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75–807 PDF 2012

THE ADMINISTRATION’S AUTO BAILOUTS AND 

THE DELPHI PENSION DECISIONS: WHO PICKED 

THE WINNERS AND LOSERS? 

HEARING 

BEFORE THE

SUBCOMMITTEE ON TARP, FINANCIAL SERVICES 

AND BAILOUTS OF PUBLIC AND PRIVATE PROGRAMS 

OF THE

COMMITTEE ON OVERSIGHT 

AND GOVERNMENT REFORM 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

SECOND SESSION 

JULY 10, 2012 

Serial No. 112–178 

Printed for the use of the Committee on Oversight and Government Reform 

( 

Available via the World Wide Web: http://www.fdsys.gov 

http://www.house.gov/reform 

(II) 

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM 

DARRELL E. ISSA, California, Chairman 

DAN BURTON, Indiana 

JOHN L. MICA, Florida 

TODD RUSSELL PLATTS, Pennsylvania 

MICHAEL R. TURNER, Ohio 

PATRICK T. MCHENRY, North Carolina 

JIM JORDAN, Ohio 

JASON CHAFFETZ, Utah 

CONNIE MACK, Florida 

TIM WALBERG, Michigan 

JAMES LANKFORD, Oklahoma 

JUSTIN AMASH, Michigan 

ANN MARIE BUERKLE, New York 

PAUL A. GOSAR, Arizona 

RAU ́ L R. LABRADOR, Idaho 

PATRICK MEEHAN, Pennsylvania 

SCOTT DESJARLAIS, Tennessee 

JOE WALSH, Illinois 

TREY GOWDY, South Carolina 

DENNIS A. ROSS, Florida 

FRANK C. GUINTA, New Hampshire 

BLAKE FARENTHOLD, Texas 

MIKE KELLY, Pennsylvania 

ELIJAH E. CUMMINGS, Maryland, Ranking 

Minority Member 

EDOLPHUS TOWNS, New York 

CAROLYN B. MALONEY, New York 

ELEANOR HOLMES NORTON, District of 

Columbia 

DENNIS J. KUCINICH, Ohio 

JOHN F. TIERNEY, Massachusetts 

WM. LACY CLAY, Missouri 

STEPHEN F. LYNCH, Massachusetts 

JIM COOPER, Tennessee 

GERALD E. CONNOLLY, Virginia 

MIKE QUIGLEY, Illinois 

DANNY K. DAVIS, Illinois 

BRUCE L. BRALEY, Iowa 

PETER WELCH, Vermont 

JOHN A. YARMUTH, Kentucky 

CHRISTOPHER S. MURPHY, Connecticut 

JACKIE SPEIER, California 

LAWRENCE J. BRADY, Staff Director 

JOHN D. CUADERES, Deputy Staff Director 

ROBERT BORDEN, General Counsel 

LINDA A. GOOD, Chief Clerk 

DAVID RAPALLO, Minority Staff Director 

SUBCOMMITTEE ON TARP, FINANCIAL SERVICES AND BAILOUTS OF PUBLIC AND

PRIVATE PROGRAMS

PATRICK T. MCHENRY, North Carolina, Chairman 

FRANK C. GUINTA, New Hampshire, Vice 

Chairman 

ANN MARIE BUERKLE, New York 

JUSTIN AMASH, Michigan 

PATRICK MEEHAN, Pennsylvania 

JOE WALSH, Illinois 

TREY GOWDY, South Carolina 

DENNIS A. ROSS, Florida 

MIKE QUIGLEY, Illinois, Ranking Minority 

Member 

CAROLYN B. MALONEY, New York 

PETER WELCH, Vermont 

JOHN A. YARMUTH, Kentucky 

JACKIE SPEIER, California 

JIM COOPER, Tennessee 

(III) 

C O N T E N T S 

Page 

Hearing held on July 10, 2012 ............................................................................... 1 

WITNESSES 

The Honorable Christy Romero, Special Inspector General for The Troubled 

Assets Relief Program, United States Treasury Department 

Oral Statement ................................................................................................. 6 

Written Statement ............................................................................................ 9 

Mr. Ron Bloom, Former Member of the Automotive Task Force, United States 

Treasury Department 

Oral Statement ................................................................................................. 27 

Written Statement ............................................................................................ 29 

Mr. Matthew Feldman, Chief Legal Advisor, United States Treasury Department’s Auto Team 

Oral Statement ................................................................................................. 33 

Written Statement ............................................................................................ 35 

Mr. Harry Wilson, Former Member of the Automotive Task Force, United 

States Treasury Department 

Oral Statement ................................................................................................. 38 

Written Statement ............................................................................................ 40 

Mr. Todd Zywicki, Professor of Law, George Mason University 

Oral Statement ................................................................................................. 65 

Written Statement ............................................................................................ 67 

APPENDIX 

Report on GM Agreements With Unions Give Rise to Unique Differences 

in Participant Benefits ........................................................................................ 109 

Timeline of Interview Requests .............................................................................. 163 

Follow up questions from Delphi Audit Interviews .............................................. 165 

A prepared statement from The Honorable Elijah E. Cumings, a Member 

of Congress from the State of Md to The Honorable Darrell E. Issa, a 

Member from Congress from the State of California, Prepared Statement .... 166 

Harry Wilson Tapped By Teamsters To Rescue Ailing Trucking Company 

And Union Jobs .................................................................................................... 175 

The Honorable Patrick McHenry, a Member of Congress from the State 

of North Carolina, Opening Statement .............................................................. 177 

The Heritage Foundation Backgrounder, Auto Bailout or UAW Bailout? .......... 179 

The Honorable Paul Ryan, a Member of Congress from the State of Wisconsin, Prepared Statement ................................................................................ 193 

CAR Research Memorandum .................................................................................. 194 

(1) 

THE ADMINISTRATION’S AUTO BAILOUTS AND 

THE DELPHI PENSION DECISIONS: WHO 

PICKED THE WINNERS AND LOSERS? 

Tuesday, July 10, 2012, 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON TARP, FINANCIAL SERVICES, AND

BAILOUTS OF PUBLIC AND PRIVATE PROGRAMS, 

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM, 

Washington, D.C. 

The subcommittee met, pursuant to call, at 10:03 a.m., in Room 

2247, Rayburn House Office Building, Hon. Patrick T. McHenry 

[chairman of the subcommittee] presiding. 

Present: Representatives McHenry, Guinta, Ross, Quigley, 

Maloney, and Speier. 

Also Present: Representatives Turner, Kelly, Johnson, and 

Cummings. 

Staff Present: Will L. Boyington, Majority Staff Assistant; Molly 

Boyl, Majority Parliamentarian; Drew Colliatie, Majority Staff Assistant; John Cuaderes, Majority Deputy Staff Director; Adam P. 

Fromm, Majority Director of Member Services and Committee Operations; Linda Good, Majority Chief Clerk; Tyler Grimm, Majority 

Professional Staff Member; Christopher Hixon, Majority Deputy 

Chief Counsel, Oversight; Jaron Bourke, Minority Director of Administration; Kevin Corbin, Minority Deputy Clerk; Ashley 

Etienne, Minority Director of Communications; Devon Hill, Minority Staff Assistant; Jason Powell, Minority Senior Counsel; Brian 

Quinn, Minority Counsel; Safiya Simmons, Minority Press Secretary; and Davida Walsh, Minority Counsel. 

Mr. MCHENRY. The Committee will come to order. 

This hearing is entitled The Administration’s Auto Bailouts and 

the Delphi Pension Decisions: Who Picked the Winners and the 

Losers? 

We have a distinguished panel before us today, but it is always 

the order of this Subcommittee by reading the Oversight and Government Reform Committee’s mission statement. The Oversight 

Committee mission statement: We exist to secure two fundamental 

principles: first, Americans have a right to know that the money 

Washington takes from them is well spent and, second, Americans 

deserve an efficient, effective government that works for them. 

Our duty on the Oversight and Government Reform Committee 

is to protect these rights. Our solemn responsibility is to hold government accountable to taxpayers, because taxpayers have a right 

to know what they get from their government. We will work tireVerDate Aug 31 2005 13:48 Sep 19, 2012 Jkt 000000 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 C:\DOCS\75807.TXT APRIL
2 

lessly in partnership with citizen watchdogs to deliver the facts to 

the American people and bring genuine reform to the Federal bureaucracy. 

And that is what this hearing is about, the auto bailout decision 

and the winners and the losers that resulted from this. 

We have a distinguished panel here today, and I will begin by 

recognizing myself for five minutes. 

Today’s hearing is about the transparency in government and 

fulfilling this Committee’s commitment to provide the American 

people with answers and accountability. When Congress passed the 

Troubled Asset Relief Program, known as TARP or the bailouts, in 

October of 2008, at the height of the financial crisis, it was designed with a specific purpose: to take toxic assets off the books of 

large banks and financial institutions. 

While today’s intention is not to re-litigate TARP or the bailouts, 

it is important to discuss their consequences and, indeed, there are 

consequences. When the Government orchestrates a bailout, it is 

clear that there will be both winners and losers. 

While some of my colleagues will spend a great deal of time talking about bailout winners, it is unlikely that you will hear them 

spend much time talking about the bailout losers. 

Although their losses were significant, we are not here to discuss 

bond holders, who took a haircut in the auto bailout. We are here 

today to focus on non-unionized retirees at Delphi, who watched 

part of their pensions disappear while some of their coworkers were 

made whole. Those coworkers whose pensions were left intact were 

members of the United Auto Workers Union and they are clear 

winners of the auto bailouts. 

A recent study from one of today’s witnesses, George Mason University law professor Todd Zywicki, calculated that United Auto 

workers received approximately $26 billion from taxpayers via the 

auto bailouts that they would not have received had they been 

treated according to standard bankruptcy principles. Mr. Zywicki is 

a witness here today and we look forward to hearing from him. 

When the Pension Benefit Guaranty Corporation terminated the 

pensions of all Delphi retirees, General Motors agreed to top-up, or 

make whole, their obligations to unionized workers. At the same 

time, the non-unionized workers took significant cuts in their pensions. 

Despite the fact that GM’s promise to the Union could have been 

thrown out in bankruptcy, like so many of GM’s other non-unionized commitments were, the Union agreement was kept in place. 

That was a decision made by the Government. 

The Special Inspector General for the Troubled Asset Relief Program has been seeking answers to questions about the irregularities of the Delphi pension decisions. Ms. Romero is a witness here 

today as the Special Inspector General for TARP. 

We are here today because for over a year three of the key figures involved in the GM and Chrysler bailouts have refused to 

meet with the Special Inspector General. I am grateful that they 

showed today, and we are very interested in hearing their testimony and the reasons for not meeting with the Special Inspector 

General. 

3 

On May 9th, the Special Inspector General notified the Committee that three former Obama Administration officials before us 

today, Mr. Bloom, Mr. Feldman, and Mr. Wilson, had been uncooperative with the Special Inspector General’s audit. These three 

individuals come from diverse backgrounds and possess different 

expertise, but together represent leading figures from President 

Obama’s Auto Task Force. All three of these individuals made pivotal decisions which are projected to cost taxpayers $23 billion and 

have left many Delphi retirees with drastically reduced pensions, 

while preserving full pensions for Delphi’s unionized retirees. 

These are the consequences of the bailouts. 

So, with that, I would recognize the Ranking Member, Mr. 

