young told SIGTARP, “We put 

forward recommendations, but at the end of 

the day, the purchaser [Treasury] makes the 

final decision.” An Auto Team official stated, 

“it is my understanding that as the buyer, we 

get to determine which assets are, you know, 

assets we would buy and which liabilities” we 

would take on. Treasury used its significant 

financial leverage to get GM to reach 

agreement with the two stakeholders that 

Treasury believed could hold up GM’s 

bankruptcy – the bondholders and the 

International Union, United Automobile, 

Aerospace, and Agricultural Implement 

Workers of America (“UAW”). 

Treasury’s requirement in the December 

2008 TARP loan agreement that GM reach a 

new deal with the UAW, Treasury’s 

conditioning TARP funds on a 40-day quickrinse bankruptcy, and UAW’s leverage to 

stall the bankruptcy or strike pressured GM 

on “getting the deal done” with the UAW and 

resulted in New GM taking on the liability to 

top up the pensions of UAW’s members who 

had worked at Delphi at the time of its 1999 

spinoff from GM, increasing their pension 

benefit payments to their full benefit level. 

The Auto Team made it clear to GM that they 

wanted an agreement with the UAW prior to 

bankruptcy (which had to be before a 

June 1, 2009, bond payment due date) and 

the Auto Team actively negotiated and made 

the overall deal. The UAW understood that 

GM could not walk away from the May 18-19 

negotiations and had to reach an agreement 

to be able to survive, and those same facts 

put pressure on GM. GM only had a couple 

of weeks to come to agreement with the 

UAW, and if they did not come to agreement, 

GM risked the UAW objecting to and 

prolonging the bankruptcy beyond 40 days, 

which GM believed would lead to liquidation. 

The UAW came to the negotiations with a “hit 

list” of priority items including the top-up. 

The top-ups were never discussed in the 

negotiations. 

The Auto Team’s role in the decision to top 

up the pensions of Delphi’s UAW workers 

was not advisory. Consistent with the Auto 

Team’s practice, it would have been 

Treasury’s decision as the buyer to assume 

or reject the top-up liability. Although the topup was previously a separate written 

agreement, the top-up was now included as 

one of the obligations in the overall new 

collective bargaining agreement with the 

UAW, which was included in the Master Sale 

and Purchase Agreement selling assets to 

New GM. GM could not decide on its own to 

agree to the new collective bargaining 

agreement that included the top-up because 

Treasury’s consent was required under the 

TARP loan agreement and Treasury was the 

purchaser in bankruptcy. The decision that 
Treasury’s Role in the Decision for GM To Provide Pension Payments 

to Delphi Employees 

SIGTARP 13-003 August 15, 2013 

New GM would honor the top-up was a joint 

decision by Treasury and GM with Treasury 

deciding to approve the UAW collective 

bargaining agreement with the top-up. 

Even though the top-up was never discussed 

in the negotiations with the UAW, it became 

a foregone conclusion that it would be 

included in the new UAW agreement. Auto 

Team leader Rattner told SIGTARP that GM 

had the option of honoring or not honoring 

the top-up, but GM needed UAW workers 

and UAW’s consent was necessary for the 

bankruptcy. Auto Team leader Rattner and 

another Auto Team official told SIGTARP 

that, because the UAW included it on their 

list, it was clear that the UAW expected the 

top-up to be part of the overall deal. 

Treasury had the power to object to New GM 

taking on the top-up obligation as part of the 

larger UAW agreement, but had no desire to 

blow up the larger deal. Although the Auto 

Team was concerned about the threat of a 

strike, they were also concerned with the 

UAW prolonging the bankruptcy, calling not 

having an agreement like “shooting yourself 

in the head.” Auto Team leader Rattner told 

SIGTARP that getting more on pensions 

“was a game of chicken we didn’t want to 

play. We were under incredible time 

pressure,” adding “it was not a ridiculous 

request, and one that we could have honored 

and needed to honor.” CEO Henderson told 

SIGTARP that the pressure to finish the 

negotiations resulted in no negotiation of the 

top-up, “the focus was on getting the deal 

done,” and that if the top-up was not 

assumed, “it would have been ‘mission 

impossible.’” 

Treasury’s Auto Team and GM did not agree 

to top up the pensions of other former GM 

employees at Delphi, which did not have 

active employees at GM, and therefore had 

no leverage to hold up GM’s bankruptcy. 

This included Delphi employees who were 

paid a salary and employees who were paid 

an hourly wage who were members of the 

International Union of Electronic, Electrical, 

Salaried, Machine and Furniture Workers 

(“IUE”) and the United Steelworkers of 

America (“USW”). Although in GM’s 

bankruptcy New GM did not assume the 

other top-up agreements with Delphi IUE and 

USW employees because those unions did 

not have leverage, subsequently New GM 

agreed to top up the smaller unions because 

of the leverage those unions had to prolong 

Delphi’s bankruptcy or strike, which GM 

believed would significantly impact its ability 

to survive. 

Lessons Learned 

GM did not fail and the broader systemic 

consequences of a GM failure that Treasury 

feared were avoided. There are two 

important lessons to be learned from the role 

that Treasury played. 

First, the Auto Team’s deep involvement and 

significant influence on GM’s decisions 

leading up to and through GM’s bankruptcy 

led to expectations that Treasury would not 

act as a private investor, but as the 

Government. The Pension Benefit Guaranty 

Corporation (“PBGC”), a Government-backed 

insurer of pensions, had an expectation that 

decisions on what obligations GM would take 

on related to the Delphi pensions would 

proceed differently than what might have 

normally occurred, and could potentially have 

saved PBGC billions of dollars with Treasury 

involved. Also contributing to this 

expectation was the fact that the Auto Team 

negotiated with PBGC on behalf of GM 

related to what GM would pay on the 

pensions. Delphi and its workers, who had 

been former GM employees, also had the 

expectation that the Government would 

ensure that GM treat the pensions of all 

former GM employees at Delphi the same 

out of fairness. Also contributing to this 

expectation was the fact that TARP funds 

were being used, and that GM had taken the 

position with Delphi (and PBGC) that taking 

on additional pension obligations violated the 

TARP loan agreement and required 

Treasury’s consent. A PBGC document 

stated that Delphi believed GM may be 

looking to the “car czar” to mandate that GM 

assume Delphi pensions as part of GM’s use 

of TARP funds. One former Delphi salaried 

employee told SIGTARP that Treasury 

“cannot throw off the mantle of Government 
Treasury’s Role in the Decision for GM To Provide Pension Payments 

to Delphi Employees 

SIGTARP 13-003 August 15, 2013 

and make themselves into a commercial 

enterprise” and “it is wrong of our 

Government to take funds from everyone and 

give it to the few.” However, Auto Team 

officials attempted to view top-ups as a 

private investor with one Auto Team official 

telling SIGTARP that the Government could 

not make everyone whole, saying, “I don’t 

think that anybody thinks bankruptcy is fair.” 

Treasury’s Auto Team did not always act as 

a private investor and at times acted as the 

Government to prevent GM from failing, 

concerned about financial stability in the auto 

industry. Although the Auto Team tried to 

view issues through a “commercially 

reasonable” lens like a private investor, they 

often did not act as a private investor, nor 

should they have. Without policies or 

procedures to define commercial 

reasonableness, Treasury used commercial 

reasonableness as a justification for all of its 

actions, even when those actions were 

based on other concerns. For example, 

Treasury decided not to move GM’s 

headquarters to save costs out of concerns 

over the impact on the city of Detroit. 

Treasury made other decisions based on 

broader concerns about the 

interconnectedness of the auto industry. No 

private investor holds the responsibility 

Treasury has to protect taxpayers and to 

promote financial stability in the economy. 

Treasury made the TARP injections in GM 

when no other private investor would lend or 

invest the money that GM needed, according 

to GM’s then CFO. Concerned about too 

much debt on GM’s balance sheet, Treasury 

funded GM’s bankruptcy and converted what 

would be higher priority TARP debt to a lower 

priority equity ownership in New GM and, 

according to GM, paid more than GM’s 

“Enterprise Value.” Treasury’s Auto Team 

took these actions based on concerns of the 

consequences of a GM failure on other 

companies in the American automotive 

industry, concerns not held by private 

investors. Even though the Auto Team tried 

to act as a private investor, they had 

considerations that no private investor would 

ever have had, blurring the lines between 

Treasury’s role as the investor and as the 

Government. 

Second, the additional leverage Treasury 

gave to certain stakeholders, such as the 

UAW, contributed to criticism of the disparate 

treatment between Delphi salaried and union 

employees. One Auto Team official told 

SIGTARP that the strength of the negotiating 

parties was dictated by the leverage they 

held, but SIGTARP found that additional 

leverage was given by Treasury. The Auto 

Team established a hierarchy of importance 

of stakeholders and issues that Auto Team 

officials believed had to be completed prior to 

GM’s bankruptcy filing to ensure a successful 

quick-rinse bankruptcy that would be 

completed in 40 days. Treasury did not view 

the non-UAW Delphi hourly employees or the 

Delphi salaried employees as having 

leverage because they did not have current 

employees at GM and therefore could not 

hold up GM’s bankruptcy. 

Two liabilities that the Auto Team had 

already decided to assume in bankruptcy 

were new agreements with the UAW and 

bondholders. The UAW had leverage 

because it knew and understood from 

Treasury that it was committed to reorganize 

GM and not let GM fail. Treasury’s 40-day 

bankruptcy condition gave the UAW and 

bondholders additional leverage to threaten 

to hold up GM’s bankruptcy. They may have 

been able to obtain more concessions than in 

a traditional bankruptcy where the issues 

may be litigated. An Auto Team official told 

SIGTARP, “We had to negotiate a deal that 

the UAW and bondholders would accept.” 

With Treasury’s dictate of a 40-day 

bankruptcy and no indication that Treasury 

would extend that timeframe, GM officials 

were under pressure, believing they had to 

reach agreements with the bondholders and 

UAW prior to bankruptcy or risk losing 

Treasury’s funding and liquidating. 

It is very difficult for Treasury to act as only a 

private investor and still fulfill its greater 

governmental responsibilities. Treasury 

entered the TARP investments as the 

Government, and must continue to act as the 

Government the whole time it holds these 

investments, protecting taxpayers’ 

investment and fulfilling Treasury’s 

responsibility to promote financial stability in 
Treasury’s Role in the Decision for GM To Provide Pension Payments 

to Delphi Employees 

SIGTARP 13-003 August 15, 2013 

the economy. An important lesson 

Government officials should learn from the 

Government’s unprecedented TARP 

intervention into private companies is that the 

actions and decisions taken must represent 

the overarching responsibilities the 

Government owes to the American public. 

What SIGTARP Recommended 

SIGTARP makes no recommendations in this 

report. Although Treasury remains invested 

in GM, and TARP’s Automotive Industry 

Financing Program is ongoing, the subject 

matter of this report concerns specific actions 

taken by Treasury’s Auto Team during 2008 

and 2009 that are unlikely to occur again 

because the Auto Team disbanded. 

Treasury provided an official written 

response, which is reproduced in full in 

Appendix D. A discussion of this response 

and SIGTARP’s response can be found in 

the Management Comments and SIGTARP’s 

Response section of this report. 
Treasury’s Role in the Decision for GM To Provide Pension Payments 

to Delphi Employees 

SIGTARP 13-003 August 15, 2013 

Table of Contents 

Introduction ................................................................................................................................................. 1

Background ................................................................................................................................................. 4

Treasury Plans for GM’s Bankruptcy, Replaces GM’s CEO, and Rejects GM’s Restructuring 

Plan .......................................................................................................................................................... 7

Treasury’s Auto Team Replaces GM’s CEO .............................................................................................. 8

Treasury’s Auto Team Rejects GM’s Restructuring Plan .......................................................................... 9

Treasury’s Auto Team and GM Develop a New GM Restructuring Plan ................................................ 11

Cutting Costs Related to Delphi ............................................................................................................... 13

Cutting Pension Costs ............................................................................................................................... 13

Treasury’s Role in the Decision for GM To File Bankruptcy .................................................................. 16

Treasury Agreed To Fund GM’s Bankruptcy with $30.1 Billion from TARP, but Only for 

40 Days .................................................................................................................................................. 18

“Cherry-picking” Assets and Liabilities ................................................................................................... 19

Deals with Major Stakeholders Before Bankruptcy ................................................................................. 20

Treasury’s Role in Pre-Bankruptcy Deal with GM’s Bondholders .......................................................... 21

Treasury’s Role in Pre-Bankruptcy Deal with UAW, Which Included New GM Assuming the 

Top-Up of Pensions ............................................................................................................................... 22

GM Completes Bankruptcy in 40 Days Without Agreeing To Top Up Any Other Delphi 

Employee ............................................................................................................................................... 27

Delphi Salaried Retirees ........................................................................................................................... 27

Delphi Hourly Employees Represented by Smaller Unions ..................................................................... 30

Conclusion ................................................................................................................................................ 33

Management Comments and SIGTARP’s Response ................................................................................ 42

Appendix A – Objectives, Scope, and Methodology ................................................................................ 43

Appendix B – Acronyms and Abbreviations ............................................................................................ 45

Appendix C – Audit Team Members ........................................................................................................ 46

Appendix D – Management Comments .................................................................................................... 47
TREASURY’S ROLE IN THE DECISION FOR GM TO PROVIDE PENSION PAYMENTS TO DELPHI EMPLOYEES 1

SIGTARP 13-003 August 15, 2013 

Introduction 

General Motors Corporation’s (“GM”) bankruptcy was one of the largest and 

fastest bankruptcies in our nation’s history. Having already invested $19.4 billion 

in GM under two Administrations through the Troubled Asset Relief Program 

(“TARP”), in June of 2009, the U.S. Department of the Treasury (“Treasury”) 

loaned GM an additional $30.1 billion from TARP to fund GM’s bankruptcy, and 

conditioned the money on the bankruptcy ending in 40 days. In exchange for its 

combined $49.5 billion TARP investment, Treasury would become the majority 

(61%) owner of a new company that would emerge from GM’s bankruptcy 

(“New GM”), purchasing substantially all of GM’s assets, and leaving behind 

many of its liabilities with the old company (“Old GM”). One of the liabilities 

that New GM agreed to honor related to the pensions of certain former GM 

employees who had worked in its automobile parts division Delphi Corporation 

(“Delphi”), when GM spun off Delphi into an independent company in 1999. The 

agreement ran to Delphi employees who were paid an hourly wage (an “hourly 

employee”) and were represented by certain unions. Delphi employees who were 

paid a salary (a “salaried employee”) did not have an agreement for GM to pay 

anything toward their pensions after the 1999 spinoff. Delphi, which was GM’s 

largest supplier of parts, had been in bankruptcy since 2005 and did not have 

enough money to fund its pensions. 

With the first TARP injection in GM, Treasury assigned responsibility for 

overseeing GM’s restructuring to a “President’s Designee” that was later formed, 

in February 2009 – the Presidential Task Force on the Auto Industry (“Auto Task 

Force”), which delegated the responsibility for GM’s restructuring to a group of 

Treasury officials known as the Auto Team (“Auto Team”). The existence of the 

Auto Team and the role they would play with GM and Chrysler Group LLC 

(“Chrysler”) sharply contrasted with the role played by Treasury officials under 

other TARP programs. The auto bailout was the only TARP program with a 

President’s Designee responsible for the restructuring of the TARP recipient. 

Auto Team officials would play a direct role in the decisions and operations of 

GM until the Auto Team disbanded in the summer of 2009, soon after both 

automakers’ bankruptcies. 

Senator Roger Wicker and Congressman John Boehner sent a letter to the 

Government Accountability Office (“GAO”) requesting a review of five questions 

related to the decision that GM would top up pension payments for Delphi hourly 

employees beyond what the Pension Benefit Guaranty Corporation (“PBGC”), a 

Government-backed insurer of pensions, would pay if the pension plans were 

terminated, but not top up pension payments for Delphi salaried employees and 

related to PBGC’s termination of the Delphi pensions. Former Congressman 

Christopher J. Lee also requested that SIGTARP work with GAO and that 

SIGTARP issue a separate report from GAO on one of the five questions. 

Congressman Michael R. Turner also requested that SIGTARP conduct a similar 

review after Congressman Lee left office. GAO and SIGTARP coordinated, 
TREASURY’S ROLE IN THE DECISION FOR GM TO PROVIDE PENSION PAYMENTS TO DELPHI EMPLOYEES 2

SIGTARP 13-003 August 15, 2013 

dividing the work into two parts that each office would address. GAO reviewed 

PBGC’s termination of Delphi’s hourly and salaried pension plans and other 

PBGC issues. To avoid duplicating GAO’s work, SIGTARP did not review 

PBGC’s decisions. The objectives of SIGTARP’s audit were to determine: 

 Treasury’s role in the decision for GM to top up (pay the full cost of pensions 

less any PBGC payout) the pension plan; and 

 whether the Administration or the Auto Task Force pressured GM to provide 

additional funding for the plan. 