Quigley of Illinois, for five minutes, and following that I will recognize Mr. Turner from Ohio for five minutes for an opening statement, and if the gentleman would like five additional minutes, we 

would be willing to grant that. 

Mr. QUIGLEY. Thank you, Mr. Chairman. I appreciate that. I am 

sure it won’t be necessary in today’s hearing. I want to thank the 

Chairman for holding this hearing. 

No one understands or appreciates the importance of transparency and strong oversight in government more than members of 

this Committee. Congress created the Office of Special Inspector 

General for the Troubled Asset Relief Program, SIGTARP, and 

members of Congress asked SIGTARP to perform its Delphi audit. 

Unfortunately, SIGTARP’s audit has been stalled because they 

have not been able to interview three of the witnesses here today, 

Ron Bloom, Matt Feldman, and Harry Wilson, who are all former 

members of the Administration’s Auto Task Force. 

In preparation for this hearing, the Democratic staff spoke with 

all three individuals and discovered they are willing to be interviewed by SIGTARP. This is a positive development and I am glad 

that SIGTARP will now be able to complete its audit. 

SIGTARP’s audit should complement the thorough work GAO 

has already completed on the Delphi pension issue. GAO published 

its findings on Delphi pensions in December of 2011. The GAO concluded that ‘‘Treasury deferred to GM’s business judgment and that 

Treasury did not explicitly approve or disapprove of GM providing 

top-ups.’’ Those are conclusions supported by the evidence gathered 

by GAO. 

Today I am looking forward to hearing an update from SIGTARP 

on the progress of its audit, and I will be eager to read its final 

report upon completion. 

But the most important conclusion that should be drawn from 

the Auto Task Force actions is that they helped save more than a 

million American jobs. As President Obama recently said, I was 

betting on the American worker and I was betting on American industry, and three years later the American auto industry is coming 

roaring back. 

Thank you, Mr. Chairman. One second. 

[Pause.] 

Thank you, and I yield back. 

Mr. MCHENRY. I thank the Ranking Member. In the Ranking 

Member’s opening statement he suggested what we received in an 

email at 5:46 yesterday from the Minority staff, that you have a 

4 

commitment from the three Auto Bailout Task Force members 

today that they will meet with SIGTARP and fulfill that request 

that has been longstanding with them, and I thank the Ranking 

Member for getting those commitments and I thank the Minority 

staff for getting those commitments because it has been well over 

a year in the works of SIGTARP trying to get Mr. Bloom, Mr. Feldman, and Mr. Wilson to submit themselves for depositions. 

With that, I would like to enter into the record the time line of 

interview requests from SIGTARP, beginning on May 5th of 2011 

and going through May 16th of 2012, including an email we received last night at 9:40 p.m. from SIGTARP explaining that the 

three witnesses in question had no communications of any sort, indicating that they will make themselves available for the requested 

interviews in conjunction with our audit. 

So without objection, those two documents will be entered into 

the record. 

Mr. MCHENRY. Again, this is bipartisan work and I appreciate 

the willingness, Mr. Quigley, of you and Minority staff and counsel 

to get those commitments, so we are hopeful that transparency is 

served from that, and I know the gentleman has been very active 

on those issues of transparency and government. So thank you. 

With that, I will recognize Mr. Turner of Ohio, who has been a 

leader on the subject matter of this hearing, for five minutes for 

the purposes of an opening statement. 

Mr. TURNER. Thank you, Mr. Chairman. I would like to thank 

you and Chairman Issa and, of course, Chairman Jordan for the 

work that has been done on this issue and for holding this important hearing today. 

Today’s hearing continues our efforts to uncover why the Treasury Department, the Auto Task Force, and the Pension Benefit 

Guaranty Corporation chose to terminate the hard-earned pensions 

of Delphi salaried retirees in the course of its multibillion dollar 

taxpayer-funded bailout of General Motors. 

Contrary to what the Vice President said recently on one of his 

campaign stops, that these retirees are doing fine, they are not 

doing fine. Thousands of retirees lost their pensions, many of which 

are in my community in Dayton, Ohio, as a result of the Administration’s decisions during the auto bailout. 

Appearing on CNN this Sunday, White House Chief of Staff Jack 

Lew proclaimed that this Administration is the most transparent 

ever. Well, not on this issue, and we are going to find out why 

today. 

Understandably, I have serious concerns about how this Administration, including the three members of the Auto Task Force we 

have before us, have continued to stonewall, provided silence on 

these issues, and repeated failures to disclose information that are 

critical to the issues that have affected almost 20,000 people across 

the Country and that was done with taxpayers’ dollars. This is not 

a venture that was undertaken with your own money, it was undertaken with taxpayers’ money. And the openness that this Administration promised needs to be enforced. 

In part, we are here today because the three former Auto Task 

Force members refused to meet with, speak to, or testify before the 

Special Inspector General for the TARP program. It is my hope 

5 

that we will shed light on who within the Administration made the 

decision to cut the hard-earned retirement benefits of these Delphi 

salaried retirees and that perhaps the Administration’s policy of 

denying access to this information, hiding behind backroom deals 

stops. 

I want to thank Christy Romero and SIGTARP for being here 

today and for your honesty in your letter. You wrote us a letter 

that said that SIGTARP believes that the Auto Task Force played 

a role in the pension decision and these individuals’ failure to 

speak to SIGTARP on this issue poses a significant obstacle to 

SIGTARP’s ability to complete this audit. And then you acknowledged that you didn’t have an ability to subpoena these three gentlemen to make them testify. 

You also acknowledge in your written testimony that you commenced this as a result of several members of Congress, including 

myself, asking you to undertake the audit to get questions answered about how this process went forward. 

Mr. Bloom, Mr. Feldman, and Mr. Wilson, the happy train of silence and refusing to answer questions ends today. You have been 

summoned before Congress because of your refusal to answer 

SIGTARP’s questions because they didn’t have the ability to compel 

you. You are here today because you know we do. You didn’t come 

here because you believed you wanted to share information with 

Congress; you were brought here because of your refusal to share 

the information that the American public is entitled to hear as a 

result of taxpayers’ dollars that were used in the auto bailout of 

General Motors and thousands of people that lost their pensions. 

There is an accountability here. 

Now, you are going to take an oath when you testify today. This 

is not a political proceeding; this is a legal proceeding. You will be 

testifying; you will not be giving speeches. That is why you are 

sworn in. It is called testifying before Congress. And in that I want 

you to rise to the level of understanding what the obligation is. It 

means that if you don’t speak truthfully in front of us, that obviously you can be subject to perjury or disbarment or other types 

of consequences, because Congress takes people appearing before 

us seriously. 

Now, we are hearing and we are looking forward to hearing from 

you, that you are now willing to cooperate, and I want you to also 

be aware that during that process of supposedly cooperating with 

SIGTARP, we have the ability to continue to enforce it. We have 

the ability to bring you in for depositions under oath, bring you 

back before Congress again. If the information you provide is not 

complete and is not thorough, you will continue to have your happy 

train of silence met here with Congress, where the American people require answers, because you served in a public position with 

public dollars and public obligations, and today we are going to 

have public questions. 

Thank you, Mr. Chairman. 

Mr. MCHENRY. I thank the gentleman from Ohio. 

Members will have seven days to submit opening statements for 

the record. 

We will now recognize our panel of witnesses today. 

6 

The Honorable Christy Romero is the Special Inspector General 

for the Troubled Asset Relief Program, United States Department 

of Treasury; Mr. Ron Bloom, Mr. Matthew Feldman, and Mr. Harry 

Wilson are all former members of the Automotive Task Force at 

the United States Department of Treasury; Ms. Nikki Clowers is 

the Director of Financial Markets and Community Investment at 

the Government Accountability Office. Thank you for your service. 

Mr. Todd Zywicki is a professor of law at George Mason University 

School of Law and a senior scholar at the Mercatus Center. 

As you all well know, this Committee swears in witnesses before 

their testimony, so if you would all please rise and raise your right 

hands, you will be sworn before your testimony. Raise your right 

hand. 

Do you solemnly swear or affirm that the testimony you are 

about to give will be the truth, the whole truth, and nothing but 

the truth? 

[Witnesses respond in the affirmative.] 

Mr. MCHENRY. You may be seated. 

Let the record reflect that the witnesses answered in the affirmative. 

You all are well practiced at testifying before Congress. As you 

well know, we have the light system here. Green means, as we 

know from traffic schools or, if you have tickets, repeated traffic 

schools, green means go; yellow means hurry up; and red means 

stop. You have five minutes to summarize your testimony in order 

to allow for discussion and questions afterwards. 

We will begin with Ms. Christy Romero for five minutes. 

WITNESS STATEMENTS 

STATEMENT OF THE HONORABLE CHRISTY ROMERO 

Ms. ROMERO. Chairman McHenry, Ranking Member Quigley, 

and members of the Committee, I am very honored to appear before you today and very much want to thank you for holding this 

hearing. 

SIGTARP was created to protect the interest of those who funded 

TARP, and that is the American taxpayers, and an important part 

of SIGTARP’s mission is to bring transparency to decisions that 

were made by the Government in the wake of the financial crisis. 

By examining the past, we can take advantage of lessons learned 

so that we can better protect taxpayers in the future. In addition, 

taxpayers have an absolute right to know the decisions that went 

into how TARP dollars were spent. 

The Government provided approximately $80 billion in TARP 

funds in the auto bailout, and SIGTARP has brought transparency 

to decisions made by Treasury and the Auto Task Force in the auto 

bailout. We seek to bring greater transparency to GM’s decisions 

to provide funds to top-up the pensions of certain hourly workers 

who were at Delphi Corporation, who were formerly employed by 

GM, and who were represented by one of three unions. 

We are conducting an audit review of Treasury’s role in that decision and whether the Auto Task Force pressured GM to provide 

additional funding for those pensions. We have closely coordinated 

with GAO, who conducted similar, but not duplicative, reviews. 

7 

We have experienced significant delay by the refusal to be interviewed by the three former Treasury officials who served on the 

Auto Team: Mr. Bloom, Mr. Wilson, and Mr. Feldman. The former 

co-head of the Auto Team, Mr. Rattner, only agreed to be interviewed this May. These individuals were heavily involved in the 

TARP assistance to GM and GM’s restructuring, and have knowledge about the pension issues. 

We first requested from Treasury interviews of these former 

Treasury officials in May 2011. Months later Treasury told us that 

the individuals would not meet with SIGTARP, while other members of the Auto Team would. We contacted these individuals directly while reviewing documents and interviewing other witnesses. 

We asked Treasury to speak to these former Treasury officials 

about the importance of cooperating with SIGTARP. When it became clear that the individuals would not agree to be interviewed, 

we informed this Committee. 

The lack of cooperation by these former Treasury officials has 

significantly protracted SIGTARP’s review. We were forced to look 

elsewhere for the information. While we continued to request their 

cooperation, we reviewed more than 100,000 pages of documents, 

but those documents do not provide a complete picture. We often 

find in our audits a lack of detailed and complete documentation 

of decision-making related to TARP. Many discussions and decisions are made in meetings and telephone calls; interviews of government officials are essential to gain a complete picture. Documents such as emails simply do not tell the whole story. 

We interviewed others who might have information. We interviewed 43 current and former officials from GM, Delphi, three 

unions, PBGC, the Auto Team, and DSRA, which represents certain Delphi salaried workers whose pensions GM did not top-up. 

Information from these witnesses and documents led SIGTARP to 

determine that Mr. Wilson, Mr. Feldman, and Mr. Bloom were the 

government officials who were involved in the Delphi pension decision and discussions. 

SIGTARP does not have the ability to compel witness testimony. 

There is no valid reason for these former Treasury officials to 

refuse to be interviewed. Treasury suggested that SIGTARP’s interviews are unnecessary because GAO already determined Treasury’s 

role and because Mr. Wilson and Mr. Feldman were deposed in GM 

and Delphi’s bankruptcies. GAO did not conduct interviews of 

Treasury’s role or whether there was any pressure by the Auto 

Team, instead deferring to SIGTARP. Also, we have read the depositions and still find it necessary to conduct the interviews. 

The refusal by these former Treasury officials to speak to 

SIGTARP poses a significant obstacle to our ability to complete the 

audit and to taxpayers gaining a full understanding of the discussions and considerations in GM’s decision. Our need to speak with 

them is significant. That is balanced with the fact that there is no 

hardship for these individuals to come talk with us. Other important and very busy government officials have been interviewed by 

SIGTARP, including Secretary Geithner, former Secretary Paulson, 

Chairman Bernanke, and former Chairman Bair. 

Also, and this is very important, it sets a dangerous precedent 

if former Treasury officials who worked on TARP programs are alVerDate Aug 31 2005 13:48 Sep 19, 2012 Jkt 000000 PO 00000 Frm 00011 Fmt 6633 Sfmt 6633 C:\DOCS\75807.TXT APRIL
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lowed to evade SIGTARP’s oversight and refuse to be interviewed. 

Such a precedent could potentially impact all of our ongoing and 

future audits. Most of the government officials who worked on 

TARP have since left government service. 

I want to thank the Committee for always supporting SIGTARP, 

and I am available to answer any questions that you have. 

[Prepared statement of Ms. Romero follows:] 

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Mr. MCHENRY. Thank you, Ms. Romero, and thank you for your 

service to our Government. 

Mr. Bloom, you are recognized for five minutes. 

STATEMENT OF RON BLOOM 

Mr. BLOOM. Mr. Chairman and members of the Committee, good 

morning. While I am here today at your request in my capacity as 

a former Treasury official, I left the Treasury Department in February of 2011 and left government service in September of 2011. 

I am, therefore, not in a position to discuss events since February 

2011 or anything concerning possible future actions. 

During the period of my government service, I testified regarding 

the Treasury’s automotive investments in front of the Senate Banking Committee on June 10th, 2009; the House Judiciary Commercial and Administrative Law Subcommittee on July 21st, 2009; the 

Congressional Oversight Panel on July 27th, 2009, and February 

25th, 2010; and the House Subcommittee on Regulatory Affairs, 

Stimulus Oversight, and Government Spending on June 22nd, 

2011. In addition, I participated in numerous meetings and discussions, and helped prepare and deliver written and oral responses 

to countless inquiries of SIGTARP, GAO, Congressional Oversight 

Panel, and individual elected officials and staff from both the 

House of Representatives and the Senate. 

I understand that the Committee has taken an interest in issues 

regarding the pensions of certain former employees of the Delphi 

Corporation. As you may know, I was named as a defendant in a 

lawsuit in federal court regarding that issue. On September 2nd, 

2011, I was dismissed from the case, as was Treasury and the 

President’s Auto Task Force. 

When President Obama took office, the American automobile industry was on the verge of collapse. In the year prior, the industry 

lost over 400,000 jobs and, as 2008 came to a close, both GM and 

Chrysler were running out of cash and faced the imminent prospects of uncontrolled liquidations. The collapse of the U.S. auto industry posed a substantial risk to financial market stability and 

the economy as a whole. Therefore, the previous Administration 

provided $24.8 billion to the auto industry. 

After studying the restructuring plan submitted by GM and 

Chrysler, President Obama decided that he would not commit any 

additional taxpayer resources to these companies without fundamental change and accountability. He rejected their initial plans 

and demanded that they develop more ambitious strategies to reduce cost and increase efficiencies. 

However, President Obama also recognized that failing to stand 

behind these companies would have far-reaching consequences. GM 

and Chrysler were supported by a vast network of auto suppliers 

which employed three times as many workers and depended on the 

automaker’s business to survive. An uncontrolled liquidation of a 

major automaker would have had a cascading effect throughout the 

supply chain, causing failures and job losses on a much larger 

scale. Because Ford and other auto companies depended on those 

same suppliers, the failure of the suppliers could have caused those 

auto companies to fail as well. Also at risk were the thousands of 

28 

auto dealers across the Country, as well as small businesses in 

communities with concentrations of auto workers. 

It was this interdependence that led some experts at the time to 

estimate that at least one million jobs could have been lost if GM 

and Chrysler went under. Widely respected economist Mark Zandi 

recently stated that 2.5 million jobs were at risk. These were grave 

risks at a time when our economy was losing 750,000 jobs per 

month; credit markets were still not functioning properly; bank 

lending had contracted substantially and there was no chance of 

securing private lending on a scale sufficient to save GM and 

Chrysler. 

To avoid uncontrolled liquidations, the President decided to give 

GM and Chrysler a chance to show that they could take the tough 

and painful steps to become viable companies. Working with their 

stakeholders and the President’s Auto Task Force, both GM and 

Chrysler underwent fair and open bankruptcies. This process required deep and painful sacrifices from all stakeholders, including 

workers, retirees, suppliers, dealers, creditors, and the countless 

communities that rely on a vibrant American auto industry. The 

steps that the President took avoided a catastrophic collapse of the 

entire auto industry and kept hundreds of thousands of Americans 

working. 

Today the American automobile industry is mounting a comeback. In 2011, GM, Chrysler, and Ford increased their U.S. market 

share for the second year in a row. Exports of motor vehicles in 

2011 increased by 21 percent over 2010. This increase in market 

share and exports has translated into more American jobs. Since 

2009, the auto industry has added over 233,000 jobs, the fastest 

pace of job growth in the auto industry since 1997. In addition, 

since 2009, GM and Chrysler have announced investments totaling 

over $11.5 billion. 

In a better world, the choice to intervene in GM and Chrysler 

would not have had to be made. But amidst the worst economic crisis in a generation, the Administration’s decisions avoided devastating liquidations and provided the American auto industry a 

new lease on life and a real chance to succeed. 

I am prepared to do my best to answer your questions. 

[Prepared statement of Mr. Bloom follows:] 

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Mr. MCHENRY. Mr. Feldman, you are recognized for five minutes. 

STATEMENT OF MATTHEW FELDMAN 

Mr. FELDMAN. Thank you. 

Mr. Chairman and members of the Committee, I understand that 

I have been requested to appear today before you to discuss my 

role with the Treasury Department’s Auto Team, which I joined in 

March of 2009 as chief legal advisor and on which I served until 

August of 2009. 

The Treasury Department recruited me to join the Auto Team 

from my career as an attorney in private practice, where I specialized in reorganizing and restructuring large businesses, not unlike 

the American automobile manufacturers that were in significant financial distress at that time in 2009. 

I believe that the work of the Auto Team contributed to a successful effort to avert disastrous consequences to both the American automobile industry and the American economy as a whole. I 

am fiercely proud of my service and I am prepared today to assist 

the Committee in reaching a complete understanding of the Auto 

Team’s work during what was a difficult time and an unprecedented challenge for all involved. 

Although it is wonderful to see the dramatic recovery of the automobile manufacturers and the thousands of American jobs that 

were saved as a result of our work, I am mindful that the 

restructurings that the Auto Team worked on required many 

Americans to make great personal sacrifices. As a result of the Delphi Corporation bankruptcy, for example, Delphi and the Pension 

Benefit Guaranty Corporation were forced to terminate Delphi’s 

pension plans, which means that there are Delphi retirees who, unfortunately, will collect less than their full pension benefits. 

Delphi had underfunded its hourly pension plan and, later, its 

salaried pension plan well prior to filing for bankruptcy protection, 

a situation that ultimately threatened General Motors’ future success as it exited from its own bankruptcy. Because General Motors 

viewed a well-motivated workforce at its largest supplier as critical 

to ensuring an uninterrupted supply chain, General Motors made 

the commercially reasonable and necessary decision to honor certain top-up agreements it entered into in 1999 with the United 

Auto Workers and certain other unions when Delphi was first spun 

off from General Motors. Sadly, many of Delphi’s employees did not 

have top-up agreements with General Motors, and some of those 

employees will face a shortfall in their pension payments as the 

PBGC assumes responsibility for their plans. 

The Auto Team agreed that honoring the top-up agreements was 

a prudent business decision, and we believed that doing so would 

protect both General Motors and the American taxpayers’ collective 

investment in the company. We supported General Motors’ business decision and I remain convinced today that it was the best 

course of action available at that time. 

While I am pleased that General Motors and other American 

automobile manufacturers have become successful, profitable contributors to our economy, I recognize that the restructuring process 

imposed painful, but necessary, sacrifices on many of Delphi’s 

stakeholders. As a bankruptcy practitioner and a restructuring speVerDate Aug 31 2005 13:48 Sep 19, 2012 Jkt 000000 PO 00000 Frm 00037 Fmt 6633 Sfmt 6633 C:\DOCS\75807.TXT APRIL
34 

cialist, I have seen similar circumstances all too often. It is, without a doubt, one of the most difficult, disheartening aspects of my 

job, and I have only the deepest sympathy for everyone affected. 

Prior to my invitation to testify here today, I received a request 

from the Office of the Special Inspector for Troubled Asset Relief 

Program that I participate in an interview. I attempted to determine what further information SIGTARP believed it required to 

complete its audit because my memory concerning specific details 

was considerably better in July 2009, when I gave a lengthy deposition in connection with the Delphi Chapter 11 proceedings that 

covered many of the topics concerning my role on the Auto Team. 

It was my hope that the transcript of that deposition, along with 

the extensive documentary record SIGTARP has undoubtedly assembled, would be sufficient to meet SIGTARP’s needs. After several requests, SIGTARP provided a list of six topics on which it desired further information, but it appears that SIGTARP contacted 

the Subcommittee before I had an opportunity to respond. In any 

event, I am here today prepared to answer any questions the Subcommittee has concerning my role on the Auto Team, which I will 

do to the best of my ability. 

[Prepared statement of Mr. Feldman follows:] 

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Mr. MCHENRY. Thank you. 

Mr. Wilson. 

STATEMENT OF HARRY WILSON 

Mr. WILSON. Chairman McHenry, Ranking Member Quigley, and 

members of the Subcommittee, thank you for the opportunity to 

testify before you today. 

I am here to report, at your request, on the Government’s efforts 

in 2009 to avoid a catastrophic collapse of the U.S. automotive industry and specifically regarding its investments in General Motors. My testimony today is in my capacity as a former Treasury 

official, which I left in early August 2009, so that is the limit of 

my direct knowledge. 

First, some brief background on myself. I have spent the vast 

majority of my career in the private sector, working at some of the 

best financial firms in the Country with a focus on fixing troubled 

businesses. As the late 2008 financial crisis deepened and the 

Bush, and then Obama, Administrations began to intervene 

through TARP, I felt it was critical that Treasury officials had the 

restructuring skills that I had in order to minimize the cost to taxpayers. So although I am a lifelong Republican, due to my desire 

to serve my Country, I joined the Auto Team in early March 2009 

and focused primarily on General Motors. After General Motors 

exited bankruptcy, I wrapped up my work and left Treasury. 