In December 2011, GAO issued a report that included the statement, “GM and 

Treasury officials stated that Treasury’s role was advisory concerning GM’s 

decisions not to take on additional Delphi pension liabilities but to honor the topup agreements with some unions.”1

 A GAO official subsequently testified before 

Congress in July 2012, that “the court filings, Treasury officials, PBGC officials, 

GM officials stated that Treasury only played an advisory role. I would note, 

however, in conducting our work, we coordinated with SIGTARP, and our report 

focused on a broad range of things, including PBGC issues, the events leading to 

the termination in Treasury’s role. But we did not conduct an investigation, as 

SIGTARP is doing, and we did not interview the former [Treasury Auto Team] 

officials here today.”2

SIGTARP conducted the audit from December 2010 through August 2013, in 

accordance with generally accepted government auditing standards as prescribed 

by the Comptroller General of the United States.3 SIGTARP’s work was 

significantly prolonged by the refusal of four key former Treasury Auto Team 

officials working on GM’s restructuring to be interviewed by SIGTARP.4 In 

July 2012, Congress held a hearing on the former Treasury officials’ refusals to be 

interviewed. In the weeks prior to the hearing, the leader of the Auto Team, 

Steven Rattner, agreed to be interviewed by SIGTARP. At the Congressional 

hearing, SIGTARP learned for the first time that the other three former Treasury 

officials – Ron Bloom, Harry Wilson, and Matthew Feldman – had told Congress 

 

1 GAO-12-168, “GM Agreements with Unions Give Rise to Unique Differences in Participant Benefits,” 12/15/2011.

2 Hearing before the Subcommittee on TARP, Financial Services and Bailouts of Public and Private Programs of the 

Committee on Oversight and Government Reform, 7/10/2012.

3 For a discussion of the audit’s scope and methodology, see Appendix A. 

4

 Three former Treasury Auto Team officials all include their roles in GM’s restructuring in their professional 

biographies. Ron Bloom’s biography states that “he helped lead the restructuring of GM and Chrysler, and then led 

Treasury’s oversight of the companies thereafter.” Harry Wilson’s biography states that “he worked as one of the four 

leaders of the Auto Task Force, responsible for the Treasury’s role in the restructuring of GM and Chrysler. 

Mr. Wilson led a team that was responsible for the business and financial work of the Task Force and also led a team 

overseeing the financial and operational restructuring of GM, the largest in American history.” Matthew Feldman’s 

biography states that he served as Chief Legal Advisor to the Auto Task Force “assembled to help develop the overall 

strategy to restructure and recapitalize General Motors Corporation and Chrysler LLC, a strategy which resulted in the 

groundbreaking legal proceedings that implemented a comprehensive financial solution for both companies. The Auto 

Team conducted complex negotiations with all major constituents of both companies, including Fiat SpA (which now 

runs Chrysler), the United Auto Workers and major creditors of both auto makers under a compressed timeline.” 
TREASURY’S ROLE IN THE DECISION FOR GM TO PROVIDE PENSION PAYMENTS TO DELPHI EMPLOYEES 3

SIGTARP 13-003 August 15, 2013 

that they would agree to a SIGTARP interview. Those interviews served as a 

turning point in SIGTARP’s work because SIGTARP could not fully determine 

Treasury’s role without interviewing the Treasury officials involved. The former 

Treasury officials made it clear to SIGTARP that the decisions made and 

Treasury’s role related to Delphi pensions had to be viewed in the broader context 

of GM’s restructuring, which is what this report covers. SIGTARP makes no 

recommendations in this report. Although Treasury remains invested in GM, and 

TARP’s Automotive Industry Financing Program is ongoing, the subject matter of 

this report concerns specific actions taken by Treasury’s Auto Team during 2008 

and 2009 that are unlikely to occur again because the Auto Team disbanded. 
TREASURY’S ROLE IN THE DECISION FOR GM TO PROVIDE PENSION PAYMENTS TO DELPHI EMPLOYEES 4

SIGTARP 13-003 August 15, 2013 

Background

According to testimony from Auto Team official Ron Bloom, in 2008, the U.S. 

auto industry lost 50% of its sales volume and over 400,000 jobs. Ray Young, 

GM executive vice president and chief financial officer (“CFO”) in 2008 and 

2009, told SIGTARP that in March 2008 GM started looking to identify sources 

of financing. Young told SIGTARP that by late 2008, it became clear that there 

was no source of financing and no parties were interested in investing in GM. In 

November 2008, GM sought Government financial support. In December 2008, 

Treasury, under the Bush Administration, announced TARP’s Automotive 

Industry Financing Program with the stated goal to prevent a significant 

disruption to the American automotive industry that would pose a systemic risk to 

financial market stability and have a negative effect on the U.S. economy. 

On December 31, 2008, Treasury provided $13.4 billion in TARP funds in a 

TARP loan to GM through the Automotive Industry Financing Program, and on 

January 2, 2009, Treasury provided $4 billion to Chrysler. Treasury’s Loan and 

Security Agreement (“TARP loan agreement”) required GM and Chrysler to each 

submit by February 17, 2009, for review and approval by the President’s 

Designee a restructuring plan showing how they would use the TARP funds to 

achieve “long-term viability,” which was defined as “positive net present value, 

taking into account all current and future costs, and can fully repay the 

government loan.” 

In summary, the TARP loan agreement with GM also laid out three conditions 

that needed to be met for GM to achieve and sustain long-term viability and that 

needed to be approved by Treasury by March 31, 2009: (1) GM was required to 

establish an agreement with the International Union, United Automobile, 

Aerospace, and Agricultural Implement Workers of America (“UAW”), which 

represented nearly all of GM’s union employees, as well as an estimated 500,000 

retirees, that would include reduced labor costs; (2) as part of the new agreement 

with the UAW, the UAW would agree that at least 50% of the approximately 

$20 billion obligation GM had to the UAW retiree health care trust, called the 

Voluntary Employee Beneficiary Association plan (“VEBA”), had to be funded 

with GM stock; and (3) GM would commence a voluntary offer to have its 

bondholders who held approximately $27 billion in debt exchange their debt for 

GM stock. President George W. Bush said that ensuring viability would require 

“meaningful concessions from all involved in the automotive industry.” 

On February 15, 2009, President Barack Obama convened the Auto Task Force 

and named Treasury Secretary Timothy F. Geithner and National Economic 

Council Director Dr. Lawrence Summers to serve as co-chairs.5

 Treasury created 

the Auto Team and the Auto Task Force delegated to it the responsibility of 

evaluating the auto companies’ restructuring plans and negotiating the terms of 

 

5 The Auto Task Force had 21 members including several cabinet-level officials from across the Executive Branch. 
TREASURY’S ROLE IN THE DECISION FOR GM TO PROVIDE PENSION PAYMENTS TO DELPHI EMPLOYEES 5

SIGTARP 13-003 August 15, 2013 

any further assistance. Leading the Auto Team was Steven Rattner, co-founder of 

Quadrangle Group, a private equity firm. Ron Bloom, a former investment 

banker and former head of collective bargaining for the United Steelworkers of 

America (“USW”), served as his deputy and then the head of the Auto Team after 

Mr. Rattner left Treasury in July 2009. With a staff of 15 people, the other key 

members of the Auto Team who worked on GM’s restructuring with Mr. Rattner 

and Mr. Bloom included Matthew Feldman, who told SIGTARP that he was 

brought in to be the bankruptcy lawyer for Treasury, and Harry Wilson, a former 

member of the hedge fund management firm Silver Point Capital. Mr. Bloom 

told SIGTARP that Dr. Summers and Secretary Geithner gave the Auto Team a 

fair amount of authority, but major decisions went to Dr. Summers and Secretary 

Geithner.6

These Auto Team officials told SIGTARP that they were directed by Treasury 

and the Administration to act in a “commercially reasonable” manner. There 

were no policies and procedures defining commercially reasonable; it was subject 

to interpretation.7

 Auto Team leader Rattner told SIGTARP that he interpreted 

the commercially reasonable approach as “if we would be doing this in the private 

sector and spending money on it.” Auto Team official Wilson testified in a 

deposition that “our test had to be what a commercial buyer would do” adding, 

“We had a fiduciary duty to use taxpayer dollars in the most appropriate way.” 

Auto Team official Bloom told SIGTARP that he interpreted the commercially 

reasonable approach as a way to “minimize taxpayer investment consistent with 

getting the job done and creating a viable enterprise.” 

Treasury’s definition of long-term viability focused on GM repaying taxpayers. 

Auto Team officials Harry Wilson and Matthew Feldman told SIGTARP that they 

each believed it would take five years for GM to repay TARP. Auto Team leader 

Rattner told SIGTARP that the Auto Team spent a lot of time on this issue with 

Dr. Summers who wanted to exit as soon as possible. Auto Team Leader Rattner 

said the Auto Team did not know what that actually meant, but that it generally 

would take five to eight years to divest when a government takes a position. 

Former Secretary Geithner told SIGTARP that Treasury could not have a plan for 

how long it would own GM stock. More than four years later, GM has not fully 

repaid taxpayers and remains in TARP.8

GM’s restructuring plan, submitted to Treasury in February 2009, did not plan for 

bankruptcy; instead it detailed the risks GM would face if it filed bankruptcy. 

GM’s plan identified eight “key risks.” One risk was that Delphi, GM’s former 

 

6

 When asked what authority was designated to the Auto Team related to GM’s restructuring and what remained with 

Dr. Summers and him, Secretary Geithner told SIGTARP that he and Dr. Summers would sign off on consequential 

strategic decisions. Mr. Rattner told SIGTARP that he met with Dr. Summers and Secretary Geithner regularly, but he 

had little interaction or communication with the rest of the Auto Task Force. 7

 There were generally defined principles in a report from the Administration for GM to achieve greater profitability, 

strengthen its balance sheet, increase its competitiveness, and develop fuel-efficient cars. 

8 As of June 13, 2013, there is $9.87 billion outstanding on Treasury’s TARP investment in GM. For that, Treasury 

owns 13.8% of GM common stock. 
TREASURY’S ROLE IN THE DECISION FOR GM TO PROVIDE PENSION PAYMENTS TO DELPHI EMPLOYEES 6

SIGTARP 13-003 August 15, 2013 

subsidiary and largest parts supplier, which had been in bankruptcy since 2005, 

had been unable to raise financing to exit bankruptcy and had underfunded the 

pension plans of employees who had worked at Delphi when it was part of GM.9

 

GM’s restructuring plan stated, “If Delphi is unsuccessful in addressing its 

underfunded pension plans and raising exit financing, it would represent a 

significant risk to the Company’s revised plan.” 

Prior to Delphi’s spinoff in 1999, all of its employees were covered by GM’s 

pension plans, but GM had funded these pension plans at different levels. At the 

time of the spinoff, GM had fully funded (at 123%) the expected payments 

needed to cover the pension plan of Delphi salaried employees, but had 

underfunded (at 69%) the pension plan of Delphi hourly employees. In 1999, 

Delphi’s three largest unions representing hourly employees negotiated pension 

benefit guarantees that, if Delphi could not fund its pensions, GM would “top up,” 

or increase, pension benefit payments of the unions’ hourly retirees to their full 

benefit levels under certain conditions (called “pension benefit guarantees,” or 

“top-up agreements”). The three unions were the UAW, the International Union 

of Electronic, Electrical, Salaried, Machine and Furniture Workers (“IUE”),10 and 

the USW.11 At the time, Delphi’s salaried employees were not represented by a 

union or organized as a group or association, and they did not negotiate or receive 

top-up agreements.12

 

 

9

 Delphi was GM’s largest supplier of automotive systems, components, and parts, and GM was Delphi’s largest 

customer with annual purchases that ranged from approximately $6.5 billion to $10.2 billion from 2005 through 2008. 

The purpose of the spinoff, according to GM and Delphi executives, was to enable Delphi to establish a more 

competitive labor cost structure and to allow Delphi to manufacture and sell parts to other automakers. 10 Effective October 1, 2000, the International Union of Electronic Workers merged with Communication Workers of 

America (“CWA”), becoming the IUE-CWA Industrial Division. 11 When Delphi was spun off, unions represented about 95% of all Delphi hourly employees. The largest Delphi union 

in the U.S. was UAW, which represented roughly 72% of the hourly workforce. The other large unions were IUE and 

USW, which represented 24% and 4% of Delphi’s unionized hourly workforce in the U.S., respectively. GM entered 

into a memorandum of understanding to extend the agreements with each of the unions – UAW, IUE, and USW – 

when they were set to expire in 2007. Through the memorandum of understanding, GM agreed effectively to extend 

the benefit guarantees indefinitely. 12 Despite the fact that GM had fully funded the salaried pension plans when it spun off Delphi in 1999, by 2001, funding 

levels for both salaried and hourly pension plans were below 100%. From 2001 to 2005, Delphi suffered losses and 

the company filed for bankruptcy in October 2005. According to Delphi officials interviewed by SIGTARP, Delphi 

remained committed to funding the hourly and salaried pension plans in the early stages of Delphi’s bankruptcy 

process between 2005 and 2007 and tried to preserve the plans. However, with the economic downturn in 2008, 

Delphi struggled to maintain the pension plans. According to the Delphi officials, various investors expressed interest 

in Delphi, but none wanted to purchase or invest in Delphi if it retained its pension liabilities. 
TREASURY’S ROLE IN THE DECISION FOR GM TO PROVIDE PENSION PAYMENTS TO DELPHI EMPLOYEES 7

SIGTARP 13-003 August 15, 2013 

Treasury Plans for GM’s Bankruptcy, Replaces 

GM’s CEO, and Rejects GM’s Restructuring Plan 

On February 17, 2009, the day they received GM’s restructuring plan, the Auto 

Team sent a memo to Auto Task Force chairs Dr. Summers and Secretary 

Geithner with “first-blush impressions” of the auto companies’ restructuring 

plans. As for GM, the memo listed four risks: (1) underfunding of pension plans; 

(2) foreign subsidiaries; (3) “GM’s plan includes funding to purchase certain 

Delphi assets, but Delphi will require other funding to exit bankruptcy, address its 

pension liabilities and continue operations,” and the “failure of Delphi to 

reorganize successfully will jeopardize GM’s restructuring plan”; and (4) GM’s 

plan to reduce its dealer base versus foreign automakers’ dealer bases in North 

America. Secretary Geithner told SIGTARP that he had no recollection of costs 

related to Delphi or Delphi pension top-up issues and that the Auto Team could 

work through Delphi issues on its own. Auto Team leader Rattner told SIGTARP 

that there were no significant meetings between him and Dr. Summers or 

Secretary Geithner related to the Delphi pensions.13 

Before and after GM submitted its restructuring plan in mid-February 2009, 

Treasury’s Auto Team was assessing the need for GM to file bankruptcy. In his 

book Overhaul: An Insider’s Account of the Obama Administration’s Emergency 

Rescue of the Auto Industry (“Overhaul”), Mr. Rattner stated that he thought 

bankruptcy was inevitable in December 2008, before he formally started at 

Treasury. Mr. Rattner stated in Overhaul that negotiations with unions, debt 

holders, and others to meet the conditions in the TARP loan agreement had 

“absolutely no chance of success.” Internal Treasury documents indicate that 

most of the restructuring options under consideration by the Auto Team in 

February 2009 involved some form of bankruptcy. A February 2009 analysis 

conducted for the Auto Team by their financial consultant indicated that an outof-court settlement had a low chance of success and that a prearranged bankruptcy 

had a moderate to high chance of success. 

In his book Overhaul, Auto Team leader Rattner described briefing Secretary 

Geithner on February 11, 2009, on restructuring options, nearly all of which 

included bankruptcy. He recounted that Secretary Geithner thought bankruptcy 

was probably inevitable and said, “We need to put foam on the runway.” An 

Auto Team official also told SIGTARP that when he started at Treasury, 

Secretary Geithner said the team should look at their role as laying “foam on the 

runway” during this tumultuous time, which the Auto Team official interpreted as 

looking for ways to soften the blow in the event of bankruptcy. Auto Team 

official Feldman, a bankruptcy lawyer who had key responsibility for GM 

bankruptcy planning, told SIGTARP, “By the end of February and beginning of 

 

13 An internal Treasury briefing agenda for a July 7, 2009, meeting with Dr. Summers and Secretary Geithner says 

“PBGC/pension,” but Mr. Rattner did not recall the briefing. Secretary Geithner told SIGTARP he did not recall any 

discussions or briefings related to Delphi pensions. 
TREASURY’S ROLE IN THE DECISION FOR GM TO PROVIDE PENSION PAYMENTS TO DELPHI EMPLOYEES 8

SIGTARP 13-003 August 15, 2013 

March, I didn’t know how GM would do in bankruptcy but couldn’t see forward 

without bankruptcy.” 

The Auto Team worked independent of GM to prepare for a GM bankruptcy 

under Section 363 of the bankruptcy code. An Auto Team official testified in a 

deposition that 363 was selected because of speed, certainty, and the ability to 

leave behind liabilities that a commercial buyer would not want in the new 

company. Auto Team leader Rattner described the 363 sale in Overhaul as “the 

fastest possible bankruptcy,” but he stated that they thought it would still take 6 to 

15 months. Auto Team leader Rattner wrote in Overhaul that in March 2009, 

Auto Team official Feldman made a critical discovery to shorten GM’s 

bankruptcy. Feldman determined that the “marketing period” typically used to 

identify potential asset purchasers in a 363 bankruptcy sale could be eliminated 

where there is only one source of financing available, which, in this instance, was 

the Government. 