I have continued my turnaround work both in the private sector 

and the public sector since then. For example, in 2010 I was Republican nominee for New York State comptroller. I ran on a platform of seeking to fix New York State’s broken government, and 

though I lost in a very close race with nearly 2.1 million votes, I 

was the top Republican vote-getter in New York in 2010. 

Shortly after that I founded my firm, The MAEVA Group, LLC, 

which is focused on fixing problem companies. 

Now let me turn to the auto rescue. In late 2008, early 2009, GM 

and Chrysler were on the verge of collapse due to years of mismanagement and the financial crisis. Unfortunately, the capital 

markets were in the middle of an unprecedented shutdown, obliterating any possibility of private financing. This lack of private financing and the substantial interdependency of the American automotive industry meant the following: one, that absent tens of billions of dollars, GM and Chrysler would liquidate; two, their liquidation would have meant the failure of many of their suppliers; 

and, three, the widespread failure of suppliers would have threatened Ford, which is why Ford never opposed our work. 

It is only because of this unique confluence of events, this once 

in a lifetime storm that threatened to destroy an essential American industry that I, a staunch fiscal conservative, reluctantly came 

to accept that the only alternative, the least bad option, was emergency financial support, the path initiated by the Bush Administration. 

The Obama Administration’s decision to pursue this work in a 

commercial manner, as they defined, meant that we would seek the 

best outcome with the minimum potential cost to the taxpayer. 

The results of that work speak for themselves. GM had its most 

profitable year ever in 2011, even though auto sales have still not 

39 

fully recovered to pre-crisis levels; it has grown market share and 

now has a fortress balance sheet. 

Tragically, the human cost to these massive restructurings were 

significant, and that is the sad part of any restructuring. But absent the Auto Team’s work, the human cost and the cost to the 

American taxpayer would have been far, far greater. 

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 the detailed decisions that needed to be made to implement 

those broad strokes. 

This approach applied to the same sad story of Delphi. When 

Delphi came to the Auto Team’s attention, 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. 

To resolve Delphi’s loan bankruptcy, GM management agreed to 

various measures, including providing capital and honoring the 

top-up agreements GM had made in 1999. Other commitments, including pensions for salaried employees or other unionized employees not covered by top-up agreements, were not accorded additional 

consideration. 

Consistent with the rest of our work, Treasury provided general 

input, but not specific decisions to these matters, as was recognized 

in the GAO finding in December 2011. 

So, in closing, the restructuring world is a difficult one, filled 

with painful choices to minimize the human and financial costs, 

while maximizing the probability of a company’s long-term success. 

The human costs of the GM rescue were deep, significant, and tragic, and those who have suffered losses of any kind have my deepest 

sympathies. But as great as those costs were, they paled in comparison to the costs of inaction. 

As a fiscal conservative, I wish our work had not been necessary. 

As an American citizen, I wish that more companies operated with 

better management so that these tragic situations would not happen as frequently as they do. But amidst the worst financial crisis 

in the past 75 years, the actions of the Bush and Obama Administrations avoided devastating liquidations and provided the American auto industry a second chance. 

And then one last point on testifying. I would disagree with the 

characterization of my particular willingness to testify. Because I 

believe as SIGTARP now knows, I have committed to both the Majority staff last Thursday, the Minority staff on Sunday, and 

through Treasury to SIGTARP officials themselves to testify and 

would be happy to do so. 

With that, I look forward to your questions. 

[Prepared statement of Mr. Wilson follows:] 

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Mr. MCHENRY. We certainly appreciate that willingness that has 

been just over a year in the making. But we are grateful for it 

nonetheless, as well as the other two members of the Task Force, 

even if it is at the eleventh hour. And we are grateful, as I said, 

for the Ranking Member and his good work and the Minority staff’s 

good work in securing those commitments the day before this important hearing. We are simply just trying—and thank you for submitting that for the record; that is going to be one of my records. 

If we could submit for the record whether or not the three members of the Task Force represented today will submit themselves 

for that interview with SIGTARP. The outline that I have of extensive requests from SIGTARP to you three gentlemen, Mr. Bloom, 

Mr. Feldman, and Mr. Wilson, is extensive. So pardon me for not 

relieving you of the burden of testifying before Congress when we 

get that commitment at 5:46 the day before a 10 a.m. hearing. But 

I think we are going to continue with this and expect some questions on that, as I am sure you do. 

Mr. Wilson, Mr. Feldman, thank you for your willingness to testify on the particular issue of this hearing. And, Mr. Bloom, we will 

direct some questions to you to see if you will be willing to submit 

some testimony for that. 

With that, Ms. Clowers, from the Government Accountability Office, you are recognized for five minutes. 

STATEMENT OF NIKKI CLOWERS 

Ms. CLOWERS. Thank you, Chairman McHenry, Ranking Member 

Quigley, and members of the Subcommittee. 

I appreciate your having me here today to speak about the termination of Delphi’s pension plans. In my comments today I will discuss two issues: first, the key events leading to the termination of 

Delphi’s pension plans and, two, the role of the Department of 

Treasury in those events. My comments are based on our recent reports on these issues. 

First, the termination of Delphi’s pension plans and the provision 

of retirement benefit supplements, also called top-ups, to some Delphi employees, but not others, culminated from a complex series of 

events involving Delphi, GM, various unions, Treasury, PBGC that 

stretched back to 1999. In that year, GM spun off Delphi as an 

independent company. At that time, GM agreed to provide top-ups 

to collectively bargain hourly employees, meaning that if something 

went wrong with these pension plans for these employees after Delphi became a separate company, GM would ensure these employees 

received their promised benefits. 

No such agreement was negotiated for salaried employees. When 

these agreements were negotiated, Delphi’s pension plan for the 

hourly workers was not fully funded. In contrast, the plan for the 

salaried workers was fully funded. 

Delphi filed for bankruptcy in 2005 and, as part of its initial reorganizational plan made public in 2007, the company planned to 

maintain its pension plans. But by this time both the salaried and 

union pension plans were underfunded. As part of Delphi’s exit 

from bankruptcy, GM agreed to take on some liabilities from Delphi’s hourly pension plans in two phases. However, by the time GM 

45 

declared bankruptcy in June 2009, it had only taken on the first 

phase of the plan’s liabilities. 

GM did agree with the UAW, however, as part of its restructuring, that GM would honor the previously negotiated top-ups. 

Salaried Delphi employees and Delphi employees who belong to 

other unions were not included in this agreement. 

Employees of these other unions, along with Delphi salaried employees, protested this outcome in bankruptcy court. To maintain 

its supply chain, GM agreed to top-up the pensions of two other 

unions, as their consent was needed to resolve Delphi’s bankruptcy. 

However, they did not agree to do so for the salaried workers, and 

this is where the situation stands today. 

I would now like to discuss Treasury’s role in these events. 

Treasury’s role stemmed from its position as the primary lender to 

GM in its bankruptcy. As the primary lender, GM played a significant role in helping GM resolve the Delphi bankruptcy in terms of 

GM’s interest. However, with regard to GM decisions about Delphi 

pension plans, court filings and statements from GM and Treasury 

officials suggest that Treasury deferred to GM’s business judgment. 

Nevertheless, according to the records and Treasury officials, 

Treasury agreed with GM’s assessment that the company could not 

afford the potential cost of sponsoring the Delphi hourly plan itself 

upon emerging from bankruptcy. Treasury also agreed with GM’s 

rationale not to assume the Delphi salaried plan since that plan 

had been fully funded when GM transferred it to Delphi in 1999. 

As for the top-ups, Treasury officials said that while Treasury 

did not explicitly approve or disapprove of GM’s agreement to 

honor previously negotiated top-up agreements with some unions, 

it agreed with GM’s conclusion that it had solid commercial reasons 

to enter into such agreement. In particular, Treasury stated that 

its aim was to ensure that new GM would only assume the liabilities of old GM that were commercially necessary, and that due to 

new GM’s continued dependency on the UAW workforce and the 

workforce of other unions, Treasury officials felt GM had solid commercial reasons to agree to the top-ups for these retirees. Also, 

Treasury stated that GM was never obligated to provide top-ups to 

the salaried or other retirees. 

In conclusion, Mr. Chairman, when companies go bankrupt and 

leave their plans with large, unfunded liabilities, some participants 

will not get their full benefits promised to them by their employer. 

This, unfortunately, is not unusual. What makes this case more 

unusual is the series of events that unfolded over the last decade 

that lead us here today and the number of players, including Delphi, PBGC, the unions, GM and Treasury, and the roles they 

played. 

Mr. Chairman, Mr. Ranking Member, and members of the Subcommittee, this completes my prepared statement. I would be 

happy to answer any questions that you may have at the appropriate time. My colleague, Charles Jeszeck, is also available to answer any specific questions regarding PBGC. 

[Prepared statement of Ms. Clowers follows:] 

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Mr. MCHENRY. Thank you, and thank you for your testimony. 

Professor Zywicki, you are recognized for five minutes. 

STATEMENT OF TODD ZYWICKI 

Mr. ZYWICKI. Thank you, Chairman McHenry, Ranking Member 

Quigley, members of the Subcommittee. 

It is my pleasure to testify today on matters related to the 

Obama Administration’s Automotive Task Force and the refusal of 

former Automotive Task Force members to cooperate in efforts to 

understand the Task Force’s controversial decision to top-up Delphi 

Corporation’s pension plan for Delphi employees who were members of the United Auto Workers Labor Union. 

General Motors’ decision to guarantee the obligations of a completely separate company, Delphi, was completely unjustified under 

current established principles of bankruptcy law, and it increased 

the cost to the taxpayer bail out the automotive industry by more 

than $1 billion, with no reciprocal benefit to General Motors. 

I commend this Committee for seeking answers to this unexplained behavior by the Automotive Task Force, and SIGTARP’s 

Christy Romero for insisting on answers to these questions. 

Altogether, the Government pumped $80 billion of TARP funds 

into the bailouts of General Motors and Chrysler, and related entities, with, as Chairman McHenry suggested, not a shred of statutory basis for allocating funds in that manner. According to the 

United States Department of Treasury, it is estimated that, at current share prices, the loss to the American taxpayers will be about 

$23 billion from this investment in the automotive bailouts. 

Now, it would be one thing to lose billions of dollars if it was necessary to facilitate the bankruptcy reorganization of these companies. But according to a recent paper by James Sherk and me, the 

entire loss to the taxpayers from the automotive bailouts is attributable to the unjustified preferential treatment of the UAW in 

bankruptcy, to the tune of $26.5 billion. 

To give you a sense of the size of those losses, that is larger than 

NASA’s annual budget; that is larger than the entire foreign aid 

budget; and that is larger than the annual budget of the State of 

Missouri. It would be much more accurate to refer to this as a 

UAW bailout, rather than an automotive bailout. 

We have heard a lot of talk about shared sacrifice today, but I 

think Steven Rattner, the Obama Administration’s former car czar, 

said it best when he said we should have asked the UAW to do 

more. We did not ask any UAW member to take a cut in their pay. 

James Sherk and I document three different ways in which the 

UAW was given preferential treatment here that resulted in this 

massive loss to the taxpayers. 

First, the UAW VEBAs were given far better treatment as unsecured creditors than any other unsecured creditors in either the 

General Motors or Chrysler bankruptcy cases. 

Second, UAW employees were given preferential treatment as 

employees. Usually, in bankruptcy cases, when confronted with 

above-market, uncompetitive wage scale, bankruptcies use to reduce them to competitive levels. What it is going on right now as 

we see in the airline bankruptcies, for instance, in which bankVerDate Aug 31 2005 13:48 Sep 19, 2012 Jkt 000000 PO 00000 Frm 00069 Fmt 6633 Sfmt 6633 C:\DOCS\75807.TXT APRIL
66 

ruptcy has been used to bring airline bankruptcy wage scales to 

competitive rates. 

In General Motors, the UAW did make wage concessions, but on 

behalf of future hires, not on behalf of any current employees, as 

Steven Rattner admitted. And very few other concessions were 

made. As a result, the wages for General Motors, in particular, still 

remain above that of any foreign transplants and in any other 

States. 

Third brings us to the issue that we are here today, the $1 billion 

that was given by General Motors to top-up the pensions of certain 

Delphi employees, the United Auto Workers, the IUE, and the 

USWA union members, but not other hourly employees or salaried 

workers. How can this be? 

Delphi was spun off in 1999, a full 10 years before the General 

Motors bankruptcy. They were a completely separate company. 

There was no continuing legal obligation for General Motors to pay 

for the retirement of the employees of a completely separate company. Instead, all we have heard, as far as I can tell, is a farfetched 

rationalization that we needed to squander $1 billion for some theoretical fear related to this. It is hard to see any explanation other 

than political clout. 

What I would like to know is whether any rational investor 

would spend $1 billion of their own money to pay for the retirement of employees of a completely separate company, or whether 

they would be only willing to do it with our money, the money of 

the taxpayers. 

And perhaps it was necessary to have a targeted intervention in 

order to deal with the frozen credit markets at the time. That could 

be. Firms like this reorganize all the time, and I take any claims 

like that with a grain of salt. But, by and large, this is a smokescreen for what we are talking about today. 

The question is, today, whether or not it was worth throwing 

away $26.5 billion worth of taxpayer dollars purely to preserve the 

benefits and the wages and everything else of the UAW. Was it 

worth it to go through bankruptcy and go through a process in 

which the Indiana Teachers and Police Fighters lost some of their 

secured bonds in order to enrich the UAW? 

I look forward to questions. 

[Prepared statement of Mr. Zywicki follows:] 

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Mr. MCHENRY. Thank you, and thank you for your testimony. 

We have two current federal folks that are in federal service on 

this panel. I want to thank you for your current service to our Government and to our people. 

I want to thank the three previous members that were in government service for your service to our Government and to our people. 

Public service should be just that. 

Now, there are also consequences for the decisions we make, 

given the public trust, and, in conjunction with that thought, that 

is what this hearing is about. 

I ask unanimous consent that our colleague from Ohio, Mr. Johnson, be allowed to participate in today’s hearing. Without objection, 

that is ordered. 

I will recognize myself for five minutes. 

For more than a year SIGTARP has been trying to secure interviews to complete their work on this subject matter of the Delphi 

pension decisions, and I want to ask Mr. Bloom why were you not 

willing to cooperate. 

Mr. BLOOM. I was very involved in personal matters at the time. 

I spent a long time in government service and I didn’t believe I had 

anything that I could usefully contribute. But as I have said, if it 

is important to the Committee, I am prepared to sit with them 

now. 

Mr. MCHENRY. Mr. Feldman, same question. Why were you simply not willing to cooperate? 

Mr. FELDMAN. In 2009, when I was deposed with respect to these 

issues, I had felt at that time that I had answered and given all 

the information that I had available to me. I also, frankly, have left 

public life and have an active and busy private life, and my response to SIGTARP was I think you have everything I can give 

you. Having said that, if an interview would be helpful, as I have 

said to the staffers, I am prepared to cooperate. 

Mr. MCHENRY. Well, Mr. Feldman, to that matter, your attorney, 

Mr. Shatter, was contacted. SIGTARP was actually in New York 

and was willing to meet with you in August to September of last 

year, and you wouldn’t participate. 

Mr. Wilson, same question. Why were you not willing to cooperate? 

Mr. WILSON. Mr. Chairman, I will give you the same answer I 

gave to Treasury at the time they approached me about it, which 

was I gave a lengthy deposition. I think I sat for 10 or 12 hours 

of testimony in the summer of 2009 related to the GM bankruptcy, 

testified on anything under the sun, as you can imagine, during 

that long period of time. 

I had the experience of being interviewed for Mr. Rattner’s book 

on these activities in early or the summer of 2010 and, frankly, I 

knew then that I could barely recall a lot of the facts from a year 

before and this was a year later, two years after the fact, and I said 

to Treasury I don’t remember a lot of what we went through; I 

could refresh my memory, it would take me probably a couple days 

of reading through public documents to do that, and I am extremely busy, and I don’t know how much I can add. 

And that was the exact response I gave to Treasury. 

72 

Mr. MCHENRY. Gotcha, you’re busy. I hear you. Not too busy to 

meet with Mr. Rattner about his book. 

I would be happy to yield to my colleague. 

Mr. QUIGLEY. Thank you. 

Gentlemen, I respect your service, but let me just say this. The 

percentage of the American public that thinks that we do the right 

thing or will do the right thing is in single digits. The real cost of 

the problems that we faced here, and in my community, of the 

public’s perception of us and the public’s perception of corruption 

is the loss of the ability to lead. The President characterized it as 

a deficit of trust. 

Now, I am not suggesting for a second that you all did anything 

wrong, but you have to appreciate this lost year, for whatever the 

personal reasons, whether you are in public service or not, really 

doesn’t matter. It is the perception of how things are done. It is the 

ability to have transparency to appreciate how you made the decisions. 

And if your answers, with all due respect, are I don’t remember, 

I get that, or you just give the best answers you possibly can. But 

when you do, when you put things off in this manner, you don’t 

help us and you don’t help the decisions you made. Frankly, I think 

we made the right decision, and we are going to discuss that later, 

about the bailout, because I thought the industry mattered. 

But I think the Chairman is correct. This was a mistake. And 

I appreciate your willingness to testify here and to cooperate and 

to be interviewed by SIGTARP, but it is hard to add anything to 

what Ms. Romero said, except for the fact that it isn’t that you 

have done anything wrong, it is that the American public has a 

right to know how those decisions were made when so much money 

was being spent, even if they agree with the decisions. So I mean 

no disrespect. I just wanted to add, to an extent complement what 

the Chairman was trying to say. 

Mr. MCHENRY. I thank the Ranking Member. 

So the question I have, Mr. Bloom, is are you willing to submit 

yourself to an interview with SIGTARP within the next, let’s say, 

two months? 

Mr. BLOOM. Yes. 

Mr. MCHENRY. Mr. Feldman? 

Mr. FELDMAN. Yes. 

Mr. MCHENRY. Mr. Wilson? 

Mr. WILSON. Yes. I offered up for this afternoon. I haven’t gotten 

a response yet, but I would be happy to do that. 

Mr. MCHENRY. Excellent. 

Well, Ms. Romero, next time you don’t have people willing to sit 

down with you for an interview, let me know; we will be happy to 

have a hearing. 

Ms. ROMERO. I can’t say how grateful I am to the Committee, to 

the Chairman, to the Ranking Member of the full Committee, 

Cummings, to Ranking Member Quigley. This is all we wanted. 

We also have not reached any conclusion in our audit. How can 

we reach a conclusion? I can’t characterize the role these gentlemen played without giving them an opportunity to speak to that 

role. This is all we have wanted and I am grateful, very grateful 

for that. 

73 

It also goes beyond just these three witnesses and this audit, as 

I talked about in my opening statement. It will be a very, very dangerous precedent if former Treasury officials or other government 

officials who worked on TARP matters and then leave refuse to be 

interviewed by SIGTARP, that that goes on and it is allowed. So 

thank you very much. 

Mr. MCHENRY. Thank you. 

I thank you for your willingness to submit yourself to this. Mr. 

Rattner, who testified about this matter, the interview took approximately two hours with SIGTARP. I know you have busy lives. 

I also know this was a very important matter in your life, in both 

your public service and now in your private sector experience. This 

is something major for our Nation and I think we need to have an 

accurate portrayal of what actually happened and why you made 

the decisions that you made. Books have been written about this. 

There are going to be generations that talk about this excessive 

amount of government intervention, whether justified or unjustified, and the results of those bailouts. 

I also will submit for the record that currently the GM stock price today is under $21. At the IPO it was $33. For the Government to break even, for the taxpayer to break even, that number 

had to be $53. With that, we have had $16 billion in direct losses 

to the taxpayer based on the bailout of just GM. 

I just want to submit that for the record. 

I do have other questions, but in the interest of other members’ 

time, we will now recognize Mr. Quigley for five minutes, after 

which we will recognize Mr. Ross for five minutes. Mr. Quigley. 

Mr. QUIGLEY. Thank you, Mr. Chairman. I yield to the Ranking 

Member of the full Committee, Mr. Cummings. 

Mr. CUMMINGS. Thank you very much. 

Mr. Chairman, I want to associate myself with your words and 

those of Mr. Quigley and Ms. Romero with regard to the necessity 

and the importance of witnesses cooperating in these investigations. And I want to thank the witnesses for being here and for 

their service to the Country. 

The former members of the Auto Task Force were part of the 

Obama Administration’s successful rescue of the American automotive industry. In December 2008, an analysis by the Economic 

Policy Institute projected that ‘‘the bankruptcy of U.S. automakers 

and the collapse of the domestic auto assembly industry could 

eliminate up to 3.3 million U.S. jobs within the next year.’’ The collapse of General Motors alone would lead to an estimated loss of 

900,000 jobs. That calamity was averted by the actions of you, our 

former members of the Government and the Obama Administration’s Auto Task Force, and you deserve our thanks and we do appreciate what you have done. 

Today’s hearing is not focused on these successes, but on why 

these three individuals have not yet been interviewed by the Special Inspector General for the Troubled Asset Relief Program, 

which is conducting a review of the Auto Task Force’s work, and 

I am very pleased to know that you all are willing to submit yourself to being interviewed. 

I recognize that you all are private citizens now and are under 

no obligation to speak with the Inspector General, but we support 

74 

the Inspector General’s Office and want them to complete their 

work. As I understood it, this was the principal reason we were 

holding today’s hearing. 

However, in preparing for the hearing, my staff contacted each 

of these three former officials and all three of them said what they 

said today, that they are now willing to be interviewed. 

The Chairman has apparently decided to go forward with today’s 

hearing, and that is his right. But, as a result, we do not have the 

benefit of the Inspector General’s final report, which I anxiously 

look forward to. I think this could have been handled with a few 

phone calls rather than a hearing, but that is not my call to make. 

Mr. Chairman, if you are going to proceed, and I know you are, 

I ask that you do so on an evenhanded basis. There is another 

issue almost exactly like this one, in which an inspector general 

has conducted a review, has sought to interview a former official, 

and has been refused. Unlike the present case, however, there is 

substantial evidence of serious abuses, as well as unethical and potentially illegal conduct in that case. 

On two occasions I have written to Chairman Issa about findings 

by the Inspector General of the National Labor Relations Board 

that a former Board member, Mr. Peter Schaumber, was regularly 

receiving deliberative, pre-decisional, and inside information from 

another Board member, Mr. Peter Flynn. The Inspector General 

warned that Mr. Schaumber had received copies of draft Board decisions and other deliberative information on pending Board actions. Yet, the Inspector General was never able to conduct an 

interview of Mr. Schaumber, who was a former employee. 

It seems to me that the only difference with that case is that it 

involved a Republican. Mr. Schaumber served as a senior advisor 

and co-chair of the Labor Policy Advisory Group to presidential 

candidate Mitt Romney when he was engaged in these activities. 