Mr. Rattner recounted in Overhaul that on March 19, 2009, while planning for 

bankruptcy, the Auto Team discovered that GM had a $1 billion payment to 

bondholders coming due June 1, 2009, but if Treasury allowed GM to make the 

payment, it would be awarding 100 cents on the dollar to bondholders who were 

only entitled to pennies.14 Auto Team officials told SIGTARP that the upcoming 

payment would drive the date of GM’s bankruptcy. Despite the Auto Team’s 

bankruptcy planning, then-GM president and chief operating officer (“COO”) 

Frederick “Fritz” Henderson told SIGTARP that bankruptcy was not discussed 

when GM met with Treasury in March 2009. 

What followed was the Auto Team’s direct involvement in the decisions affecting 

GM. Treasury’s Auto Team used their financial leverage as GM’s only lender to 

significantly influence the decisions GM made during the time period leading up 

to and through GM’s bankruptcy. 

Treasury’s Auto Team Replaces GM’s CEO 

It was increasingly clear to the Auto Team that GM, under the leadership of thenchief executive officer (“CEO”) Rick Wagoner, was unwilling to move toward 

bankruptcy. CEO Wagoner had been vocally and adamantly opposed to putting 

GM into bankruptcy and had done little to no planning for the possibility of 

bankruptcy. CEO Wagoner did not believe that the company could survive in 

bankruptcy because consumers would not purchase cars from an automaker in 

bankruptcy as there would be no guarantee that the company would be able to 

fulfill its long-term warranty obligations. CEO Wagoner believed that customers 

would view this as an unnecessary risk and avoid it by purchasing another 

 

14 Mr. Rattner stated in Overhaul that he told the Detroit Free Press that “bankruptcy is not our goal,” while “all the 

while we were preparing for it.” That interview took place March 16, 2009. 
TREASURY’S ROLE IN THE DECISION FOR GM TO PROVIDE PENSION PAYMENTS TO DELPHI EMPLOYEES 9

SIGTARP 13-003 August 15, 2013 

automaker’s automobiles. He was concerned that a lack of consumer confidence 

would hurt sales needed for the company to continue to exist. 

The Auto Team disagreed with Wagoner’s view and believed that bankruptcy was 

the only path remaining for GM to succeed. On March 27, 2009, Auto Team 

leader Rattner called CEO Wagoner and GM then-president and COO Henderson 

to separate meetings. Mr. Henderson told SIGTARP that he felt Mr. Rattner was 

interviewing him. He was correct. Later that day, at Mr. Rattner’s request, 

Wagoner resigned and Mr. Rattner asked Mr. Henderson to serve as CEO. 

Henderson told SIGTARP that GM’s Board of Directors was upset by the 

replacement of Mr. Wagoner and felt that their authority to appoint the CEO had 

been usurped by Treasury. Mr. Henderson described his appointment as CEO as 

a “principal source of friction” between the board and Treasury. Mr. Henderson 

told SIGTARP that the Auto Team’s decision to replace Mr. Wagoner with their 

selection sent a message to GM executives and was an early indicator that 

Treasury, as the main investor in GM, would have significant influence over 

GM’s decisions and operations. 

Treasury’s Auto Team Rejects GM’s Restructuring Plan 

Three days later, on March 30, 2009, Treasury rejected GM’s restructuring plan 

as not viable, stating in its Viability Determination Fact Sheet, “Their best chance 

at success may well require utilizing the bankruptcy code in a quick and surgical 

way.” Treasury also stated in its Viability Determination that although GM had 

made meaningful progress in its turnaround plan over the last few years, the 

progress had been “far too slow.” Treasury’s Viability Determination stated that 

the deadline had nearly passed for the three TARP-required conditions: 

(1) establishing a new agreement with UAW to reduce labor costs; (2) obtaining 

all necessary approvals for changes to the VEBA retiree health care trust, which 

included UAW’s approval; and (3) commencing an offer to bondholders to 

exchange debt for equity. The Auto Team viewed these conditions as a floor, not 

a ceiling. Treasury also indicated other “key factors” for GM’s viability, such as 

reducing the number of brands and dealerships, and reducing the cash cost of 

legacy liabilities, including employee pensions and health care costs. These were 

key areas of focus for Treasury’s Auto Team.15 

Additionally, in its Viability Determination, Treasury stated that GM needed a 

“substantially more aggressive restructuring plan” to make GM viable, gave GM 

until June 1 to resubmit the plan, and gave GM an additional $6 billion in TARP 

funds – enough working capital to continue operations over the following 

60 days. GM’s then-CFO Young told SIGTARP that GM executives did not 

know how they would obtain the financing to restructure the company and they 

 

15 SIGTARP previously reported on the termination of dealerships in its audit, “Factors Affecting the Decisions of 

General Motors and Chrysler to Reduce their Dealership Networks,” released 7/19/2010. 
TREASURY’S ROLE IN THE DECISION FOR GM TO PROVIDE PENSION PAYMENTS TO DELPHI EMPLOYEES 10

SIGTARP 13-003 August 15, 2013 

did not know how they could shed the liabilities required by the TARP loan 

agreement, calling the situation “dire.” 

An Auto Team official told SIGTARP that broader economic considerations 

served as the catalyst for Treasury to offer GM the opportunity to develop a new 

restructuring plan. The Auto Team official told SIGTARP that GM’s success or 

failure had “broader economic ramifications.” According to that member and 

other Auto Team officials, the Auto Team was concerned that GM’s collapse 

could have a cascading effect throughout the interconnected American automotive 

industry by causing automotive parts manufacturers and auto dealerships to fail, 

which could then threaten the stability of American automakers during an 

economic crisis. When announcing the additional TARP funds, President Obama 

stated, “We cannot, and must not, and we will not let our auto industry simply 

vanish.” 
TREASURY’S ROLE IN THE DECISION FOR GM TO PROVIDE PENSION PAYMENTS TO DELPHI EMPLOYEES 11

SIGTARP 13-003 August 15, 2013 

Treasury’s Auto Team and GM Develop a 

New GM Restructuring Plan 

With only 60 days of funding from TARP, GM developed a new restructuring 

plan with significant influence and leverage from Treasury’s Auto Team. 

Treasury’s influence and leverage over GM went beyond Treasury’s rights under 

the TARP loan agreement. Under the TARP loan agreement, Treasury had the 

right to approve or prohibit transactions over $100 million that were not in the 

ordinary course of GM’s business or any increase in pension obligations. An 

Auto Team official stated in a deposition, “Obviously, under 100 million we 

didn’t have any say, and we didn’t have any ability to be asked for our consent or 

to stop it or do anything else.” While this statement describes Treasury’s legal 

rights, SIGTARP found that Treasury’s Auto Team had significant influence over 

GM’s decisions, even in the areas where Treasury’s consent was not required 

under the TARP loan agreement. One GM official told SIGTARP, “Ultimately it 

was that GM is not in control. And GM is totally dependent.” 

Then-CEO Henderson told SIGTARP that the Auto Team was concerned about 

how to deleverage the company’s balance sheet, and that they wanted to start 

from ground zero and build GM back up, restructuring everything. Then-CEO 

Henderson told SIGTARP, “The Auto Team from Day 1 looked at everything in 

detail. The Auto Team was uncomfortable with the balance sheet. Harry Wilson 

and the Auto Team were taking apart the plan step by step and rebuilding it step 

by step in Detroit.” 

An Auto Team official told SIGTARP the Auto Team’s review was “very deep 

and very thorough.” The same Auto Team official told SIGTARP that the Auto 

Team provided “direction not decisions. We were skeptical on all decisions. We 

had to approve the decisions, show us the data.” The official told SIGTARP, “It 

wasn’t a fight. It was a debate. We didn’t involve ourselves in any day-to-day 

decisions.” The Auto Team official told SIGTARP that he would have a call 

every evening at 10 p.m. with GM’s then-CFO Young. The Auto Team official 

told SIGTARP, “There was a feeling that the Auto Team had to carefully manage 

GM, which would have given away Treasury’s money without blinking.” 

Rather than merely providing advice, the Auto Team used their leverage as GM’s 

largest lender to influence and set the parameters for GM to make decisions. An 

Auto Team official told SIGTARP that Treasury was GM’s largest lender and 

investor, GM’s “only lifeline.” Another Auto Team official testified before 

Congress, “While Treasury was closely involved in pressing GM management for 

the major changes needed to make the company profitable, we were very careful 

to never get involved in the specific decisions on plant closures, dealer closures, 

or the like. We would agree with GM on the broad strokes, which was to create a 

world-class auto business, and the key components of that, and they would make 
TREASURY’S ROLE IN THE DECISION FOR GM TO PROVIDE PENSION PAYMENTS TO DELPHI EMPLOYEES 12

SIGTARP 13-003 August 15, 2013 

the detailed decisions that needed to be made to implement those broad strokes.”16 

As SIGTARP has previously reported, in its Dealership Audit,17 in response to the 

Auto Team’s rejection of GM’s restructuring plan and its explicit comment that 

GM’s “pace” of dealership closings was too slow and an obstacle to its viability, 

GM substantially accelerated its dealership termination timelines. Instead of 

gradually reducing its network by approximately 300 dealerships per year through 

2014, as GM had proposed in the plan submitted to Treasury, GM responded to 

the Auto Team’s direction by terminating the ability of 1,454 dealerships to 

acquire new GM vehicles and giving them until October 2010 to wind down 

operations. Although the Auto Team did not tell GM which dealerships to close, 

GM made the decision to accelerate the dealership closings with significant 

Treasury influence. 

As an Auto Team official explained to SIGTARP, Treasury did not want to start 

running the company, but when dealing with taxpayer resources, “We, the 

Government, were ultimately holding that purse string,” and Treasury reserved 

the right to tell GM that they would not back them. Another Auto Team official 

told SIGTARP that there were no instances where the Auto Team “crammed” a 

decision on GM, “but we were investing a lot of money, and we had the 

opportunity to disagree.” This same Auto Team official told SIGTARP that the 

Auto Team did not impose ultimatums on GM. As this official told SIGTARP, 

“GM realized that there was no other available source of money.” 

An Auto Team official told SIGTARP that the Auto Team’s approach with GM 

was to “push them” and to “question them.” Another Auto Team official told 

SIGTARP the Auto Team “pushed GM toward making the changes necessary to 

become a viable company.” A GM official told SIGTARP, “They [the Auto 

Team] were pushing us to be tougher and take more significant actions other than 

what we would have done on our own volition.” When one Auto Team official 

was asked by SIGTARP how the Auto Team conveyed their preference or nudged 

GM to see things the way the Auto Team saw them, given that ultimately GM 

could do its own thing, the Auto Team official said, “Well, they could, but then 

they couldn’t exist. I mean, as I said, as the lender we had a fair amount of 

leverage.” 

Then-CFO Young told SIGTARP that the Auto Team was “being hard on GM 

and scrutinizing how much money GM needed.” Mr. Young told SIGTARP that 

the Auto Team “was persistently pressing GM executives to cut costs.” An Auto 

Team official told SIGTARP, “We thought GM could be viable on its own if it 

could reduce costs and liabilities.” Auto Team leader Rattner told SIGTARP that 

GM officials had been too generous in the past and the Auto Team had to dial 

 

16 Hearing before the Subcommittee on TARP, Financial Services and Bailouts of Public and Private Programs of the 

Committee on Oversight and Government Reform, 7/10/2012. 17 SIGTARP-10-008, “Factors Affecting the Decisions of General Motors and Chrysler to Reduce their Dealership 

Networks,” 7/19/2010. 
TREASURY’S ROLE IN THE DECISION FOR GM TO PROVIDE PENSION PAYMENTS TO DELPHI EMPLOYEES 13

SIGTARP 13-003 August 15, 2013 

them back. The Auto Team specifically pressed GM to be less generous in 

relation to Delphi and pensions. 

Cutting Costs Related to Delphi 

Auto Team leader Rattner told SIGTARP that Delphi was an example of where 

the Auto Team was less generous than GM. According to one of the Auto Team 

members, Messrs. Matt Feldman and Harry Wilson took the lead on Delphi 

issues. Mr. Wilson testified before Congress, “Delphi was bleeding 

approximately $150 million in cash per month. GM was supporting Delphi 

because Delphi was the sole supplier for certain critical GM parts, so a Delphi 

liquidation would have shut down all of General Motors. This was an 

unsustainable proposition, both for GM, and for the American taxpayer.” Mr. 

Wilson’s view, according to an email he wrote, was that they would look to 

eliminate all obligations, given the staggering cost of supporting Delphi. 

A GM official told SIGTARP the Auto Team’s reaction was that Delphi was 

costly to GM, and that GM should not be assuming more liabilities than 

necessary. That same GM official told SIGTARP, “We did not have the leverage 

to tell them to pound sand.” For example, in March 2009, Delphi wanted an 

additional $150 million from GM for operating costs and for GM to purchase 

Delphi’s global steering business. Because this was above the $100 million 

threshold, Treasury’s consent was required under the TARP loan agreement. The 

Auto Team did not consent. An Auto Team official told SIGTARP that Delphi 

was identified as a risk, but that “obviously we would continue to urge GM, you 

know, don’t be irresponsible about it, be tough. Give as little as you have to, but 

try to help get Delphi done...you can’t write a blank check.” Auto Team leader 

Rattner told SIGTARP that GM would have continued to squander a huge amount 

of dollars on Delphi. 

Cutting Pension Costs 

According to Auto Team leader Rattner, pensions were another area where the 

Auto Team “encouraged” GM to cut costs. GM had a pay-as-you-go pension plan 

for salaried employees that was not funded and GM salaried employees and 

retirees wanted their full pensions, but Mr. Rattner told SIGTARP that the Auto 

Team wanted cuts to those benefits. 

In addition to pension issues relating to GM employees, between February and 

May 2009, GM and the Auto Team officials discussed and analyzed GM’s 

liabilities related to Delphi’s pensions. GM officials told SIGTARP that GM 

needed PBGC to release liens on Delphi assets so Delphi could successfully 

emerge from bankruptcy.18 According to one GM official interviewed by 

 

18 PBGC held liens on certain Delphi assets that, according to a Delphi official, an investor or purchaser of Delphi would 

want free and clear title. 
TREASURY’S ROLE IN THE DECISION FOR GM TO PROVIDE PENSION PAYMENTS TO DELPHI EMPLOYEES 14

SIGTARP 13-003 August 15, 2013 

SIGTARP, “Ultimately to get Delphi out of bankruptcy, we needed the [pension] 

plans to be terminated.” PBGC officials told SIGTARP that PBGC advocated 

that GM go beyond the top-ups and take back (assume the full cost) of both 

Delphi’s hourly and salaried pension plans. The Auto Team and GM identified at 

least three options: (1) for New GM to agree to the top-up for the Delphi hourly 

employees consistent with the preexisting agreements (full cost of pensions less 

PBGC payout) (at a projected cost of approximately $1-1.5 billion for the UAW, 

IUE, and USW hourly employees); (2) for New GM to take back (assume) all of 

Delphi’s pension plans, paying all obligations under the plans without a payout 

from PBGC (at a projected cost of $5.4 billion); and (3) for New GM to take on 

no obligation to top up or take back any Delphi pension plans (zero cost).19 

GM took the position that Treasury’s consent was required. A PBGC email 

received by Auto Team officials stated, “In discussions with Delphi and directly 

with PBGC, GM has stated that it cannot assume responsibility for either the 

previously agreed-to hourly plan pension obligations or the Delphi’s salaried plan 

pension obligations, as doing so would represent taking on additional pension 

obligations in violation of the pension covenant in GM’s TARP loan.” A 

February 2009 PBGC document stated, “Delphi believes that GM, in refusing to 

discuss further pension plan assumptions, may be looking to the to-be-appointed 

car czar [Rattner] to mandate that GM assume Delphi pensions as part of GM’s 

continued use of TARP money.”20 

Auto Team official Feldman negotiated with PBGC on behalf of GM, which 

contributed to an expectation that the presence of Treasury could potentially 

change the outcome. Mr. Rattner told SIGTARP that having the Auto Team work 

directly with PBGC was viewed as more efficient because it was Government to 

Government. Additionally, at least one GM official told SIGTARP that GM 

thought there was some benefit to Treasury taking the lead on dealing with the 

PBGC because it was “Government agency to Government agency” and Treasury 

would get a better deal for GM. The presence of Treasury as a Government 

agency created expectations on PBGC’s part that decisions on what obligations 

GM would take on related to the Delphi pensions would proceed differently than 

what would have normally occurred in PBGC’s negotiations with a private 

company and potentially save PBGC billions of dollars. A PBGC official told 

SIGTARP when discussing the likelihood of GM’s absorption of the Delphi 

pension plans that “as [Treasury] got involved, we were more hopeful.” In a 

deposition, Mr. Feldman stated that the PBGC “asked us whether we would force 

General Motors to take the plan on.” If GM were to assume the full cost of the 

Delphi hourly plan, it would require Treasury’s approval. There was a split 

 

19 This audit was conducted in coordination with GAO to avoid excessive duplication of efforts. GAO reviewed PBGC’s 

termination of Delphi’s hourly and salaried pension plans and other PBGC issues. The objectives of SIGTARP’s 

audit did not involve a review of PBGC’s termination of the Delphi pension plans. 20 Later, an April 17, 2009, PBGC document makes it clear that Delphi wanted the pension plans to be transferred to GM 

(“with support from Treasury”) but that “GM contends it cannot afford the Plans, and that covenants in the Treasury 

loan agreement prevent GM from taking on new pension liabilities.” 
TREASURY’S ROLE IN THE DECISION FOR GM TO PROVIDE PENSION PAYMENTS TO DELPHI EMPLOYEES 15

SIGTARP 13-003 August 15, 2013 

within the Auto Team on whether GM should assume the Delphi hourly plan, 

with Mr. Feldman in favor of GM assuming the hourly plan (which would go 

beyond the top-up), and Mr. Wilson not in favor of assuming it. The PBGC 

official told SIGTARP, “As it relates to the possibility of GM sucking up the 

hourly plan...I knew what GM’s position was. It didn’t have to do anything with 

GM. If there was any possibility that it was going to happen, it was going to 

come from Treasury. It would be Treasury folks because they had the right of 

refusal and could dictate what was going to happen.” 