As I stated from the outset, I strongly support our inspectors 

general and I believe our Committee should help them when they 

cannot obtain access to information. So, Mr. Chairman, I know how 

diligent you are, and I would like to ask you now will you support 

my request for a hearing with Mr. Schaumber to obtain his testimony? Will you join me in requesting that the Committee call him 

before us, like you called these three gentlemen before us today? 

And will you commit to conducting the operations of this Committee on an evenhanded basis? 

Mr. MCHENRY. Well, Mr. Cummings, I want to thank the Ranking Member. At the beginning of this hearing I went through a significant amount of this time line. I will be happy to look at the letter that you have presented this morning. I recognize that I was 

not on that exchange. I am not familiar with the subject matter 

you are bringing up, but I trust the gentleman has a deep and 

abiding interest in government transparency; he has been diligent 

in a tough, but fair Ranking Member in my dealings with the gentleman, having served on his subcommittee in my first term in 

Congress. I thank you for bringing this subject matter up and I will 

be happy to look at this issue. 

Mr. CUMMINGS. May I have another 20 seconds, please? 

Mr. MCHENRY. Absolutely. 

75 

Mr. CUMMINGS. I just ask unanimous consent that my two previous letters on this topic be entered into the record. We have been 

asking for this since March, Mr. Chairman, and I see no difference 

between these cases other than that the gentlemen here today have 

all agreed to be interviewed by the Inspector General, and Mr. 

Schaumber has not. 

Mr. MCHENRY. Without objection. 

Mr. CUMMINGS. I want to thank you for your patience. Thank 

you. 

Mr. MCHENRY. I thank the Ranking Member for bringing that 

subject matter up. 

Ms. Romero, to that end, have you contacted the Committee 

about this subject matter and this witness? 

Ms. ROMERO. As regards to these three witnesses—— 

Mr. MCHENRY. Oh, it is a different IG. I am sorry. 

Ms. ROMERO. Oh. 

Mr. MCHENRY. I am sorry, I was just informed of that. 

Well, thank you, Mr. Cummings, and we certainly will follow up 

with you on that. You have my commitment on that. 

With that, we will now proceed to Mr. Ross of Florida for five 

minutes. 

Mr. ROSS. Thank you, Mr. Chairman. You are to be commended 

for holding this hearing. 

As a practicing lawyer, I find that justice doesn’t always move at 

the rate we would like it to move, and the collection of facts is absolutely necessary for the rule of law to be applied and justice to 

prevail. 

While we are here on the eleventh hour and now getting cooperation from the witnesses, I am grateful for their cooperation. But, 

Mr. Feldman, when you say that it should have been done back in 

July of 2009, when your deposition was taken and you had a better 

recollection of the events, I also think back to the witnesses that 

I would have in my cases and am grateful for discovery depositions 

because it allows for a person, allows for a witness to recollect their 

thoughts and remember their testimony. 

So again I am grateful for you all to agree now, but let me go 

into some questions. 

Mr. Bloom, you indicated in your opening that the bankruptcy 

proceeding was fair and open. My question to you is was it any different than any other normal bankruptcy proceeding? I mean, was 

this not one of the most expedited bankruptcy proceedings in the 

history of the U.S.? 

Mr. BLOOM. In my experience, it was faster than average, but 

there are other 363 sales—— 

Mr. ROSS. Are you familiar with any other bankruptcies that 

were expedited in such a summary fashion? 

Mr. BLOOM. Well, the sale of the parts of Lehman Brothers to 

Barclays in the Lehman bankruptcy, that portion of it, which was 

a 363 sale, which is what this was, was actually done more quickly. 

Mr. ROSS. And, Mr. Feldman, are you familiar with, in your experience, any company independent through a bankruptcy proceeding giving $1 billion to another company, as was done in this 

particular situation? 

76 

Mr. FELDMAN. Certainly, they honored a contract and they made 

the decision to honor the contract based on their business judgment, and I frankly think you see that all the time in many, many 

bankruptcies. 

Mr. ROSS. Mr. Zywicki, how do you respond to that? 

Mr. ZYWICKI. Well, first, I would say I have never seen a bankruptcy like this at all. I have taught bankruptcy for 15 years; I 

practiced bankruptcy. I have never seen a bankruptcy case in 

which secured creditors received $0.29 on the dollar and unsecured 

creditors received $0.44 on the dollar, which is what happened 

here; and, again, some of those secured creditors were other retirees, the Indiana policemen and teachers retirement unions. 

I have never seen, under the guise of a 363 sale, what really 

amounted to or what is effectively a sub rosa plan, which is not 

just selling the company, but dictating how the assets are going to 

be distributed. What we also saw in this case was an auction that 

was anything but a fair auction of the assets; there were strings 

attached to it that basically required that anybody—— 

Mr. ROSS. And why was that? Was the UAW that effective? 

Mr. ZYWICKI. Well, anybody else who wanted to bid on the company was required to give preferential treatment to the UAW in 

the same sort of way that the Government did with respect to honoring the VEBAs. Once the company went into bankruptcy, of 

course, we saw a lot of other shenanigans. But I have never seen 

any bankruptcy case that resembled this in terms of the impact on 

the rule of law, the way in which it scrambled around priorities, 

and the speed at which they essentially sold the company and distributed the assets. 

Mr. ROSS. Thank you. 

Mr. Bloom, what role did the Auto Task Force or other administration officials play in the negotiations between GM and the UAW 

in this bankruptcy? 

Mr. BLOOM. I think the role we played in that generally was the 

same role we played with most of the issues, which is to say that 

we deferred to General Motors in terms of their business judgment 

about how to handle a particular matter, and I think the UAW negotiation would fall into that category. But we reviewed that decision to see if we agreed that it was commercially reasonable. 

Mr. ROSS. And did the UAW have a great deal of leverage in 

these negotiations? 

Mr. BLOOM. I think it would be fair to say they had a degree of 

leverage. I wouldn’t describe—— 

Mr. ROSS. Do think they would have derailed the entire deal over 

the salaries of a few? 

Mr. BLOOM. I can’t speculate as to what they might have done. 

Mr. ROSS. Mr. Feldman, what do you think? 

Mr. BLOOM. I think our judgment at the time was that the judgments that GM made were reasonable. 

Mr. ROSS. Mr. Feldman, your opinion? The UAW exerted a great 

deal of leverage in this negotiation? 

Mr. FELDMAN. I think everybody in the case who had leverage 

exerted that leverage. The UAW was really no different than any 

other participant. 

77 

Mr. ROSS. Do you think they would have derailed the negotiations over—— 

Mr. FELDMAN. I truly don’t know. General Motors—— 

Mr. ROSS. But you would have to speculate. I mean, this is your 

forte. 

Mr. FELDMAN. I don’t think speculating is my forte. My forte is 

how to move companies through Chapter 11, include these two 

companies, Chrysler and General Motors. 

Mr. ROSS. And never on speculation? 

Mr. FELDMAN. I try not to. 

Mr. ROSS. Thank you. 

With regard to the payback, let’s say that under the Bush Ad- ministration we give GM $10, under the Obama Administration we 

give $20 to GM; GM pays back $20. In this particular example, it 

hasn’t all been paid back. Was that something that was never intended to come to fruition or was it just that we wanted to make 

sure that we paid back what was given under the Obama Administration? Mr. Feldman, I will go to you for that. 

Mr. FELDMAN. I don’t think that was the intention. The intention 

was to get paid back. Unfortunately, in the case of General Motors, 

the stock price has not performed as I think people hoped it would. 

But one of the reasons that General Motors was de-levered to the 

extent it was de-levered was to hopefully help the stock price. 

Mr. ROSS. I see my time has expired, so I will yield back. Thank 

you. 

Mr. MCHENRY. I thank my colleague. 

We will now recognize Ms. Speier from California for five minutes. 

Ms. SPEIER. Mr. Chairman, thank you. 

I want to thank Mr. Feldman, Mr. Wilson, and Mr. Bloom for 

being here as private citizens today and for recognizing that there 

is a responsibility as private citizens to support one’s Country. 

Professor, you referenced shenanigans, which I thought was an 

interesting term, because I could think of a lot of shenanigans that 

went on with Wall Street, and particularly Goldman Sachs, among 

many other. Would you call those shenanigans? 

Mr. ZYWICKI. I don’t know those in detail. If I looked at it, I 

would be willing to call them shenanigans, a lot of them. It would 

be possible. I have not looked at those in as much detail as I have 

with respect to these auto bankruptcies. 

Ms. SPEIER. Well, with Goldman Sachs, they actually created a 

product for a specific individual who wanted to short them, and 

then sold those products as if they were good, outstanding products. Those, to me, are—that kind of conduct is shenanigans. I 

think a company going bankrupt is not necessarily shenanigans, or 

trying to keep it alive is not necessarily shenanigans. 

Let me ask you, Mr. Wilson, as you noted in your testimony, you 

are a lifelong Republican, and proud of it, I have no doubt, and you 

were the Republican conservative and Independent party nominee 

for New York State’s comptroller, is that true? 

Mr. WILSON. Yes. 

Ms. SPEIER. The work you did to rescue the U.S. auto industry 

was about doing what was best for the Country, was it not? 

Mr. WILSON. Yes. 

78 

Ms. SPEIER. At any time did you detect that persons on your 

team were pursuing a political agenda? 

Mr. WILSON. No. 

Ms. SPEIER. Were you attempting to push a particular political 

agenda? 

Mr. WILSON. Only to save as much taxpayer money as possible. 

Ms. SPEIER. Oh, what a novel idea, to save taxpayer money. Is 

that what you were engaged in doing? 

Mr. WILSON. Yes. 

Ms. SPEIER. Okay. Is it true that you were working to stave off 

a potential collapse of a very large and interdependent U.S. automotive industry, and you were deferring to the company’s business 

judgment regarding many of these detailed decisions? 

Mr. WILSON. Yes. 

Ms. SPEIER. So, as you look back at your time, would you say 

that you regret having done anything as a member of that Task 

Force? 

Mr. WILSON. I wouldn’t say that. I mean, we could always do a 

better job. You always have second thoughts and wish you did better than anything you do in life, but I certainly feel that we did 

the best we could given the circumstances and the timing, and I 

think it was the right thing for the Country. 

Ms. SPEIER. So are you proud with what happened? 

Mr. WILSON. Yes. 

Ms. SPEIER. How about you, Mr. Feldman? 

Mr. FELDMAN. I think I said in my opening remarks that I remain fiercely proud. I think what we did was, with a lot of help 

from a lot of other people in the Government and at the companies, 

pretty spectacular for these companies, frankly. 

Ms. SPEIER. Mr. Bloom? 

Mr. BLOOM. I would just echo my former colleagues’ comments, 

and I would emphasize Mr. Feldman’s point; there were a lot of 

people who worked extremely hard on this matter, but I think collectively a very good result was achieved compared to the alternative. 

Ms. SPEIER. Now, each of you is going to now provide a deposition to SIGTARP on your activities, and we also have a GAO report 

that has been completed that suggests that there was nothing underhanded. Have you read the GAO reports? Do you have any comments on that GAO report? Any of you. 

Mr. FELDMAN. I have read the GAO report. I suspect my colleagues have as well. I didn’t take issue with anything in the GAO 

report; I thought it was, overall, a very good job. 

Ms. SPEIER. Anyone else have any comments? Mr. Bloom? 

Mr. BLOOM. I wouldn’t disagree. 

Ms. SPEIER. All right, I yield back, Mr. Chairman. 

Mr. TURNER. [Presiding.] Thank you. I want to thank the Chairman for yielding the gavel to me during this period of asking questions, and I want to thank the Ranking Member, Mr. Quigley. 

This is a bipartisan issue. If you noticed, the topic of this hearing 

is not the auto bailout, the questions of whether or not it should 

have been doing or shouldn’t have been done. The topic is the Delphi pensions, those who did not receive the top-up or their pensions 

being whole, in fact, had their pensions reduced, and the involveVerDate Aug 31 2005 13:48 Sep 19, 2012 Jkt 000000 PO 00000 Frm 00082 Fmt 6633 Sfmt 6633 C:\DOCS\75807.TXT APRIL
79 

ment of the Auto Task Force and these three gentlemen and their 

refusal to participate in that. The GAO report did not have information for determining their role or their responsibilities. 

Mr. Bloom, you have said that you have testified a number of 

times, but, as you acknowledge in your own testimony, you did not 

testify concerning this topic because you claim that there was ongoing litigation that would prevent you to stand in front of Congress 

and tell the truth. 

Mr. Feldman, do you have a medical condition that affects your 

memory? 

Mr. FELDMAN. I do not. 

Mr. TURNER. Great. Thank you. Because in your testimony you 

have, like, foreshadowed that you might claim that you don’t remember this stuff when you go before SIGTARP or when the other 

questions are asked of you in this Committee, and I would want 

to invite you to have a refreshed memory because of two things. 

One, when we pull up your law firm’s advertisement of what you 

do, not only do they recognize that you have a practice that is complex litigation, clearly, you recall it. But the very first thing it tells 

is that in March 2009 you were recruited to serve as the chief legal 

advisor for the strategy to restructure and recapitalize General Motors Corporation. It is the first item. So if your clients can avail 

themselves of the knowledge you had, we want to also. 

Mr. Bloom, you testified before this Committee, on the Regulatory Affairs Subcommittee on June 22nd, 2011. At that hearing 

I handed you three pages of questions. My staffer, Andy, who is 

going to hand them to you again, handed them to you at that hearing. Do you recall receiving these questions? 

Mr. BLOOM. Yes. 

Mr. TURNER. Okay. I asked you if you would answer those questions, and let me refresh your memory as to what you said. Here 

is the video of you at that hearing. 

[Video played.] 

Mr. TURNER. Mr. Bloom, your answer to me on June 22nd, 2011, 

was absolutely. I have not received one answer from you. Why 

haven’t you answered me? 

Mr. BLOOM. Subsequent to the time before I had a chance to answer, I left government service. 

Mr. TURNER. So your answer changed because you left government service? 

Mr. BLOOM. I did not feel it was appropriate that I continue to 

involve myself in this matter after I left government service. 

Mr. TURNER. Well, clearly, this Committee views that otherwise, 

as do the taxpayers. You had great responsibility, as also your current firm indicates and advertises you as the senior advisor at the 

U.S. Department of Treasury where he helped lead the restructuring of General Motors. Is your accountability to the taxpayers. 

Will you commit, as you did in that hearing, to answer these questions now? 

Mr. BLOOM. I am here today, and if there are questions I can answer, I will do it. 

Mr. TURNER. Will you commit in writing to answer these questions, as you did under oath in that hearing on June 22nd? 

Mr. BLOOM. I will answer the questions I can answer today. 

80 

Mr. TURNER. So we will just keep you here and I will just orally 

ask you the questions, with the Chairman’s approval, then. 

Mr. Feldman, we have a number of your coworkers’ emails that 

also can help you refresh your recollection. When we get to the 

SIGTARP’s reason for wanting to speak to you, Ms. Romero states, 

SIGTARP believes that the Auto Task Force played a role in the 

pension decision, and these individuals’ failure to speak on this 

issue poses a significant obstacle. 

Mr. Feldman, do you agree that you played a role in the pension 

decisions? 

Mr. FELDMAN. I don’t think I agree that I played a role in the 

pension decisions. I certainly spoke regularly to the PBGC and to 

General Motors regarding the Delphi pension issues. 

Mr. TURNER. Did you ever speak to people at the White House 

concerning this issue? 

Mr. FELDMAN. Brian Deese, who was, at that time, at the White 

House, was a regular member of our team and the team reported 

to Larry Summers and Tim Geithner, and obviously Mr. Summers 

or Dr. Summers was at the White House at that time. 

Mr. TURNER. Can you please put up slide 6? 

[Slide.] 

Mr. TURNER. This is Joseph House of PBGC, his email following 

his conversation with you, where he says that you reported that 

you made progress discussing our proposal with a number of key 

folks at Treasury and at the White House, but he has not yet 

wrapped up his coordination. This would be the issue of the pensions. PBGC’s emails indicating that we have several, including 

this one, that indicate your role on the Auto Task Force of coordinating the issue of the pensions. Do you disagree with this email? 

Mr. FELDMAN. I don’t disagree that I was the coordinator or 

facilitator of those issues. I think that is accurate to say. 

Mr. TURNER. What was your role? You just said a minute ago 

you didn’t have one. 

Mr. FELDMAN. I think you asked whether I was a decision maker, 

and I was not a decision maker. 

Mr. TURNER. I asked you to describe what your role was. Would 

you describe that role for us, please? 

Mr. FELDMAN. Sure. I was the facilitator, coordinator of issues 

between General Motors and the PBGC, among other roles, regarding the Delphi pension issues. 

Mr. TURNER. And how does that role assist or affect PBGC and 

its participation in the bankruptcy process and in the decision affecting the pensions? 

Mr. FELDMAN. Well, the decision that the PBGC made with respect to the pensions was independent of anything that Treasury 

or I had to say to the PBGC. The issue vis-a-vis the PBGC and Delphi was what claims the PBGC would have in the Delphi case; 

what liens they would purport to have over assets of Delphi, particularly the foreign assets of Delphi, and that had a large impact 

on Delphi’s future and obviously on GM’s future. 

Mr. TURNER. So, Mr. Feldman, you played a role in determining 

the either claiming or releasing of PBGC liens on General MotorsDelphi assets in the bankruptcy process with respect to these pensions. 

81 

Mr. FELDMAN. That is not correct. 

Mr. TURNER. That is what I heard you say. Please clarify. 

Mr. FELDMAN. Let me be very clear. I urged the PBGC to come 

to decisions in a rapid manner because it had the potential to hold 

up General Motors’ emergence. But I did not advocate for positions 

vis-a-vis the PBGC; I played the role of a facilitator or mediator, 

if you will, between the PBGC and General Motors. 

Mr. TURNER. My time has expired. 

Mr. Quigley? 

Mr. QUIGLEY. Thank you, Mr. Chairman. 

Good morning, Ms. Clowers. 

Ms. CLOWERS. Good morning. 

Mr. QUIGLEY. Your audit tried to identify some of the factors that 

went into GM’s decisions to top-up some pensions and not others. 

That is correct, right? 

Ms. CLOWERS. It did. 

Mr. QUIGLEY. Your December 2011 report states, ‘‘Treasury deferred to GM’s business judgment and Treasury did not explicitly 

approve or disapprove of GM providing top-ups.’’ So it would appear from your report that the Delphi pension matter was decided 

by GM without Treasury influence? 

Ms. CLOWERS. Yes. We reported that while Treasury played a 

significant role in resolving the Delphi bankruptcy, as they wanted 

that resolved as quickly as possible, as new GM emerged from 

bankruptcy, they played an advisory role with regard to the pension plan issues as laid out in court filings and interviews with 

GM, PBGC officials, and Treasury officials. I think an example of 

that is in a court filing that shows that Treasury assumed GM 

would be honoring the hourly plans, up until it was informed by 

GM in June that it could no longer do so because of the financial 

burden. 

Mr. QUIGLEY. Okay. And in your mind and in what you wrote, 

what were the factors driving GM’s decisions? 

Ms. CLOWERS. According to GM officials that we spoke to and the 

public records that we reviewed, GM considered the dependency on 

the UAW for the workforce; they were heavily reliant on the workforce, so, emerging from bankruptcy, they wanted to make sure 

they had a motivated and intact workforce. They also considered 

other costs and risk factors, and weighed that against emerging 

from bankruptcy in terms of what type of costs and risks they 

wanted to take on. 

Mr. QUIGLEY. And did you find any evidence that Delphi’s pension decisions were anything other than GM’s private business decisions? 

Ms. CLOWERS. Again, 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 officials 

here today. 

Mr. QUIGLEY. Is there anything else you want to add related to 

the GM decision-making process and the questions I have asked? 

82 

Ms. CLOWERS. No, sir. 

Mr. QUIGLEY. All right. Thank you. 

I yield back. 

Mr. MCHENRY. [Presiding.] I thank the Ranking Member and 

certainly appreciate his line of questioning as well. 

We will now recognize Mr. Kelly of Pennsylvania for five minutes. 

Mr. KELLY. Thank you, Mr. Chairman. Thank you for holding the 

hearing and allowing me to participate. 

I do have a question. Mr. Bloom, I have been with you before at 

other hearings. When we talk about the boards and we talk about 

GM making decisions, is the consensus is these are GM board decisions that were made involving the UAW? 

Mr. BLOOM. I think it would depend on the decision. 

Mr. KELLY. But specifically with this one, when it comes to pensions and picking and choosing who would get bailed out and who 

would not get bailed out. 

Mr. BLOOM. I couldn’t say whether General Motors management 

specifically brought this issue to their board of directors or not; I 

wouldn’t know. 

Mr. KELLY. Did you sit on the board of directors of General Motors? 

Mr. BLOOM. No. 

Mr. KELLY. No. You were part of the Auto Task Force? 

Mr. BLOOM. Yes. 

Mr. KELLY. Okay. And the board of directors, again, the old GM 

versus the new GM, because there are two completely different entities there, as we know. A lot of the new General Motors were appointees by the Administration. 

So as we move on, let me ask you this, Mr. Wilson, in your testimony, I think this really makes a lot of sense, you talked about 

what happened with this and you say, on page 2, the results of the 

work speak for themselves. General Motors had its most profitable 

year ever in 2011, even though auto sales have still not fully recovered. 

I know we talk about the auto industry coming roaring back. Do 

you know what GM made in 2011? 

Mr. WILSON. I think it was just under $8 billion net income. 

Mr. KELLY. How much taxes did they pay? 

Mr. WILSON. Well, they had some NOLs from the transaction. 

Mr. KELLY. Well, how much did they pay in taxes? 

Mr. WILSON. I don’t know. 

Mr. KELLY. I will tell you what it is. It is zero. Zero. 

And maybe, professor, you can tell us why they paid zero taxes 

on almost $8 billion in profits. 

Mr. ZYWICKI. Sure, yes. This is another anomaly about these 

cases that are very irregular, which is that the Treasury Department issued essentially a special ruling for TARP recipients that 

allowed them preferential treatment under the tax code in order to 

carry forward net operating—— 

Mr. KELLY. Wait, wait. Can I just say, so preferential treatment? 

Can we just say on the street we call that picking winners and losers, and who gets to take advantage of things that weren’t available to others in bankruptcy? 

83 

Mr. ZYWICKI. I think that would be a very accurate description, 

yes. 