Delphi salaried retirees and Delphi officials also hoped Treasury’s presence 

would make a difference in whether GM would take on obligations for Delphi 

pensions. Treasury’s Auto Team met with representatives from the Delphi 

salaried retirees on more than one occasion. During those meetings, the salaried 

retirees asked the Auto Team to consider fairness in making their pensions whole. 

The Auto Team also met with Delphi officials. Delphi’s then-CFO John Sheehan 

told SIGTARP that from his perspective, GM was deferring decision making on 

all subjects. He also told SIGTARP, “GM wasn’t in a position to dictate. Harry 

[Wilson] and Matt [Feldman] were the decision makers and the drivers on how 

this would all occur – in my view.” 
TREASURY’S ROLE IN THE DECISION FOR GM TO PROVIDE PENSION PAYMENTS TO DELPHI EMPLOYEES 16

SIGTARP 13-003 August 15, 2013 

Treasury’s Role in the Decision for GM To File 

Bankruptcy 

SIGTARP found that Treasury’s Auto Team directed GM’s restructuring efforts 

toward bankruptcy. An Auto Team official told SIGTARP, “We didn’t decide to 

file a bankruptcy. We decided to support a bankruptcy.” That same Auto Team 

official told SIGTARP that GM decided to file bankruptcy and GM came to the 

conclusion that it could not reorganize without bankruptcy, and the question for 

Treasury was “do we support a GM filing or not?” While it is technically true 

that GM had to decide to file bankruptcy, it was the Auto Team that took steps to 

signal to GM their strong preference for bankruptcy and bring significant 

influence over GM’s decision to file bankruptcy. 

GM and Treasury’s Auto Team had different approaches as to how to proceed in 

order to create a sustainable GM. GM’s executives continued to prefer a 

restructuring of the company outside of the bankruptcy process, while the Auto 

Team preferred bankruptcy. According to Auto Team leader Rattner in Overhaul, 

the Auto Team had already determined that there was no alternative to bankruptcy 

before rejecting GM’s restructuring plan on March 30, 2009. The Auto Team’s 

March 27, 2009, replacement of GM CEO Wagoner, who did not favor 

bankruptcy, and the choice of Mr. Henderson as CEO, signaled the Auto Team’s 

preference for bankruptcy and directed GM’s restructuring efforts toward 

bankruptcy. Mr. Henderson told SIGTARP that his view on bankruptcy for GM 

was different than Wagoner’s. Once Treasury replaced Mr. Wagoner with Mr. 

Henderson as CEO, there was a greater willingness by GM to consider 

bankruptcy. On April 1, 2009, as one of his first acts as the new CEO, Mr. 

Henderson told GM employees that bankruptcy was likely. However, despite that 

statement, Mr. Henderson told SIGTARP that his preferred approach was to 

restructure GM by completing a voluntary bond exchange – an offer proposed to 

bondholders to convert their debt to equity – hoping to avoid bankruptcy. 

Auto Team officials first raised the prospect of an expedited bankruptcy with GM 

during the first week of April 2009, according to then-CFO Young. In his 

interview with SIGTARP, Young said the Auto Team “highly suggested” and felt 

“pretty strongly” that a Section 363 bankruptcy was the “best approach” because 

it would be quicker to complete than a normal bankruptcy that could take 9 to 12 

months. Then-CEO Henderson told SIGTARP the Auto Team began to outline 

the 363 process for GM, with GM’s 363 planning being similar to what the Auto 

Team was doing with Chrysler, but Chrysler was much simpler.21 Then-CEO 

Henderson told SIGTARP that Treasury’s view was that speed had real power, 

and that to do a deal in a commercial and fast way could only be accomplished 

with a 363 sale. 

 

21 Chrysler filed a 363 bankruptcy on April 30, 2009.
TREASURY’S ROLE IN THE DECISION FOR GM TO PROVIDE PENSION PAYMENTS TO DELPHI EMPLOYEES 17

SIGTARP 13-003 August 15, 2013 

Then-CFO Young told SIGTARP that GM thought of bankruptcy as “Plan B.” 

Then-CEO Henderson described “Plan A” as the bond exchange. CFO Young 

told SIGTARP that with the right terms on the bond exchange, GM was hoping to 

reduce its liabilities enough to avoid bankruptcy. An Auto Team official told 

SIGTARP that the Auto Team did not support the bond exchange and felt that a 

bond exchange alone was unlikely to restructure GM’s balance sheet sufficiently 

to make GM viable. In fact, at least one Auto Team official told SIGTARP that 

he opposed GM’s decision to proceed with the bond exchange. This same Auto 

Team official told SIGTARP that by the third week of April it was clear that GM 

needed to be shepherded through a prepackaged bankruptcy. The Auto Team also 

directed GM’s restructuring efforts toward bankruptcy by discussing with GM 

their preference that 90% of bondholders participate in the bond exchange, which 

commenced on April 27, 2009. Henderson told SIGTARP that Treasury set the 

“level of acceptance” of the bond exchange “very high,” making bankruptcy more 

likely. 

Then-CEO Henderson told SIGTARP that it was not clear that bankruptcy was 

the only option until the bond exchange failed. GM would need to file 

bankruptcy by June 1, 2009, when a $1 billion bond payment came due. GM’s 

then-CFO Young told SIGTARP that Treasury did not want to loan GM $1 billion 

to make this payment. 
TREASURY’S ROLE IN THE DECISION FOR GM TO PROVIDE PENSION PAYMENTS TO DELPHI EMPLOYEES 18

SIGTARP 13-003 August 15, 2013 

Treasury Agreed To Fund GM’s Bankruptcy with 

$30.1 Billion from TARP, but Only for 40 Days 

Treasury determined that GM would need $30 billion, but the Auto Team was 

concerned about giving the TARP funds in a loan that would be too much debt on 

GM’s balance sheet, so the Auto Team proposed to senior Treasury officials that 

Treasury fund GM’s bankruptcy with a loan that would convert to common stock 

ownership in New GM – the purchaser of Old GM’s assets in bankruptcy. This 

would mean that the Government would have a substantial ownership interest in a 

private company. According to Rattner in Overhaul, the Auto Team discussed it 

with Lawrence Summers on May 11, 2009. Dr. Summers, Secretary Geithner, 

and ultimately President Obama approved an additional $30.1 billion in a TARP 

loan (in the form of a debtor-in-possession (“DIP”) loan) that, when combined 

with the $19.4 billion in prior TARP injections, totaled $49.5 billion in TARP 

funds in GM. The TARP investment in GM would convert to 61% Government 

ownership of common stock in New GM. 

Treasury conditioned the TARP financing on GM exiting bankruptcy in 40 days, 

a requirement created by the Auto Team. The TARP loan, effective on June 1, 

2009, provided that the loan would default if GM failed to obtain certain 

bankruptcy court orders acceptable to Treasury by July 10, 2009 (40 days later). 

Auto Team leader Rattner has referred to GM’s bankruptcy as a “quick-rinse 

bankruptcy.” A quick-rinse bankruptcy is structured to move through legal 

proceedings faster than the average bankruptcy. Mr. Rattner recounted in 

Overhaul that GM hired prominent bankruptcy attorney Harvey Miller, who told 

Auto Team official Wilson that the timeline was “impossibly aggressive” and that 

“it’s never been done before.” GM’s then-CFO Young told SIGTARP that 

although GM agreed that a drawn-out bankruptcy would negatively impact 

consumers’ perceptions about GM, GM thought it would take at least two to three 

months to complete bankruptcy and the 40 days did not seem realistic. 

SIGTARP found that Treasury conditioned giving GM $30.1 billion in TARP 

funds on a quick-rinse bankruptcy that would end in 40 days because Auto Team 

officials thought it was the best way to save the American automobile industry, 

concerned that GM could not survive a lengthy bankruptcy and GM’s failure 

would have broader systemic consequences. Treasury Auto Team officials were 

concerned that if GM’s bankruptcy was prolonged, consumers would stop 

purchasing GM’s automobiles, and GM would likely fail. As one Auto Team 

official explained to SIGTARP, consumers might be cautious about buying cars 

from a bankrupt automaker. He told SIGTARP that “...one of the things you 

worry about when you buy a car is getting the car serviced.” Therefore, in a 

lengthy bankruptcy, GM would run the risk of consumers saying, “The heck with 

it, I’ll buy someone else’s car,” the Auto Team official told SIGTARP. Once the 

decision to have GM go into bankruptcy was made, the same Auto Team official 
TREASURY’S ROLE IN THE DECISION FOR GM TO PROVIDE PENSION PAYMENTS TO DELPHI EMPLOYEES 19

SIGTARP 13-003 August 15, 2013 

told SIGTARP, “It was in our interest to try to expedite the bankruptcy, if we 

could,” given the risk of “getting in and getting stuck” in bankruptcy. 

Treasury had leverage to set conditions on TARP funds, even if it was a 

timeframe that did not seem realistic to GM and had never been done before. If 

GM’s bankruptcy was not completed within the 40 days, GM risked losing its 

only source of financing. GM also risked losing its purchaser in bankruptcy, 

given that Treasury would become the majority owner of New GM. Treasury 

viewed the 40-day timeframe as a real deadline. One Auto Team official told 

SIGTARP that Treasury was willing to “walk away” rather than put in “a huge 

amount more. We advocated and put in a $30 billion DIP. If you let people 

believe you would have done anything, that number could have been multiples of 

that.” That same Auto Team official said they tried to be “commercial.” Another 

Auto Team official testified in a deposition that if the 40-day timeframe was not 

met, “We expect the company to liquidate” but “[GM] is always free to try to find 

alternative forms of financing.” 

“Cherry-picking” Assets and Liabilities 

Although Treasury, through its Auto Team, had significant leverage and influence 

on GM’s decisions and operations before the decision to file bankruptcy, 

Treasury’s influence over GM deepened after Treasury decided to fund GM’s 

bankruptcy and become the majority owner of New GM. SIGTARP found that 

with their leverage as the purchaser of GM’s assets in bankruptcy, Treasury’s 

Auto Team had significant influence on GM to make specific decisions that were 

in keeping with Treasury’s preferences. Then-CFO Young told SIGTARP, “We 

put forward recommendations, but at the end of the day, the purchaser [Treasury] 

makes the final decision.” One Auto Team official told SIGTARP that “We 

approve technically everything because we don’t have to do the DIP [bankruptcy 

loan]. But no, not in the micro. I mean it wasn’t, you know you bring us this, we 

approve this, we approve that. It was bring us a plan and we do a DIP or we don’t 

do a DIP.” Another Auto Team official testified in a deposition that the leverage 

Treasury had with Old GM was that Treasury was the only buyer for GM’s assets. 

That same Auto Team official called Treasury’s leverage “considerable” because 

the alternative was “catastrophic,” adding that he meant liquidation. 

As explained by an Auto Team official in a deposition, the 363 bankruptcy sale 

allowed New GM and the Auto Team to assume Old GM’s assets and “cherrypick” the liabilities that a “commercial buyer” would want and New GM would 

need. As that Auto Team official stated in a deposition, “It is up to the purchaser 

to exclude or assume liabilities.” The Auto Team official further testified in the 

deposition, “It is my understanding that as the buyer, we get to determine which 

assets are, you know, assets we would buy and which liabilities” we would take 

on. This same Auto Team official told SIGTARP that “our general perspective, 

and in general the right way to do a 363 sale as a buyer, is to assume all assets 

unless explicitly excluded, and to reject all – to leave behind all liabilities unless 

explicitly assumed.” GM’s then-CFO Young told SIGTARP that GM and the 
TREASURY’S ROLE IN THE DECISION FOR GM TO PROVIDE PENSION PAYMENTS TO DELPHI EMPLOYEES 20

SIGTARP 13-003 August 15, 2013 

Auto Team went down GM’s balance sheet (including pensions and the supplier 

base), going over some line items in great detail. 

Without policies, procedures, or guidelines interpreting how to make 

commercially reasonable decisions, Treasury’s Auto Team made some decisions 

on which liabilities New GM would assume that were not commercially 

necessary, but the Auto Team called the decision “commercial” because it could 

factor into public relations and the image of New GM. One Auto Team official 

testified in a deposition that the Auto Team requested that GM identify 

“politically sensitive” liabilities. Then-CFO Young told SIGTARP that this 

exercise was about identifying liabilities that might present a public relations 

challenge if New GM did not assume them. He also told SIGTARP that assuming 

these liabilities conflicted with taking a strictly commercial approach because GM 

could operate without them. For example, the Auto Team official testified in the 

deposition that the Auto Team concluded that it was not commercially necessary 

for New GM to assume product liabilities. However, New GM assumed those 

liabilities because, according to the Auto Team official, failure to assume them 

would impact consumers’ confidence in GM’s products, which the Auto Team 

official said was a commercial basis. 

In another instance, broader considerations, rather than just a commercially 

reasonable approach, were weighed by the Auto Team when they considered the 

possible closure of GM’s headquarters in Detroit.22 According to an Auto Team 

official, GM and the Auto Team considered moving GM’s headquarters out of 

Detroit to its Technical Center located outside of the city because the move would 

consolidate GM’s management operations and save money. According to 

Mr. Rattner’s account in Overhaul, around May 2009, CEO Henderson told 

Mr. Rattner that the move would cut GM’s costs and, therefore, Mr. Rattner 

initially supported the initiative. Nevertheless, Rattner wrote in Overhaul that 

White House and Treasury officials expressed concern about the economic impact 

of the move on the city of Detroit, and they retained the Detroit location. 

Deals with Major Stakeholders Before Bankruptcy 

According to an Auto Team official, as the buyer, Treasury determined which 

assets to buy and which liabilities to take on. The Auto Team established a 

hierarchy of importance of stakeholders and issues that had to be completed prior 

to GM’s bankruptcy filing to ensure its success. Two liabilities that Treasury had 

already decided to assume were a new collective bargaining agreement with 

GM’s union, the UAW, and an agreement with GM’s bondholders. A quick-rinse 

bankruptcy necessitates that major stakeholders negotiate and reach consensus 

prior to the proceeding in order to prevent objections being filed in court by 

essential parties, which could delay the process. An Auto Team official told 

 

22 An Auto Team official told SIGTARP that the decision to retain GM’s headquarters in Detroit was impacted by 

broader considerations. 
TREASURY’S ROLE IN THE DECISION FOR GM TO PROVIDE PENSION PAYMENTS TO DELPHI EMPLOYEES 21

SIGTARP 13-003 August 15, 2013 

SIGTARP that the two important stakeholders were the bondholders and the 

UAW. The only question was the terms of those liabilities for New GM. 

An Auto Team official told SIGTARP that the strength of the negotiating parties 

during GM’s bankruptcy and throughout labor negotiations was dictated by the 

leverage each group held. The looming June 1 bond payment and the 40-day time 

constraint on the bankruptcy limited the time for negotiation and sent a powerful 

message to GM and the major stakeholders. With no indication that Treasury 

would extend the 40 days, GM and its major stakeholders were required to reach a 

deal prior to bankruptcy or risk GM running out of funding and having to 

liquidate. Auto Team leader Rattner stated in Overhaul that the 40-day deadline 

was the financial equivalent of “putting a gun to the heads of the bankruptcy 

judge, GM’s stakeholders, and of course Team Auto itself.” 

Negotiations took place on May 18-19 at Treasury headquarters and at the offices 

of Treasury’s lawyers in Washington, D.C. According to one Auto Team official, 

the UAW and the bondholders were kept “in the dark” during “parallel 

negotiations” as deals were negotiated. According to Auto Team official 

Feldman’s professional biography, “The Auto Team conducted complex 

negotiations with all major constituents of both companies [GM and Chrysler], 

including Fiat SpA (which now runs Chrysler), the United Auto Workers and 

major creditors of both auto makers under a compressed timeline.” Another Auto 

Team official testified in a deposition that Treasury represented the owners of 

New GM in the negotiations. Mr. Wilson told SIGTARP that he and Mr. Bloom 

“set the tenor” for the talks with the UAW, while he and Mr. Feldman “set the 

tone” for the talks with bondholders. 

Treasury’s Role in Pre-Bankruptcy Deal with GM’s Bondholders 

SIGTARP found that Treasury made a deal with the bondholders prior to GM 

filing bankruptcy because of the bondholders’ leverage to object to and prolong 

the bankruptcy. An Auto Team official told SIGTARP that establishing a deal 

with the bondholders would eliminate a major risk of delay in bankruptcy court. 

Auto Team officials told SIGTARP that GM’s bondholders had the leverage to 

object to and prolong GM’s bankruptcy. At the time of GM’s bankruptcy, 

bondholders held approximately $27.2 billion of GM’s unsecured debt, which, 

according to a GM public filing, “comprise[d] substantially all of Old GM’s debt 

and a significant majority of the total unsecured claims against Old GM.” An 

Auto Team official explained that the bonds were owned by millions of people 

around the world, some bonds were 100 years old, and without a settlement 

before bankruptcy, it would have been painstakingly difficult to try to solicit each 

bondholder to approve any bankruptcy plans, which would have taken at least 

nine months. 

Mr. Feldman, who had primary responsibility within the Auto Team for 

negotiating with the bondholders, told SIGTARP he worked with representatives 
TREASURY’S ROLE IN THE DECISION FOR GM TO PROVIDE PENSION PAYMENTS TO DELPHI EMPLOYEES 22

SIGTARP 13-003 August 15, 2013 

of GM’s bondholders to reach the agreement that would reduce GM’s 

indebtedness and clear the path for GM’s quick-rinse bankruptcy, but he would 

not have given them everything simply to get a deal. Auto Team leader Rattner 

stated in Overhaul, “We valued the package at about 12 to 15 cents on the dollar, 

more than what they deserved (zero)...” CEO Henderson explained to SIGTARP 

that in the bankruptcy, Treasury was senior to the bondholders and the VEBA 

trust. If GM’s bondholders agreed not to oppose GM’s bankruptcy, Treasury 

would provide additional consideration to Old GM during the bankruptcy 

proceeding, to the benefit of GM’s bondholders.23 CEO Henderson told 

SIGTARP that Treasury was in a position to provide bondholders with a better 

recovery than under the bond exchange. This was because Treasury would own 

most of the equity of New GM, and, according to Henderson, equity was 

something only Treasury could provide. When asked whether GM was 

authorized to negotiate with bondholders for a larger slice of equity (stock), an 

Auto Team official testified in a deposition that, for matters about what capital 

(stock in New GM) Treasury would be willing to extend, the only one with 

authority was Treasury. 

Treasury’s Role in Pre-Bankruptcy Deal with UAW, Which Included 

New GM Assuming the Top-Up of Pensions 

Treasury’s requirement in the December 2008 TARP loan agreement that GM 

reach a new deal with the UAW, Treasury’s conditioning TARP funds on a 40-

day quick-rinse bankruptcy, and UAW’s leverage to stall the bankruptcy or strike 

pressured GM on “getting the deal done” with the UAW. The UAW had 

extensive leverage representing approximately 50,000 GM employees at the time 

of GM’s restructuring – 99% of GM’s unionized workforce (according to one 

Auto Team official). Other Delphi and GM executives, as well as Government 

and UAW officials, corroborated in separate interviews with SIGTARP that 

UAW had significant leverage due to the threat of a labor disruption. One GM 

official told SIGTARP, “You couldn’t run this play without the agreement of the 

UAW.” Another GM official told SIGTARP, “All you need is one missing part 

and it stops production. They had significant leverage... We needed the 

cooperation and enthusiasm of the UAW.” 

In addition to the traditional strike leverage, the requirement in the TARP loan 

agreement for a new collective bargaining agreement, and the upcoming deadline 

for GM to file bankruptcy, gave the UAW additional leverage. The UAW 

understood that GM had to reach an agreement with it to be able to survive, and 

those same facts put pressure on GM. Given the need for GM to file bankruptcy 

by June 1, 2009, GM only had a few weeks to come to an agreement with the 

UAW, and if they did not come to agreement, GM risked the UAW prolonging 

the bankruptcy beyond 40 days, which could lead to GM liquidating. An Auto 

 

23 Under the proposal, New GM would issue to Old GM 10% of the common equity of New GM and warrants to 

purchase an additional 15% of the equity of New GM. 
TREASURY’S ROLE IN THE DECISION FOR GM TO PROVIDE PENSION PAYMENTS TO DELPHI EMPLOYEES 23

SIGTARP 13-003 August 15, 2013 

Team official told SIGTARP that UAW was a very major constituency that could 

slow down and potentially block the entire sale. The time constraint of Treasury’s 

financing was well known to the UAW and helped give it a bargaining advantage. 

An Auto Team official told SIGTARP the Auto Team had “a strong preference” 

that GM have “a deal in place with the UAW” prior to its bankruptcy filing, 

adding, “And we made that known to both sides.” 

The Negotiations 

At the May 18-19, 2009 negotiations at Treasury’s offices and at the offices of 

Treasury’s lawyers in Washington, D.C., GM’s CEO Henderson and UAW’s 

President Ron Gettelfinger sat at opposite sides of a table, with Treasury’s Auto 

Team at the end of the table. The UAW came to the negotiations with a “hit list” 

of priority items that included New GM assuming the pension benefit guarantee 

(top-up) for the former GM employees at Delphi represented by UAW. The same 

UAW official who had been involved in the 1999 negotiation for the top-up (and 

an extension of that agreement when it was scheduled to expire in 2007) was 

negotiating with GM in 2009.24 That UAW official told SIGTARP that the top-up 

agreement had been strongly bargained for in 1999. Auto Team leader Rattner 

told SIGTARP the item on the term sheet showed that it was something that was 

important to the UAW. Mr. Rattner told SIGTARP that “the top-up was an 

integral item on the list of needs for the UAW.” Another Auto Team official told 

SIGTARP that the UAW made it clear that it cared about the “Delphi matter” and 

so the UAW put out these “key terms” that it “expected to be part of the overall 

deal.” 

GM’s then-CFO Young told SIGTARP that the UAW negotiations were only 

focused on those aspects of the GM-UAW relationship that were discussed in the 

TARP loan agreement. These were new labor costs and changing the UAW’s 

health care trust (the VEBA) funding to be at least 50% in GM stock. An Auto 

Team official told SIGTARP that the 2008 TARP loan agreement gave Treasury 

leverage to get the UAW to the bargaining table, with Treasury’s leverage as the 

only source of capital. Another Auto Team official told SIGTARP, “Since this 

was a financial matter that would eventually affect the interest of taxpayers, we 

had quite strong views.” This same Auto Team official explained to SIGTARP 

that the consideration provided to the VEBA would impact the value of 

 

24 GM was significantly dependent on the automotive parts produced by Delphi and agreed in 2007 to assume Delphi’s 

hourly pension plan in two tranches to help Delphi resolve its pension liability problem and facilitate its exit from 

bankruptcy. The initial agreement between GM and Delphi was entered into in 2007, but was “amended and restated” 

in September 2008. In September 2008, GM assumed the first tranche of Delphi’s hourly plan participants amounting 

to $2.1 billion in pension liabilities. Those Delphi hourly employees whose pensions were transferred were no longer 

part of Delphi’s hourly pension plan. GM was due to assume the second tranche, estimated at between $3.2 billion 

and $3.5 billion if Delphi substantially consummated its planned bankruptcy reorganization. However, because the 

reorganization was not consummated, the transfer did not occur. Afterward, Delphi froze and ceased funding the 

hourly pension plan in November 2008. Delphi froze and ceased to fund the Delphi salaried pension plan in 

September 2008. 
TREASURY’S ROLE IN THE DECISION FOR GM TO PROVIDE PENSION PAYMENTS TO DELPHI EMPLOYEES 24

SIGTARP 13-003 August 15, 2013 

Treasury’s equity, “which was really what the taxpayers were going to get back 

for the money they put in.” 

Late in the negotiations, CEO Henderson broached the topic of pensions, as 

reported by Auto Team leader Rattner in Overhaul. Mr. Rattner wrote that such 

changes would be worth billions of dollars to GM, but that when CEO Henderson 

raised it, UAW’s President Gettelfinger said, “We aren’t going to sit in this room 

if pensions are on your list.” Moreover, no person SIGTARP interviewed could 

recall any discussion of the top-up agreement at the negotiations. UAW’s thenGeneral Counsel Dan Sherrick confirmed that negotiations focused only on “big 

ticket items” and that “other prior agreements,” including the top-up agreement, 

were not negotiated. Then-CEO Henderson told SIGTARP that the pressure to 

finish negotiations resulted in no negotiations that he could recall related to the 

top-up agreement. 

Then-CEO Henderson told SIGTARP that the meetings with the UAW did not 

initially go well, and UAW turned down a Treasury-backed proposal at 11 p.m. 

the second day. Auto Team leader Rattner stated in Overhaul that the UAW 

rejected the proposal at 3 a.m. At the end of two days, the UAW left the 

negotiations at an impasse. The UAW had leverage because it knew and 

understood from Treasury’s public statements that Treasury was committed to 

reorganizing GM and not letting GM fail. An Auto Team official said, “I think 

they thought their leverage was they knew we would prefer all things equal to 

reorganize GM.” One GM official told SIGTARP that, when the Federal 

Government came into the picture, it clearly changed the dynamics because the 

terms of the TARP loan agreement were clearly understood by the unions and 

GM needed the money. According to CEO Henderson, UAW President 

Gettelfinger later called Auto Team official Bloom and “the deal got done.” CEO 

Henderson thought that Mr. Bloom sweetened the deal with warrants (options to 

purchase stock). Auto Team leader Rattner stated in Overhaul that Mr. Bloom 

talked to Mr. Gettelfinger the next day (May 20, 2009), and two hours later, the 

UAW accepted the overall deal on the collective bargaining agreement. 

The Deal with UAW 

Consistent with Treasury’s Auto Team’s practice, as with any liability, it would 

have been Treasury’s decision as the buyer to assume or reject the liability to 

top up the pensions of Delphi hourly UAW employees. The top-up was never 

discussed in the negotiation where both GM and Treasury were present and 

actively negotiating. Although the top-up was previously a separate written 

agreement, the top-up was now included as one of the obligations in the overall 

new collective bargaining agreement with the UAW, which was included under 

the Master Sale and Purchase Agreement selling assets to New GM.25 GM could 

 

25 According to the UAW, it made a number of concessions in the negotiation including: elimination of performance 

bonuses and cost of living adjustments, reduced holidays, scaled-back overtime rules, and frozen wages for new entry 
TREASURY’S ROLE IN THE DECISION FOR GM TO PROVIDE PENSION PAYMENTS TO DELPHI EMPLOYEES 25

SIGTARP 13-003 August 15, 2013 

not agree to the new collective bargaining agreement (that included the top-up) on 

its own without Treasury’s approval. The decision that New GM would honor the 

top-up was a joint decision by Treasury and GM, with Treasury deciding to 

approve the collective bargaining agreement with the UAW that included the topup. Auto Team leader Rattner told SIGTARP that GM had the option of honoring 

or not honoring its pension benefit guarantees in bankruptcy, but GM needed 

UAW workers and UAW’s consent was necessary for the bankruptcy. 

Mr. Rattner told SIGTARP, “It was not a ridiculous request. And one that we 

could have honored and needed to honor.” 

Then-GM CEO Fritz Henderson told SIGTARP that GM knew about the top-up, 

but that “the focus was on getting the deal done.” He told SIGTARP that if the 

pension benefit guarantee was not assumed by New GM, there would have been a 

strike, and “we needed a workforce.”26 However, the pressure on GM was not 

only the threat of a strike, but the risk that the UAW would prolong the 

bankruptcy. CEO Henderson told SIGTARP that if the pension benefit guarantee 

with the UAW was not assumed by New GM, it would have been “mission 

impossible.” CEO Henderson told SIGTARP that renegotiating the pensions in 

bankruptcy would have taken a long time and would have had a negative impact 

on the survival of GM. CEO Henderson told SIGTARP that he sought advice 

from bankruptcy attorney Harvey Miller regarding GM’s ability to seek 

modifications to pensions in bankruptcy and was told that to do so would have 

extended GM’s bankruptcy for at least six months. GM believed this was not a 

risk that GM could afford to take because Treasury had given no indication that it 

would extend financing beyond 40 days. 

Treasury had the power to object to New GM taking over the top-up obligation as 

part of the larger agreement with the UAW, but like GM, had no desire to blow up 

the larger deal. Although Mr. Rattner told SIGTARP, “Left to our own devices, 

we would have not done the top-up,” he said that getting more on pensions “was a 

game of chicken we didn’t want to play. We were under incredible time 

pressure.” Although the Auto Team was concerned about the threat of the strike, 

they were also concerned with the UAW prolonging the bankruptcy.27 When 

asked whether they could have been tougher on the UAW, an Auto Team official 

told SIGTARP, “We had to negotiate a deal that the UAW and bondholders 

would accept” and “You do need employees to say yes and bondholders to say 

yes. No one thought they [GM] could survive an 18-month bankruptcy.” In an 

interview with SIGTARP, another Auto Team official called UAW the “big dog” 

 employees. GM would also be allowed to use stock to replace debt for the VEBA health care trust and other 

concessions. 

26 UAW officials told SIGTARP that the top-up was a priority and if New GM had not honored the top-up agreement, 

the UAW would have objected to the bankruptcy sale and “they would have had a workforce stoppage.” A UAW 

official indicated to SIGTARP that the threat of a strike was real. 

27 An Auto Team official told SIGTARP that Treasury assumed it would have ownership in the company and “we had to 

ask ourselves what is the value of an ownership stake in GM that is not making automobiles...If they don’t come to 

work in the morning, it’s tricky to make cars.” 
TREASURY’S ROLE IN THE DECISION FOR GM TO PROVIDE PENSION PAYMENTS TO DELPHI EMPLOYEES 26

SIGTARP 13-003 August 15, 2013 

because the union represented most of GM’s workforce and a failure to establish 

an agreement with UAW could have resulted in GM’s liquidation, which the Auto 

Team did not want. The Auto Team official told SIGTARP, “I don’t know what 

would have happened” and that not having an agreement with UAW would have 

been like “shooting yourself in the head,” adding that it could have resulted in the 

liquidation of GM. 
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SIGTARP 13-003 August 15, 2013 

GM Completes Bankruptcy in 40 Days Without 

Agreeing To Top Up Any Other Delphi Employee 

During bankruptcy, the existing General Motors Corporation, Old GM, sold 

substantially all of its assets to a wholly new company, New GM, which emerged 

from GM’s bankruptcy on July 10, 2009, with most of the company’s debt and 

liabilities remaining with Old GM.28 An Auto Team official told SIGTARP the 

quick-rinse bankruptcy was consistent with the Auto Team’s commercially 

reasonable approach. However, GM CEO Henderson said to SIGTARP that, 

according to an assessment performed prior to the bankruptcy, Treasury overpaid 

for GM. GM’s financial advisor determined that Treasury agreed to purchase 

New GM at more than New GM’s “Enterprise Value.” Auto Team leader Rattner 

acknowledged in a statement made to the press in December 2011 that Treasury 

may have overpaid. He reportedly stated, “We put more cash into GM than we 

probably needed to – and we knew this. It’s part of why GM is so wellcapitalized today.”29 

GM and Treasury had agreed that New GM would assume the liability for the topup of pensions of UAW hourly retirees at Delphi. Treasury informed PBGC of 

the decision to top up rather than take back the full cost of the Delphi hourly 

pensions. According to a PBGC official, an Auto Team official notified PBGC, 

saying “We’ve done the math, and the liability associated with assumption is 

greater than the top-up.”30 According to an internal Treasury memorandum, on 

June 30, 2009, an Auto Team official informed PBGC that Treasury would not be 

able to provide financing support to GM in an amount sufficient to allow the 

continuation of Delphi’s hourly pension plan, but that it was anticipated that 

GM’s pension benefit guarantees to the hourly employees would be preserved. 

Treasury and GM did not agree to top up the pensions of any other Delphi retiree 

in GM’s bankruptcy. However, after GM’s bankruptcy, New GM decided to top 

up the pensions of certain Delphi “splinter unions” that had filed an objection to 

Delphi’s bankruptcy. 

Delphi Salaried Retirees 

SIGTARP found that Delphi’s salaried retirees had no leverage, other than what 

they hoped to be political leverage and that Treasury, as a Government agency, 

 

28 On June 1, 2009, GM filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code (11 

U.S.C. §§ 1101-1174) and conducted a court-supervised asset sale (under 11 U.S.C. § 363), in which substantially all 

of the operating assets of the company were sold to General Motors Company, or New GM, and most of the 

company’s debt and liabilities remained in the possession of Motors Liquidation Company, or Old GM, which is 

being addressed in bankruptcy court. New GM emerged from GM’s bankruptcy on July 10, 2009. 

29 The Detroit News, “Rattner: Bailout a ‘Success,’” 12/16/2011. 

30 An Auto Team official told SIGTARP that he wanted to include the Delphi hourly employees because he believed that 

it would help push the Delphi bankruptcy through more quickly. He told SIGTARP that when he attempted to get 

consensus from GM, GM pushed back and did not want to absorb this liability. 
TREASURY’S ROLE IN THE DECISION FOR GM TO PROVIDE PENSION PAYMENTS TO DELPHI EMPLOYEES 28

SIGTARP 13-003 August 15, 2013 

would provide them with a top-up. Delphi salaried retirees had no active 

employees at GM, a critical difference between them and the UAW. They were 

not creditors in GM’s bankruptcy because they did not have a preexisting 

agreement with GM to provide the pension benefit guarantee as did the UAW and 

other unions. In 1999, the salaried workers were not organized and did not 

negotiate a top-up agreement because their pensions had been fully funded by 

GM. Aware that they did not negotiate a top-up agreement with GM, 

representatives of Delphi’s salaried employees told SIGTARP that there should 

have been consistent treatment and that they would have no problem if nobody 

got a top-up. 

GM had taken the position in February and March 2009 that it had no preexisting 

obligation to the salaried employees and that the TARP loan agreement prohibited 

it from increasing its pension benefits without Treasury’s consent, and therefore 

GM alone could not authorize benefits for the salaried retirees. GM’s then-CEO 

Henderson told SIGTARP that Treasury’s consent would have been necessary. 

When asked whether Treasury’s consent was necessary to top up the salaried 

workers, a GM executive told SIGTARP that ultimately Treasury had to agree. 

The cost was also over the $100 million threshold requiring Treasury’s consent. 

A Delphi salaried retiree told SIGTARP, “Unlike the UAW, the only leverage we 

had was political. The UAW had leverage because they were building parts.” 

Therefore, Delphi salaried retirees have pushed for action to protect their pensions 

by appealing to the President, members of Congress, and Treasury officials for 

assistance. On June 6, 2009, after a Congressman sent a letter to the President 

and the Auto Team appealing on behalf of the Delphi salaried retirees, GM briefly 

considered what, if anything, could be done to top up the pensions of Delphi’s 

salaried retirees. On June 6, 2009, Delphi salaried retirees forwarded to then-GM 

CEO Fritz Henderson an email with the subject, “Congressman Lee Makes Direct 

Appeal to President Obama Demanding Fairness for Delphi Salaried Retirees.” 

Immediately, CEO Henderson got in touch with Mr. Rattner, forwarding him the 

email. Mr. Rattner promptly emailed other members of the Auto Team and 

Advisor to the President Brian Deese, saying that he had had a long conversation 

with CEO Henderson on this and other matters. He wrote, “With respect to the 

Delphi retirees, [then-GM Treasurer] Walter Borst is apparently preparing some 

kind of proposal for how to do something for them that is defensible. Fritz seems 

relaxed/ambivalent. We should be hearing more about this over the next 

24 hours.” 

Auto Team leader Rattner told SIGTARP that GM came to the Auto Team 

because “GM wanted to do something for the [Delphi] salaried retirees.” 

Mr. Rattner discussed it with then-GM CEO Henderson. Although Mr. Rattner 

could not remember the specifics of the conversation, he told SIGTARP that he 

thought there was nothing defensible from a commercial standpoint that could be 

done for the Delphi salaried retirees. Mr. Rattner told SIGTARP, “We didn’t 
TREASURY’S ROLE IN THE DECISION FOR GM TO PROVIDE PENSION PAYMENTS TO DELPHI EMPLOYEES 29

SIGTARP 13-003 August 15, 2013 

think there was anything defensible. We felt bad, but we didn’t think it was 

justifiable.” 

GM’s then-CEO Henderson told SIGTARP that he asked then-GM Treasurer 

Borst if there was anything that could be done for the Delphi salaried retirees. 

CEO Henderson told SIGTARP that Treasurer Borst told him that nothing could 

be done and the salaried plan was well funded when Delphi was spun off. 

Treasurer Borst told SIGTARP he informed CEO Henderson that GM was unable 

to take action. Treasurer Borst told SIGTARP, “We didn’t have a benefit 

guarantee agreement [with the salaried retirees] like the one the hourlies had.” 

According to CEO Henderson, the salaried plan had been fully funded at the time 

of the spinoff and that there was no preexisting agreement to provide the salaried 

retirees with a pension benefit guarantee. CEO Henderson told SIGTARP that 

Mr. Borst had explained that if GM found a way to fund the top-up during GM’s 

bankruptcy, it would be as if GM had funded the plan twice. As CEO Henderson 

expressed to SIGTARP, “It was terrible for those who lost their benefits,” but he 

explained that from a commercial standpoint GM had already fully funded 

Delphi’s salaried pensions at the time of Delphi’s spinoff and there was no basis 

to do so again. According to a Treasury document, it was estimated that Delphi 

salaried retirees would lose approximately $440 million in pension benefits. A 

top-up would be expected to cost an equivalent amount. 

The presence of the Government changed the Delphi salaried retirees’ 

expectations. One former Delphi salaried employee told SIGTARP that Treasury 

“cannot throw off the mantle of Government and make themselves into a 

commercial enterprise.” He continued, “It is wrong of our Government to take 

funds from everyone and give it to the few.” After the decision was made not to 

provide a top-up for salaried employees, the President read a letter from a Delphi 

salaried retiree and asked his advisors for information. Lawrence Summers 

prepared a briefing memo to the President in August 2009; however, there was no 

further action. 

Although Delphi salaried retirees had asked Auto Team official Bloom to 

consider preserving the pensions out of fairness, Auto Team official Bloom told 

SIGTARP that GM “did not provide a top-up to the salaried guys because I think 

[GM] concluded there was not a commercially reasonable reason to do it.” 

Mr. Bloom added that GM’s automotive parts suppliers “received a hundred cents 

on the dollar,” the UAW’s retirees received a number “less than a hundred, but 

more than the bondholders,” and some got less than the bondholders. Mr. Bloom 

told SIGTARP that they could not make everyone whole and “That’s not to say 

that people didn’t lose a lot or [were] hurt or were treated in a way that – sort of in 

a human way you would say that’s unfair. I don’t think that anybody thinks 

bankruptcy is fair. It is what it is, though.” 
TREASURY’S ROLE IN THE DECISION FOR GM TO PROVIDE PENSION PAYMENTS TO DELPHI EMPLOYEES 30

SIGTARP 13-003 August 15, 2013 

Delphi Hourly Employees Represented by Smaller Unions 

SIGTARP found that although in GM’s bankruptcy, GM did not assume the other 

top-up agreements for Delphi IUE and USW hourly employees because those 

unions did not have leverage, subsequently GM agreed to top up the smaller 

unions because of the leverage those unions had to prolong Delphi’s bankruptcy 

or strike, which GM believed would significantly impact its ability to survive. 

Then-CEO Henderson told SIGTARP that GM did not assume the IUE/USW 

pension benefit guarantees in GM’s bankruptcy because there were no active IUE 

or USW employees at GM.31 According to a representative of both unions, the 

IUE and USW knew that they had little chance of succeeding in holding up or 

affecting GM’s bankruptcy. GM did not have any discussions with these unions 

prior to filing for bankruptcy. Although the unions filed objections in GM’s 

bankruptcy, the GM bankruptcy judge dismissed their objections.32

From approximately July 10 to July 22, 2009, GM was negotiating with the IUE 

and USW, which had filed objections in Delphi’s bankruptcy, had active workers 

at Delphi, and had told GM in the case of the IUE that representatives had asked 

that union to file for strike authorization.33 Then-CEO Henderson told SIGTARP 

that after GM’s 363 sale, there were residual issues with the IUE because the 

Auto Team had given parameters to GM to reduce by two-thirds postemployment benefits such as health care and pensions. Then-CEO Henderson 

told SIGTARP that GM had proposed a 62% reduction in employment benefits, 

but Mr. Rattner told them it had to be two-thirds. Given that these negotiations 

took place after New GM emerged from GM’s bankruptcy, the Auto Team was 

not involved in the same way they had been, leading up to and through the 

bankruptcy.34 

 

31 “They are just dramatically less relevant,” Auto Team official Bloom told SIGTARP. “They didn’t have nearly the 

same footprint and the drama that UAW had, the overwhelming majority of General Motors employees.” Bloom told 

SIGTARP that as to those two unions, given his prior employment with USW, he made a conscious decision not to 

involve himself. 

32 The court ruled that New GM needed “a properly motivated work force” to succeed, which required that it “enter into 

satisfactory agreements with the UAW.” In commenting on the other unions, the bankruptcy judge ruled, “And the 

Purchaser is not similarly motivated, in triaging its expenditures, to assume obligations for retirees of unions whose 

members, with little in the way of exception, no longer work for GM.” 

33 An IUE official told SIGTARP that the union was prepared for a protracted conflict if GM had decided not to uphold 

IUE’s top-up agreement: “Without a doubt, it would have been fought on the factory floors and in the district courts.” 

34 Following the bankruptcy sale from Old GM to New GM on July 10, 2009, the Auto Team told SIGTARP that they 

began to shift from active daily contact with GM to a less hands-on approach. Members of the Auto Team indicated 

that Lawrence Summers was the principal advocate for a quick withdrawal of Government involvement in GM, an 

approach that was also strongly supported by Secretary Geithner. Nevertheless, Auto Team members acknowledged 

to SIGTARP that there were outstanding issues relating to GM that remained after the bankruptcy and for which the 

Auto Team still had some level of involvement. As Mr. Rattner said to SIGTARP regarding continued involvement, 

“We agreed with Larry Summers that there were some loose ends that we had not finished.” Another Auto Team 

official described it as “clean up” telling SIGTARP, “While they were out, there was still stuff that needed to get 

finalized and implemented, etc...And then largely, although there was a bit of a transition period, largely we then 

moved into a monitoring role.” Steven Rattner was one of the first to depart in late July 2009. 
TREASURY’S ROLE IN THE DECISION FOR GM TO PROVIDE PENSION PAYMENTS TO DELPHI EMPLOYEES 31

SIGTARP 13-003 August 15, 2013 

In July 2009, internal Government emails between the Auto Team and Advisor to 

the President Brian Deese discussed GM’s need to address issues with Delphi’s 

“splinter unions.” Auto Team officials did not recall details related to the 

emails.35 When Senator Charles Schumer took a position that GM should assume 

the Delphi salaried retiree pensions, Mr. Deese emailed Mr. Rattner this “may 

complicate the optics of doing anything for the splinters.” Other emails from 

Mr. Deese stated, “We will continue to face intense scrutiny on this issue. The 

politics of terminations is quite intense” and “we need to work on a clear rationale 

for the outcomes we’re moving toward, as well as an explanation of respective 

roles.” Mr. Rattner emailed members of the Auto Team that he had spoken with 

Fritz Henderson about “our logic on the splinters, which he [Henderson] was fine 

with. [Auto Team Analyst] Sadiq [Malik] should speak to Janice [Uhlig]36 about 

the details, particularly how the reallocation of the $417mm would work.” 37 

Auto Team member Feldman emailed members of the Auto Team about health 

care/pension benefit changes for IUE and USW employees, and Mr. Deese 

responded that the company’s organizing principle was parity between GM 

salaried and non-UAW hourlies. Mr. Deese referenced a discussion about health 

care costs and the “credible fairness arguments to augment the hourlies’ recovery 

based on the pension disparity, but that for all the reasons we discussed that 

would not be possible. However, I think the logic of that conclusion strongly 

counsels in favor of bringing the top-up through. Otherwise, we’re moving in the 

opposite direction from a position that we all agreed was itself on the edge of 

fairness.” 

In the emails from middle to late July 2009, Mr. Feldman told the Auto Team and 

Mr. Deese, “GM had separately concluded that as part of reaching a resolution 

with the splinters they needed to be prepared to honor the top-up.” Mr. Deese 

later emailed the Auto Team that he told an IUE official that “this is GM’s 

negotiation,” that they should only engage in discussions if there is a “risk that 

GM would go substantially beyond what we had discussed with them,” to which 

Mr. Feldman replied, “I continue to think we should stay out. We have given GM 

our input but this is up to GM.” CEO Henderson told SIGTARP that the input 

Treasury gave was the two-thirds reduction. 

 

35 Mr. Deese may have been emailing about this matter because Mr. Bloom sent the splinter unions to Mr. Deese 

because of Mr. Bloom’s prior employment with the USW. Also, the splinter unions met with the President on 

July 13, 2009, but pensions were not discussed. SIGTARP was unable to interview Mr. Deese about these emails and 

these events because the Administration declined to make him available for an interview because until just recently he 

was an advisor to the President. The Administration cited what it referred to as a long-standing practice. The 

Administration also did not grant SIGTARP’s request for an interview with Dr. Summers, although White House 

Counsel advised SIGTARP that they contacted Dr. Summers and that he indicated to them that he had no specific 

recollection of, or involvement in, the issue of the Delphi pensions. Dr. Summers is not a current employee of the 

Administration. 

36 Janice Uhlig was a GM health care finance executive involved in the benefit analysis for GM. 

37 The $417 million figure related to health care costs related to the two-thirds reduction in certain costs for GM that 

Mr. Rattner had set for GM as a guideline during the GM bankruptcy. 
TREASURY’S ROLE IN THE DECISION FOR GM TO PROVIDE PENSION PAYMENTS TO DELPHI EMPLOYEES 32

SIGTARP 13-003 August 15, 2013 

Although the meaning of these Government emails is unclear, GM officials told 

SIGTARP that they did not know the views of Treasury or the White House. GM 

Associate General Counsel Frank Jaworski told SIGTARP that Mr. Feldman 

asked for updates on the progress of negotiations but did not express any views of 

the White House or Treasury. He told SIGTARP that there were no constraints or 

limitations placed by Treasury during the talks with the unions. Then-CEO 

Henderson told SIGTARP that he did not remember talking to anyone in the 

Administration about the top-up or that anyone put limitations or constraints on 

the negotiations. He told SIGTARP that he did not recall any suggestion that GM 

provide the top-up, or anyone at Treasury or the Administration (such as Mr. 

Deese) wanting GM to provide the top-up. CEO Henderson told SIGTARP that 

there was no pressure to provide the top-up from the Administration or Treasury. 

On September 10, 2009, as part of a larger settlement agreement that also 

addressed retiree health care, New GM agreed to honor IUE’s and USW’s Delphi 

top-up agreements at an estimated cost of $350 million. CEO Henderson told 

SIGTARP that providing the top-up was necessary “to get the deal done,” saying 

there was a clear inference that IUE could strike at Delphi, which would have shut 

down GM.38 GM’s then-CFO Young told SIGTARP, “If Delphi shut down, we 

shut down.”39 Then-CEO Henderson and another GM executive told SIGTARP 

that although Treasury knew about these top-ups and did not oppose them, GM 

did not seek Treasury’s consent because the TARP loan agreement prohibiting 

GM from taking on new pension liabilities was between Treasury and Old GM, 

not New GM. 

 

38 One GM official told SIGTARP that the unions got the agreement because liquidation of Delphi would have been a 

disaster for GM. 

39 GM’s former CFO Young told SIGTARP that if the Delphi bankruptcy had gone on longer, it would have been 

difficult for GM and GM would have had to develop an alternative means to obtain parts. Delphi exited bankruptcy 

in October 2009. 
TREASURY’S ROLE IN THE DECISION FOR GM TO PROVIDE PENSION PAYMENTS TO DELPHI EMPLOYEES 33

SIGTARP 13-003 August 15, 2013 

Conclusion 

The U.S. Department of the Treasury’s (“Treasury”) injection of Troubled Asset 

Relief Program (“TARP”) funds in General Motors Corporation (“GM”) and 

Chrysler Group LLC (“Chrysler”) was the only bailout with a President’s 

Designee overseeing the companies’ restructurings. With the first TARP 

injection of $13.4 billion in December 2008, Treasury assigned responsibility 

over GM’s restructuring to the President’s Designee. In February 2009, the 

President designated the Presidential Task Force on the Auto Industry (“Auto 

Task Force”), which delegated the responsibility for GM’s restructuring to four 

primary officials who were part of an Auto Team (“Auto Team”), three of whom 

worked at Treasury from February 2009 to the summer of 2009,40 led by Steven 

Rattner, who was called the “car czar.”41 The existence of the Auto Team and the 

role these Treasury officials played sharply contrasted with the role played by 

Treasury officials under other TARP programs. These four Auto Team officials 

played a direct role in GM’s decisions and operations up to and through one of the 

largest and fastest bankruptcies in our nation’s history. A new company referred 

to as New GM emerged from GM’s bankruptcy in July 2009, with Treasury 

owning 61% of its common stock on behalf of taxpayers. New GM purchased 

substantially all of GM’s assets while leaving behind many of its liabilities. 

One of the liabilities that New GM agreed to honor related to the pensions of 

certain former GM employees who had worked in its automobile parts division 

Delphi Corporation (“Delphi”), when GM spun off Delphi into an independent 

company in 1999. The agreement ran to Delphi employees who were paid an 

hourly wage (an “hourly employee”) and were represented by certain unions. 

Delphi employees who were paid a salary (a “salaried employee”) did not have an 

agreement for GM to pay anything toward their pensions after the 1999 spinoff. 

Delphi, which was GM’s largest supplier of parts, had been in bankruptcy since 

2005 and did not have enough money to fund its pensions. When interviewed by 

SIGTARP, the four Treasury Auto Team officials made it clear that the decisions 

made and Treasury’s role related to Delphi pensions had to be viewed in the 

broader context of GM’s restructuring. 

As GM’s only lender and later GM’s largest investor, Treasury, through its Auto 

Team, had significant leverage and influence on GM’s decisions leading up to and 

through the bankruptcy. Before and after GM submitted its restructuring plan to 

Treasury, the Auto Team had been assessing bankruptcy, and in February was 

planning (but not discussing with GM) a GM bankruptcy that would sell assets to 

a buyer, leaving behind many of its liabilities. The Auto Team believed this type 

of bankruptcy (called a “363 sale” for a section of the bankruptcy code) would be 

quicker than a normal 9 to 12 months bankruptcy. They were also planning this 

 

40 The fourth primary official continued to work on the Auto Team until the fall of 2011. 

41 The Auto Task Force was co-chaired by former Treasury Secretary Timothy Geithner and former National Economic 

Council Director Lawrence Summers.
TREASURY’S ROLE IN THE DECISION FOR GM TO PROVIDE PENSION PAYMENTS TO DELPHI EMPLOYEES 34

SIGTARP 13-003 August 15, 2013 

type of bankruptcy for Chrysler. The Auto Team first exerted their significant 

influence on GM by replacing GM’s CEO Rick Wagoner (who adamantly 

opposed bankruptcy) with Treasury’s choice, Fritz Henderson, a move that GM’s 

Board of Directors viewed as Treasury usurping their power. Mr. Henderson told 

SIGTARP that the Auto Team’s decision to replace Mr. Wagoner with their 

selection sent a message to GM executives and was an early indicator that 

Treasury, as the main investor in GM, would have significant influence over 

GM’s decisions and operations. 

Importantly, three days later, on March 30, 2009, Treasury rejected GM’s 

restructuring plan that did not plan for bankruptcy, required a new plan signaling 

that GM may need bankruptcy, and injected $6 billion in TARP funds in GM – 

enough financial support to last 60 days. With only 60 days of funding, GM 

developed a new restructuring plan with significant influence and leverage from 

Treasury’s Auto Team. The December 2008 TARP loan agreement gave 

Treasury the explicit right to approve transactions over $100 million and new 

pension obligations, but the Auto Team’s influence went far beyond that legal 

right. One GM official told SIGTARP, “Ultimately it was that GM is not in 

control. And GM is totally dependent.” 

Although the Auto Team’s role was supposed to be advisory for matters not 

requiring Treasury’s consent under the TARP Loan Agreement, in practice it was 

more than advisory. SIGTARP found that the Auto Team used their leverage as 

GM’s largest lender to influence and set the parameters for GM to make decisions 

in areas that did not require Treasury consent. One Auto Team official described 

Treasury as GM’s “only lifeline.” The Auto Team exerted the influence that 

came with that position. According to numerous interviews of Auto Team and 

GM officials, the Auto Team “was persistently pressing” and “pushed” GM to 

take more significant actions than GM would have done on its own, actions in line 

with Treasury’s preferences. As SIGTARP previously reported in its prior audit, 

in response to the Auto Team’s rejection of GM’s restructuring plan and its 

explicit comment that GM’s “pace” of dealership closings was too slow and an 

obstacle to its viability, GM substantially accelerated its dealership termination 

timelines.42 Although the Auto Team did not tell GM which dealerships to close, 

GM made the decision to accelerate the dealership closings with significant 

Treasury influence. 

An Auto Team official told SIGTARP that “There was a feeling that the Auto 

Team had to carefully manage GM, which would have given away Treasury’s 

money without blinking.” Another Auto Team official explained to SIGTARP 

that Treasury did not want to start running the company, but when dealing with 

taxpayer resources, “We, the Government, were ultimately holding that purse 

string,” and Treasury reserved the right to tell GM that they would not back them. 

A third Auto Team official told SIGTARP that they did not cram down decisions 

 

42 SIGTARP-10-008, “Factors Affecting the Decisions of General Motors and Chrysler to Reduce Their Dealership 

Networks,” 7/19/2010. 
TREASURY’S ROLE IN THE DECISION FOR GM TO PROVIDE PENSION PAYMENTS TO DELPHI EMPLOYEES 35

SIGTARP 13-003 August 15, 2013 

on GM, “but we were investing a lot of money, and we had the opportunity to 

disagree.” There was no need for ultimatums. As one Auto Team official told 

SIGTARP, “GM realized that there was no other available source of money.” 

When an Auto Team official was asked by SIGTARP how the Auto Team 

conveyed their preference or nudged GM to see things the way the Auto Team 

saw them, given that ultimately GM could do its own thing, the Auto Team 

official said, “Well, they could, but then they couldn’t exist. I mean, as I said, as 

the lender we had a fair amount of leverage.” 

Driven by broader concerns about the auto industry, Treasury’s Auto Team 

directed GM’s restructuring efforts toward filing for bankruptcy. The Auto Team 

took steps to signal to GM their strong preference for bankruptcy and bring 

significant influence over GM’s decision to file bankruptcy. The Auto Team’s 

replacement of GM CEO Wagoner, who did not favor bankruptcy, and the choice 

of Mr. Henderson as CEO, signaled the Auto Team’s preference for bankruptcy 

and directed GM’s restructuring efforts toward bankruptcy. GM CEO Henderson 

was open to bankruptcy but only as “Plan B.” He hoped to avoid bankruptcy by 

getting bondholders to exchange their debt for GM stock. Despite the exchange 

being a condition under the TARP loan agreement, Treasury’s Auto Team did not 

believe that the bond exchange alone would make GM viable and asserted their 

leverage as the primary financial support of GM. In the first week of April 2009, 

the Auto Team “highly suggested” to GM that they felt “pretty strongly” that a 

Section 363 bankruptcy was the “best approach.” The Auto Team opposed GM’s 

decision to proceed with the bond exchange and communicated to GM their 

preference that 90% of the bondholders participate in the exchange, a “level of 

acceptance” that was “very high,” making bankruptcy more likely, according to 

then-CEO Henderson. CEO Henderson told SIGTARP that it was not clear that 

bankruptcy was the only option until the bond exchange failed. With a $1 billion 

bond payment coming due June 1, 2009, which Treasury would not fund, GM 

asked Treasury to fund GM’s bankruptcy. Having already invested $19.4 billion 

in TARP funds and out of concern that a GM failure could have a cascading effect 

throughout the automobile industry by causing related companies to fail, Treasury 

agreed to fund GM’s bankruptcy with a $30.1 billion TARP loan. Not wanting 

the TARP debt on GM’s balance sheet, Treasury decided that its combined 

$49.5 billion in TARP loans would convert to 61% ownership of common stock 

in New GM, the purchaser in bankruptcy. 

Treasury’s Auto Team created a condition on funding GM’s bankruptcy that 

would serve as pressure on GM and would drive pre-bankruptcy negotiations and 

decisions. Treasury conditioned giving GM $30.1 billion in TARP funds on a 

“quick-rinse bankruptcy” that would end in 40 days because Auto Team officials 

thought that was the best way to save the automobile industry, concerned that GM 

could not survive a lengthy bankruptcy and GM’s failure would have broader 

systemic consequences. Treasury Auto Team officials deemed speed as essential 

and were concerned that if GM’s bankruptcy was prolonged, consumers would 

stop purchasing GM’s automobiles, and GM would likely fail. Neither Treasury 
TREASURY’S ROLE IN THE DECISION FOR GM TO PROVIDE PENSION PAYMENTS TO DELPHI EMPLOYEES 36

SIGTARP 13-003 August 15, 2013 

nor GM believed that the company could survive a lengthy bankruptcy; however, 

GM thought that the 40-day timeframe was not realistic. GM’s bankruptcy 

lawyer told the Auto Team that the timeline was “impossibly aggressive. It’s 

never been done.” Treasury had leverage to set conditions on TARP funds, even 

if it was a timeframe that did not seem realistic to GM and had never been done 

before. If GM’s bankruptcy was not completed in time, GM risked losing its only 

source of financing and its purchaser in bankruptcy. 

Treasury’s influence over GM deepened after Treasury decided to fund GM’s 

bankruptcy and become the majority owner of New GM. With their leverage as 

the purchaser of GM’s assets in bankruptcy, Treasury’s Auto Team had 

significant influence on GM to make specific decisions that were in keeping with 

Treasury’s preferences. GM’s then-CFO Young told SIGTARP, “We put forward 

recommendations, but at the end of the day, the purchaser [Treasury] makes the 

final decision.” One Auto Team official told SIGTARP that “We approve 

technically everything because we don’t have to do the DIP [debtor-in-possession 

bankruptcy loan]. But no, not in the micro. I mean it wasn’t, you know you bring 

us this, we approve this, we approve that. It was bring us a plan and we do a DIP 

or we don’t do a DIP.” One Auto Team official testified in a deposition that the 

leverage Treasury had with Old GM was that Treasury was the only buyer for 

GM’s assets. That same Auto Team official called Treasury’s leverage 

“considerable” because the alternative was “catastrophic,” adding that he meant 

liquidation. One reason why the Auto Team had chosen a 363 bankruptcy sale 

was the ability to “cherry-pick” assets and liabilities that New GM would take on. 

An Auto Team official stated in a deposition, “it is my understanding that as the 

buyer, we get to determine which assets are, you know, assets we would buy and 

which liabilities” we would take on. 

A quick-rinse bankruptcy requires consensus with major stakeholders, and 

Treasury used its significant financial leverage to get GM to reach agreement with 

the two stakeholders that Treasury believed could hold up GM’s bankruptcy – the 

bondholders and the International Union, United Automobile, Aerospace, and 

Agricultural Implement Workers of America (“UAW”). The 2008 TARP loan 

agreement required new agreements with both of these groups. Treasury made a 

deal with the bondholders in the weeks prior to GM filing bankruptcy because of 

the bondholders’ leverage to object to and prolong the bankruptcy. The Auto 

Team was actively involved in the negotiations out of concern that the 

bondholders were a major risk of delaying the bankruptcy if they objected. 

Treasury was in a position to provide bondholders with a better recovery than 

under the bond exchange. This was because Treasury would own most of the 

equity of New GM, and, according to Henderson, equity was something only 

Treasury could provide. In exchange for the bondholders agreeing not to oppose 

the bankruptcy, Treasury gave additional consideration to Old GM during the 

bankruptcy proceeding, to the benefit of GM’s bondholders. 
TREASURY’S ROLE IN THE DECISION FOR GM TO PROVIDE PENSION PAYMENTS TO DELPHI EMPLOYEES 37

SIGTARP 13-003 August 15, 2013 

Treasury’s requirement in the December 2008 TARP loan agreement that GM 

reach a new deal with the UAW, Treasury’s conditioning TARP funds on a 40-

day quick-rinse bankruptcy, and UAW’s leverage to stall the bankruptcy or strike 

pressured GM on “getting the deal done” with the UAW and resulted in New GM 

taking on the liability to top up the pensions of UAW’s members who had worked 

at Delphi at the time of its 1999 spinoff from GM, increasing their pension benefit 

payments to their full benefit level.43 Members of the Auto Team were actively 

involved in the negotiations with UAW that took place on May 18-19, 2009, at 

Treasury’s offices and at the offices of Treasury’s lawyers in Washington, D.C. 

One Auto Team official testified in a deposition that Treasury represented the 

owners of New GM in the negotiations. GM and Auto Team officials were 

concerned that the UAW, referred to as “the big dog” by an Auto Team official, 

represented 99% of GM’s unionized employees and could stop production with a 

strike. In addition to the traditional strike leverage, the requirement in the TARP 

loan agreement for a new collective bargaining agreement and the Auto Team’s 

40-day timeframe for bankruptcy gave the UAW additional leverage. An Auto 

Team official told SIGTARP that the UAW was a very major constituency that 

could slow down and potentially block the entire sale. The Auto Team made it 

very clear to GM and the UAW that it was essential that they reach an agreement 

with UAW prior to GM’s bankruptcy filing. The UAW understood that GM 

could not walk away from negotiations and had to reach an agreement with it to 

be able to survive, and those same facts put pressure on GM. Given the need for 

GM to file bankruptcy by June 1, 2009 when a $1 billion bond payment came 

due, GM only had a couple of weeks to come to an agreement with the UAW, and 

if they did not come to agreement, GM risked the UAW objecting to and 

prolonging the bankruptcy beyond 40 days, which GM believed would lead to 

liquidation. 

The UAW came to the negotiations with a “hit list” of priority items that included 

New GM assuming the pension benefit guarantee (“top-up”) for the former GM 

employees at Delphi represented by UAW. Since February 2009, the Auto Team 

had been analyzing options concerning the top-ups of Delphi employees and had 

been negotiating with the Pension Benefit Guaranty Corporation (“PBGC”), the 

Government entity that insures pensions. The May 2009 UAW negotiations only 

focused on those aspects that were discussed in the TARP loan agreement, which 

included GM funding retiree health care costs using New GM stock, with 

Treasury as the majority owner of New GM. According to Mr. Rattner’s book, 

Overhaul: An Insider’s Account of the Obama Administration’s Emergency 

Rescue of the Auto Industry (“Overhaul”), when GM’s CEO raised pensions, the 

UAW’s president reportedly said, “We aren’t going to sit in this room if pensions 

are on your list.” At the end of two days, the UAW left the negotiations at an 

impasse. The UAW president called Auto Team official Ron Bloom the next day, 

and they made the overall deal for a new collective bargaining agreement. The 

 

43 Delphi was GM’s largest supplier of auto parts and had been in bankruptcy since 2005. 
TREASURY’S ROLE IN THE DECISION FOR GM TO PROVIDE PENSION PAYMENTS TO DELPHI EMPLOYEES 38

SIGTARP 13-003 August 15, 2013 

top-up was never discussed in the negotiations where both GM and Treasury were 

present and actively negotiating. 

The Auto Team’s role in the decision to top up the pensions of Delphi’s UAW 

workers was not advisory. Consistent with the Auto Team’s practice, as with any 

liability, it would have been Treasury’s decision as the buyer to assume or reject 

the liability to top up the pensions of Delphi hourly UAW employees. The Auto 

Team made it clear to GM that they wanted an agreement with the UAW prior to 

bankruptcy and the Auto Team actively negotiated and made the overall deal. 

Although the top-up was previously a separate written agreement, the top-up was 

now included as one of the obligations in the overall new collective bargaining 

agreement with the UAW, which was included in the Master Sale and Purchase 

Agreement selling assets to New GM.44 GM could not decide on its own to agree 

to the new collective bargaining agreement that included the top-up because 

Treasury’s consent was required under the TARP loan agreement and Treasury 

was the purchaser in bankruptcy. The decision that New GM would honor the 

top-up was a joint decision by Treasury and GM with Treasury deciding to 

approve the collective bargaining agreement with the UAW that included the topup. 

Even though the top-up was never discussed in the negotiations with the UAW, it 

became a foregone conclusion that it would be included in the new UAW 

collective bargaining agreement. Auto Team leader Rattner told SIGTARP that 

GM had the option of honoring or not honoring its pension benefit guarantees in 

bankruptcy, but GM needed UAW workers and UAW’s consent was necessary 

for the bankruptcy. Auto Team leader Rattner and another Auto Team official 

told SIGTARP that, because the UAW included the top-up on their list, it was 

clear that the UAW expected the top-up to be part of the overall deal. Treasury 

had the power to object to New GM taking on the top-up obligation as part of the 

larger agreement with the UAW, but had no desire to blow up the larger deal. 

Although the Auto Team was concerned about the threat of the strike, they were 

also concerned with the UAW prolonging the bankruptcy. An Auto Team official 

told SIGTARP that not having an agreement with UAW would have been like 

“shooting yourself in the head,” adding that it could have resulted in the 

liquidation of GM. Auto Team leader Rattner told SIGTARP that getting more on 

pensions “was a game of chicken we didn’t want to play. We were under 

incredible time pressure.” Auto Team leader Rattner told SIGTARP, “It was not 

a ridiculous request. And one that we could have honored and needed to honor.” 

Then-GM CEO Henderson told SIGTARP that the pressure to finish the 

negotiations resulted in no negotiation on the top-up, and although GM knew 

about the top-up, “the focus was on getting the deal done.” CEO Henderson told 

SIGTARP that renegotiating the pensions in bankruptcy would have taken a long 

 

44 According to the UAW, it made a number of concessions in the negotiation including: elimination of performance 

bonuses and cost of living adjustments, reduced holidays, scaled-back overtime rules, and frozen wages for new entry 

employees. GM would be allowed to use stock to replace debt for the VEBA health care trust, and other concessions. 
TREASURY’S ROLE IN THE DECISION FOR GM TO PROVIDE PENSION PAYMENTS TO DELPHI EMPLOYEES 39

SIGTARP 13-003 August 15, 2013 

time – a risk that GM did not believe it could afford to take because Treasury had 

given no indication that it would extend financing beyond 40 days. CEO 

Henderson told SIGTARP that if the pension benefit guarantee with the UAW 

was not assumed by GM, it would have been “mission impossible.” 

Treasury’s Auto Team and GM did not agree to top up the pensions of other 

former GM employees at Delphi, which did not have active employees at GM, 

and therefore had no leverage to hold up GM’s bankruptcy. This included Delphi 

employees who were paid a salary and employees who were paid an hourly wage 

who were members of the IUE and USW unions. These two groups of employees 

had pension plans that had become underfunded. Although the hourly employees 

at these unions had a preexisting top-up agreement, there were no discussions 

regarding the top-up agreement with GM and these unions prior to GM’s 

bankruptcy. Although in GM’s bankruptcy New GM did not assume the other 

top-up agreements with Delphi IUE and USW employees because those unions 

did not have leverage, subsequently New GM agreed to top up the smaller unions 

because of the leverage those unions had to prolong Delphi’s bankruptcy or strike, 

which GM believed would significantly impact its ability to survive.45 

Delphi’s salaried retirees had no leverage, other than what they hoped would be 

political leverage and that Treasury, as a Government agency, would provide 

them with a top-up. The Delphi salaried employees were not represented when 

Delphi was spun off. GM had fully funded (at 123%) the expected payments 

needed to cover the salaried employees’ pension plan at the time of Delphi’s 

spinoff and there was no top-up agreement in place. They did not have active 

employees at GM and were not creditors in GM’s bankruptcy. They sought to use 

their only tool, political pressure, to improve their position in the hopes that 

Treasury would provide them with the same treatment as Delphi UAW 

employees. GM officials took the position with PBGC and Delphi, and confirmed 

in SIGTARP interviews, that GM did not believe it had the ability to provide a 

top-up for the salaried employees on its own because the TARP loan agreement 

prohibited GM from increasing pension benefits without Treasury’s consent. The 

cost was also over the $100 million threshold requiring Treasury’s consent. 

According to a Treasury document, it was estimated that Delphi salaried retirees’ 

would lose approximately $440 million in pension benefits. A top-up would be 

expected to cost an equivalent amount. 

 

45 The interconnectedness of Delphi to GM provided the IUE and USW hourly employees leverage in Delphi’s 

bankruptcy where these employees filed objections to the bankruptcy and threatened to strike. New GM began 

negotiations with the IUE and USW shortly after its emergence from GM’s bankruptcy in an effort to resolve 

remaining issues. As part of a larger settlement, New GM agreed to top up the pensions of these workers at an 

estimated cost of $350 million. GM executives believed that a shutdown at Delphi could shut GM down. Given that 

these negotiations took place after New GM emerged from GM’s bankruptcy and the Auto Team was disbanding, the 

Auto Team was not involved in the same way they had been leading up to and through the bankruptcy. According to 

then-CEO Henderson, GM did not seek Treasury’s consent because the TARP loan agreement prohibiting GM from 

taking on new pension liabilities was between Treasury and Old GM, not New GM. 
TREASURY’S ROLE IN THE DECISION FOR GM TO PROVIDE PENSION PAYMENTS TO DELPHI EMPLOYEES 40

SIGTARP 13-003 August 15, 2013 

Ultimately, GM did not fail and the broader systemic consequences of a GM 

failure that Treasury had feared were avoided. There are two important lessons to 

be learned from the role that Treasury’s Auto Team played. 

First, the Auto Team’s deep involvement and significant influence on GM’s 

decisions leading up to and through GM’s bankruptcy led to expectations that 

Treasury would not act as a private investor, but as the Government. PBGC had 

an expectation that decisions on what obligations GM would take on related to the 

Delphi pensions would proceed differently than what might have normally 

occurred, and could potentially have saved PBGC billions of dollars with 

Treasury involved. Also contributing to this expectation was the fact that the 

Auto Team negotiated with PBGC on behalf of GM related to what GM would 

pay on the pensions. Delphi and its workers, who had been former GM 

employees, also had the expectation that the Government would ensure that GM 

treat the pensions of all former GM employees at Delphi the same out of fairness. 

Also contributing to this expectation was the fact that TARP funds were being 

used, and that GM had taken the position with Delphi (and PBGC) that taking on 

additional pension obligations violated the TARP loan agreement and required 

Treasury’s consent. A PBGC document stated that Delphi believed GM may be 

looking to the “car czar” to mandate that GM assume Delphi pensions as part of 

GM’s use of TARP funds. One former Delphi salaried employee told SIGTARP 

that Treasury “cannot throw off the mantle of Government and make themselves 

into a commercial enterprise” and “it is wrong of our Government to take funds 

from everyone and give it to the few.” However, Auto Team officials attempted 

to view top-ups as a private investor. An Auto Team official told SIGTARP that 

the Government could not make everyone whole, saying, “I don’t think that 

anybody thinks bankruptcy is fair.” 

Treasury’s Auto Team did not always act as a private investor and at times acted 

as the Government to prevent GM from failing, concerned about financial 

stability in the auto industry. Although the Auto Team tried to view issues 

through a “commercially reasonable” lens like a private investor, they often did 

not act as a private investor, nor should they have. Without policies or procedures 

to define commercial reasonableness, Treasury used commercial reasonableness 

as a justification for all of its actions, even when those actions were based on 

other concerns. For example, Treasury decided not to move GM’s headquarters 

to save costs out of concerns over the impact on the city of Detroit. Treasury 

made other decisions based on broader concerns about the interconnectedness of 

the auto industry. No private investor holds the responsibility Treasury has to 

protect taxpayers and to promote financial stability in the economy. Treasury 

made the TARP injections in GM when, according to GM’s then CFO, no other 

private investor would lend or invest the money that GM needed. Concerned that 

the TARP loans would be too much debt on GM’s balance sheet, Treasury funded 

GM’s bankruptcy and converted what would be higher priority debt to a lower 

priority equity ownership in New GM and, according to GM, paid more than 

GM’s “Enterprise Value.” Treasury’s Auto Team took these actions based on 
TREASURY’S ROLE IN THE DECISION FOR GM TO PROVIDE PENSION PAYMENTS TO DELPHI EMPLOYEES 41

SIGTARP 13-003 August 15, 2013 

concerns of the consequences of a GM failure on other companies in the 

American automotive industry, concerns not held by private investors. Even 

though Treasury, through the Auto Team, tried to act as a private investor, they 

had considerations that no private investor would ever have had, blurring the lines 

between Treasury’s role as the investor and as the Government. 

Second, the additional leverage Treasury gave to certain stakeholders, such as the 

UAW, contributed to criticism of the disparate treatment between Delphi salaried 

and union employees. One Auto Team official told SIGTARP that the strength of 

the negotiating parties was dictated by the leverage they held, but SIGTARP 

found that additional leverage was given by Treasury. The Auto Team 

established a hierarchy of importance of stakeholders and issues that Auto Team 

officials believed had to be completed prior to GM’s bankruptcy filing to ensure a 

successful quick-rinse bankruptcy that would be completed in 40 days. Treasury 

did not view the non-UAW Delphi hourly employees or the Delphi salaried 

employees as having leverage because they did not have current employees at GM 

and therefore could not hold up GM’s bankruptcy. 

Two liabilities that the Auto Team had already decided to assume in bankruptcy 

were a new agreement with the UAW and an agreement with the bondholders. 

The UAW had leverage because it knew and understood from Treasury that it was 

committed to reorganize GM and not let GM fail. Moreover, Treasury’s 40-day 

bankruptcy condition gave the UAW and bondholders additional leverage to 

threaten to hold up GM’s bankruptcy. They may have been able to obtain more 

concessions than in a traditional bankruptcy where the issues may be litigated. 

An Auto Team official told SIGTARP, “We had to negotiate a deal that the UAW 

and bondholders would accept.” With Treasury’s dictate of a 40-day bankruptcy 

and no indication that Treasury would extend that timeframe, GM officials were 

under pressure, believing they had to reach agreements with the bondholders and 

UAW prior to a June 1 bankruptcy filing or risk losing Treasury’s funding and 

liquidating. 

It is very difficult for Treasury to act as only a private investor and still fulfill its 

greater governmental responsibilities. Treasury entered the TARP investments as 

the Government, and must continue to act as the Government the whole time it 

holds these investments, protecting taxpayers’ investment and fulfilling 

Treasury’s responsibility to promote financial stability in the economy. An 

important lesson Government officials should learn from the Government’s 

unprecedented TARP intervention into private companies is that the actions and 

decisions taken must represent the overarching responsibilities the Government 

owes to the American public. 

 
TREASURY’S ROLE IN THE DECISION FOR GM TO PROVIDE PENSION PAYMENTS TO DELPHI EMPLOYEES 42

SIGTARP 13-003 August 15, 2013 

Management Comments and SIGTARP’s 

Response 

Treasury provided an official written response in a letter dated August 9, 2013. 

(Full text in Appendix D). In its response, Treasury noted: (1) that the decision to 

top up pensions of certain hourly Delphi retirees, but not for salaried Delphi 

retirees, had sound commercial reasons; (2) that Treasury does not believe that the 

facts support the conclusions regarding the decision-making process and Treasury 

states that the report is based on interviews of the former Treasury [Auto Team] 

officials done without Treasury being present; and (3) Treasury was not given the 

executive summary of the report and therefore Treasury does not think they 

received the full draft report prior to publication. 

The report highlights the multiple factors which affected the decision-making 

process leading up to and through the GM bankruptcy and Treasury’s role in the 

decision to top up certain Delphi retirees. As the report makes clear, the 

consideration of commercial reasonableness was only one factor driving the 

decisions. The report’s conclusions are well-supported. SIGTARP has a rigorous 

quality control system designed to ensure that audits are performed and reports 

are issued in accordance with professional standards and legal and regulatory 

requirements. SIGTARP’s system of quality control was recently reviewed as 

part of the Council of the Inspectors General on Integrity and Efficiency external 

peer review program and assigned the highest rating. SIGTARP provided 

Treasury with a complete draft of the report including the conclusion. The 

executive summary is typically drafted after receiving Treasury’s response, and is 

a summary of the conclusion provided to Treasury, with no new information. 

Therefore, Treasury was missing no information in the report. 
TREASURY’S ROLE IN THE DECISION FOR GM TO PROVIDE PENSION PAYMENTS TO DELPHI EMPLOYEES 43

SIGTARP 13-003 August 15, 2013 

Appendix A – Objectives, Scope, and Methodology 

SIGTARP performed this audit under the authority of Public Law 110-343, as amended, which also 

incorporates the duties and responsibilities of inspectors general under the Inspector General Act of 

1978, as amended. We initiated this audit as part of our continuing oversight of TARP and in 

response to a request from former Congressman Christopher J. Lee in a letter dated August 3, 2010. 

We later received an additional request to conduct the audit by Congressman Michael R. Turner on 

March 3, 2011. The requesters asked SIGTARP to conduct a review related to GM’s decision to 

top up certain Delphi hourly retirees’ pension benefits. In response, the audit’s objectives were to 

review: 

 Treasury’s role in the decision for GM to top up the pension plan; and 

 whether the Administration or the Auto Task Force pressured GM to provide additional funding 

for the plan. 

The audit engagement was announced in November 2010 and we conducted our audit work from 

December 2010 through August 2013 in Washington, D.C., New York, N.Y., San Antonio, Texas, 

Chicago, Ill., Pittsburgh, Pa., and Detroit, Mich. This audit was conducted in coordination with 

GAO to avoid excessive duplication of efforts. GAO reviewed PBGC’s termination of Delphi’s 

hourly and salaried pension plans and other PBGC issues. The objectives of SIGTARP’s audit did 

not involve a review of PBGC’s termination of the Delphi pension plans. 

SIGTARP interviewed current and former officials from GM, Delphi, UAW, IUE, USW, the Delphi 

Salaried Retirees Association, PBGC, and Treasury. In addition to testimonial evidence, SIGTARP 

reviewed documents concerning the Auto Team, GM, Delphi, UAW, IUE, USW, PBGC, and the 

Administration, including emails, contracts, calendar appointments, letters, memorandums, written 

policies, procedures, guiding principles, press releases, public announcements, and written analyses. 

SIGTARP also reviewed court documents, including depositions and motions, filed in the GM and 

Delphi bankruptcies and in litigation brought by the Delphi Salaried Retirees Association. 

SIGTARP makes no recommendations in this report. Although Treasury remains invested in GM, 

and TARP’s Automotive Industry Financing Program is ongoing, the subject matter of this report 

concerns specific actions taken by Treasury’s Auto Team during 2008 and 2009 that are unlikely to 

occur again because the Auto Team disbanded. 

SIGTARP conducted this audit in accordance with generally accepted government auditing 

standards as prescribed by the Comptroller General of the United States. Those standards require 

that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable 

basis for findings and conclusions based on the audit objectives. SIGTARP believes that the 

evidence obtained provides a reasonable basis for the findings and conclusions based on the audit 

objectives. 
TREASURY’S ROLE IN THE DECISION FOR GM TO PROVIDE PENSION PAYMENTS TO DELPHI EMPLOYEES 44

SIGTARP 13-003 August 15, 2013 

Limitations on Data 

SIGTARP generally relied upon Treasury to identify and provide relevant documentation, including 

email communications and other Treasury records. To the extent that the documentation provided to 

SIGTARP by Treasury did not reflect a comprehensive response to SIGTARP’s documentation 

requests, SIGTARP’s review may have been limited. 

Use of Computer-Processed Data 

SIGTARP did not use any computer-processed data to complete this audit. 

Internal Controls 

SIGTARP did not perform an assessment of internal controls because such an assessment was not 

relevant to accomplishing the audit’s objectives. 

Prior Coverage 

SIGTARP previously performed an audit related to Treasury’s Automotive Industry Financing 

Program and GM’s restructuring, titled “Factors Affecting the Decisions of General Motors and 

Chrysler to Reduce Their Dealership Networks.”46 The audit reviewed, among other things, the role 

the Auto Team played in GM and Chrysler’s decision-making process regarding auto dealership 

closings. 

GAO has issued two related reports. In March 2011, GAO issued a report outlining the timeline 

leading to the Delphi pension top-ups and in November 2011 GAO issued a testimony statement 

based on the March 2011 timeline.47 In December 2011, GAO issued a report that addressed 

PBGC’s termination of Delphi’s hourly and salaried pension plans.48 In July 2012, GAO issued an 

additional testimony statement.49 

 

 

46 SIGTARP-10-008, “Factors Affecting the Decisions of General Motors and Chrysler to Reduce Their Dealership 

Networks,” 7/19/2010. 

47 GAO-11-373R, “Key Events Leading to the Termination of the Delphi Defined Benefit Plans,” 3/30/2011. GAO also 

published a testimony based on its March 2011 report, GAO-12-234T. 

48 GAO-12-168, “GM Agreements with Unions Give Rise to Unique Differences in Participant Benefits,” 12/15/2011. 

49 GAO also published a testimony based on its March 2011 and December 2011 reports, GAO-12-909T. 
TREASURY’S ROLE IN THE DECISION FOR GM TO PROVIDE PENSION PAYMENTS TO DELPHI EMPLOYEES 45

SIGTARP 13-003 August 15, 2013 

Appendix B – Acronyms and Abbreviations 

Acronym or Definition 

Abbreviation 

Auto Task Force Presidential Task Force on the Auto Industry 

Auto Team a group of Treasury officials responsible for overseeing GM’s restructuring, 

who reported to the Auto Task Force 

CEO chief executive officer 

CFO chief financial officer 

Chrysler Chrysler Group LLC 

COO chief operating officer 

Delphi Delphi Corporation 

DIP debtor in possession 

GAO Government Accountability Office 

GM General Motors Corporation 

IUE International Union of Electronic, Electrical, Salaried, Machine and 

Furniture Workers 

New GM General Motors Company – name of the company after GM’s bankruptcy 

was completed in July 2009 

Old GM General Motors Corporation 

PBGC Pension Benefit Guaranty Corporation 

SIGTARP Office of the Special Inspector General for the Troubled Asset Relief 

Program 

TARP Troubled Asset Relief Program 

TARP loan agreement Treasury’s Loan and Security Agreement 

Treasury U.S. Department of the Treasury 

UAW International Union, United Automobile, Aerospace, and Agricultural 

Implement Workers of America 

USW United Steelworkers of America 

VEBA Voluntary Employee Beneficiary Association plan 

 
TREASURY’S ROLE IN THE DECISION FOR GM TO PROVIDE PENSION PAYMENTS TO DELPHI EMPLOYEES 46

SIGTARP 13-003 August 15, 2013 

Appendix C – Audit Team Members 

This audit was conducted and the report was prepared under the direction of Bruce S. Gimbel, Acting 

Assistant Deputy Special Inspector General for Audit and Evaluation, Office of the Special Inspector 

General for the Troubled Asset Relief Program. 

Staff members who conducted the audit and contributed to the report include Simon Galed, Jonathan 

Lebruto, Eric Mader, John Poirier, and Samuel Withers. 

 
TREASURY’S ROLE IN THE DECISION FOR GM TO PROVIDE PENSION PAYMENTS TO DELPHI EMPLOYEES 47

SIGTARP 13-003 August 15, 2013 

Appendix D – Management Comments 
TREASURY’S ROLE IN THE DECISION FOR GM TO PROVIDE PENSION PAYMENTS TO DELPHI EMPLOYEES 48

SIGTARP 13-003 August 15, 2013 
SIGTARP 13-003 August 15, 2013 

SIGTARP Hotline 

If you are aware of fraud, waste, abuse, mismanagement, or misrepresentations associated with the Troubled 

Asset Relief Program, please contact the SIGTARP Hotline. 

By UOnline FormU: Uwww.SIGTARP.govU By Phone: Call toll free: (877) SIG-2009 

By Fax: (202) 622-4559 

By Mail: Hotline: Office of the Special Inspector General

for the Troubled Asset Relief Program

1801 L Street., NW, 3rd Floor 

Washington, D.C. 20220

Press Inquiries 

If you have any inquiries, please contact our Press Office: 

Troy Gravitt 

Director of Communications 

Troy.Gravitt@treasury.gov

202-927-8940 

Legislative Affairs 

For Congressional inquiries, please contact our Legislative Affairs Office: 

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Director of Legislative Affairs 

Joseph.Cwiklinski@treasury.gov

202-927-9159 

Obtaining Copies of Testimony and Reports 

To obtain copies of testimony and reports, please log on to our website at Uwww.SIGTARP.govU.