Mr. KELLY. So $7.1 billion. I am a General Motors dealer, by the 

way, so I am really happy when they make money. But I always 

like the fact, and the President always talks about the 99 percent 

and the 1 percent, and how the 1 percent is not paying their fair 

share. An almost $8 billion profit and they didn’t try to put anything back in? That is offensive to me as a taxpayer. 

I know that during the bailout, as a dealer, I didn’t get one cent. 

In fact, I was at risk of losing my dealership, and the answer was, 

you know what, good luck; you guys can probably make it if you 

really work hard, we made it. I understand that. 

But when we talk about this auto industry roaring back, we are 

talking about an industry that had 16.5 million sales every year. 

It fell to 9.5 million sales. So the roaring back comes as a result 

of the fact that cars, like people, age; cars, like people, can’t perform at the same level they had when they were newer. There is 

a thing called the scrapping rate that is taking place. 

So the roaring back really is a result of a diminished market the 

last three or four years. So, yes, it is going to come roaring back. 

It is going to come roaring back, but I think right now they are projecting somewhere some people say 13.5 million units a year, some 

14.5 million units a year. But I am telling you, from a guy who is 

actually on the lot, talking to people, what is keeping it from really 

roaring back is people just aren’t sure what the future holds. They 

are not willing to go into a 48-month or 60-month commitment, not 

knowing if they are going to have a job in that time period. 

So I think it is important that we really take a look at what did 

happen in the auto industry, and I have to tell you, Mr. Wilson, 

I know you are a good Republican and I know that you are very 

heralded for what you do. 

Without objection, I would like to enter the testimony from City 

and State, an article that talked about Harry Wilson tapped by the 

Teamsters to rescue an ailing trucking company and union jobs. 

Mr. KELLY. You do a good job at what you do. I don’t think there 

is any question about that, and I think people in the private sector, 

it doesn’t really matter what political affiliation you have. I mean, 

I sell cars. The prerequisite is they have to be a Republican to buy 

a car from me. I just want everybody to come in and avail themselves of the fine products that General Motors builds. 

Mr. WILSON. But you are in Florida, not New York. 

Mr. KELLY. So you do have close ties and you are going to try 

and help the trucking association too, because they are also in a 

very bad shape right now, are they not? 

Mr. WILSON. Yes. In that particular deal, sir, we completed that 

restructuring in July of 2011. 

Mr. KELLY. Okay. So they are back on their feet and recovering. 

Mr. WILSON. Yes. 

Mr. KELLY. But my real question, I guess it comes down to how 

do we pick those we bail out and those we don’t? 

Mr. WILSON. As a government or as a private sector? 

Mr. KELLY. As a government, knowing that the private sector 

funds all these decisions that we make. 

84 

Mr. WILSON. Sure. Well, philosophically, the way I look at it is 

it is almost never acceptable for the Government to intervene in 

the private sector, and I have gotten ribbing from friends of mine 

with philosophical similarities about why was it okay in 2009. And 

the only reason I personally concluded it was okay was because we 

were on the edge of the abyss. No one knew where the bottom was, 

sir, as you remember. The S&P was at 66. 

Mr. KELLY. Let me ask you one thing. So the bailout was to keep 

General Motors from going bankrupt, right? 

Mr. WILSON. No, I think the rescue was done to save the entire 

American auto industry from going out of business. 

Mr. KELLY. All right, all right. So the market would be the market; the industry fairs on its own. 

Professor, the length of the GM bankruptcy, how many days? 

Mr. ZYWICKI. I don’t remember exactly, but it was like 30 to 60 

days from beginning to end. 

Mr. KELLY. So one of the biggest bankruptcy cases ever is solved 

in 30 to 60 days? 

Mr. ZYWICKI. That is what we are led to believe, yes. 

Mr. KELLY. So if we don’t use what was ultimately used and we 

let the—I am sorry, my time is up. I just wanted to see if it had 

gone through a normal bankruptcy, what would the recovery time 

have been also. I apologize. 

Mr. MCHENRY. The gentleman can answer the question. Then we 

will move forward. 

Mr. ZYWICKI. If it had gone through normal bankruptcy, it would 

have taken somewhat longer, but it would have been a lot more 

transparent. We could have a real 363 sale; we could have not 

shredded the rule of law in terms of priorities and those sorts of 

things. So it may have taken a little bit longer, but there is no reason why we had to do all the things that we did, all this other stuff 

in order to fix the auto companies. 

Mr. MCHENRY. I thank the gentleman for his testimony. 

We will now recognize Mrs. Maloney of New York for five minutes. 

Mrs. MALONEY. I want to thank the gentleman and I want to 

thank all of the panelists for being here. 

Actually, I want to thank President Obama for saving the auto 

industry in America. I, for one, can’t imagine an America that 

doesn’t build our own cars. Granted, it is not where it was, but we 

saved at least a million jobs, and we are now exporting cars and 

we seem to be doing a good job. We have to remember, when President Obama took office, the industry was shedding jobs by hundreds of thousands, and GM and Chrysler faced the possibility of 

being totally liquidated, which would then have huge ramifications. 

Even in New York we had suppliers in New York that were supplying the auto industry, and they went out of business and many 

New Yorkers lost their jobs. We weren’t building the cars, but we 

weren’t building some of the parts. So it had ramifications across 

our great Nation. 

Yet, when the American auto industry was on the brink of collapse and we were going to lose, by all estimates, from all economists, at least a million jobs on the line, that would have been at 

least one in eight jobs in Ohio and in jobs across our Country. And 

85 

it wasn’t just the people in the auto plants. We have to remember 

this. This industry affected everyone. It affected the suppliers hundreds of thousands of miles away and up and down the chain. It 

affected the restaurants near the plant; every store, every school, 

everyone in the community, the families that depended on the 

worker that was at that plant. 

I remember some people said let Detroit go bankrupt, let it go 

down the drain. Even a guy running for president said that. But 

our President said, no, we are going to save the auto industry and, 

quite frankly, I am proud of the auto industry. I am proud of their 

comeback and I think it is an American success story that America 

bet on the American worker and bet on American industry. And 

GM is back. Now it is the number one company in the world. Ford 

is on the move, was handled extremely well during that whole crisis. They did extremely well. Chrysler is back. 

I think supporting with policies the American worker and American business, I think it is a success story. So I want to applaud 

everyone on the panel or everyone who played any role whatsoever 

in saving an American industry which is now exporting cars. 

Now, I would like to point out and put in the record the GAO 

highlights first page, and I want to quote from it because there is 

some confusion about Treasury’s role, and I am going to quote exactly from their report. ‘‘Although acknowledging the significant 

role Treasury played in GM’s restructuring, 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 top-up agreements with some unions.’’ Also, PBGC officials stated that PBGC independently made the decision to terminate the plans. 

So I would like to put that in the record because it clarifies the 

independent voice of GAO. 

Mr. MCHENRY. Without objection. 

Mrs. MALONEY. I know that we have a representative here and 

we have some questions for Ms. Clowers, but I first want to ask 

Mr. Bloom, Mr. Feldman, and Mr. Wilson, and I want to thank 

them, first, for testifying. They are out there, aren’t they? I don’t 

have my glasses, so I can’t see. I regret I was at a hearing in Financial Services that I had to attend and I didn’t hear all of it, but 

I read your testimony. 

I want to know what was your overall mission as members of the 

Auto Task Force? Delphi was just one piece of the situation that 

you were facing and Delphi was a major parts suppliers to GM that 

had been experiencing its own financial troubles for some time. If 

you saved GM, but Delphi failed, all of your efforts would have 

been for nothing, is that correct? Your answer? 

Mr. BLOOM. I think I would echo what Mr. Wilson had said earlier. Our mission was not to save General Motors; our mission was 

to see if there were a way to facilitate the restructuring of these 

companies so that the American automobile industry in its entirety 

could continue to function at the least possible cost to the taxpayer. 

It was General Motors’ judgment, which we did not disagree with, 

that if Delphi had liquidated, General Motors’ ability to reorganize 

would have been put seriously at risk. 

86 

Mrs. MALONEY. Well, my time is up and I think that says it all, 

so I think your judgment was right. We are employing, it saved 

over a million jobs, we are exporting. I would call that an American 

success story. Congratulations for any role you did to support it. 

Mr. MCHENRY. The gentlelady’s time has expired. 

Mr. Guinta, the Vice Chair, is recognized for five minutes. 

Mr. GUINTA. Thank you, Mr. Chairman. I want to make a statement and a comment, then I want to yield some additional time to 

Mr. Kelly. 

What I am hearing from this testimony is that had this action 

not taken place, that America would be forever changed; that the 

Federal Government had no choice but to act. There are a lot of 

people in this Country that disagree with that assessment. There 

are a lot of people in this Country that disagree with that assessment. There are a lot of people in this Country who believe in 

America; that a Federal Government should be limited and effective and efficient. I happen to be one of those Americans and I find 

it somewhat offensive that people in this Committee, in this panel 

feel that only the Federal Government could act to save the private 

sector. 

Now, we talk about the size and scope of General Motors. Fannie 

Mae is actually larger than General Motors. So under the auspice 

of the Federal Government had to act to save this industry, apparently you are also suggesting and admitting that we are going to 

have to act to save Fannie Mae. I am not sure that people in this 

Country believe in that either. 

There is one question I have for Mr. Wilson. Did unions get special treatment in this bailout, yes or no? 

Mr. WILSON. No. 

Mr. GUINTA. In your opinion. 

Mr. WILSON. No. 

Mr. GUINTA. Okay. 

Mr. Zywicki, in your opinion, did unions get special treatment in 

this bailout? 

Mr. ZYWICKI. Yes, absolutely. 

Mr. GUINTA. Okay. Why do you think that? 

Mr. ZYWICKI. As we document in our paper, first, they were 

treated better with respect to their VEBAs in the General Motors 

cases than other unsecured creditors were treated; second, they 

were treated much better than employees typically are treated in 

bankruptcy cases, and they were allowed to retain wages that, 

frankly, are above market wages, above any of their competitors’ 

wages, and were thereby prevented from having to do what typically happens; and, third, there was really no justification for giving $1 billion to the retirees of another company, which is what 

they did with respect to Delphi. 

Mr. GUINTA. So, Mr. Wilson, is Mr. Zywicki telling the truth or 

is he lying? 

Mr. WILSON. I don’t think he is lying; he is just mistaken, and 

woefully so. 

Mr. GUINTA. So you don’t think what he said actually happened? 

Mr. WILSON. I think he has the facts completely wrong, and I 

would be happy to go through in detail why. 

Mr. GUINTA. Okay, explain to me in 15 seconds how he is wrong. 

87 

Mr. WILSON. Well, there is no way to explain $26 billion of 

mischaracterization in 15 seconds. I would be happy to explain 

it—— 

Mr. GUINTA. Twenty-six billion dollars? 

Mr. WILSON. That was his claim. 

Mr. GUINTA. Okay. 

Mr. WILSON. But, again, I am happy to go and, of course, you will 

cut me off at any time you want to. 

But if you look at each of the three pieces, sir, we negotiated the 

best possible deal we could with each of the constituencies, with 

both UAW and with the bondholders. The bondholders overwhelmingly approved the General Motors bankruptcy deal, overwhelmingly. 

If they felt they were disadvantaged, there were people who held $28 billion in claims and they could have voted with their feet. But 

they chose not to because they felt the deal was a fair deal. So that 

is why his first point is completely wrong. 

His second point is also completely wrong. We were governed in 

all our actions by the Corker amendments. Senator Corker, who is 

an honorable and wonderful Senator, put forward a bunch of stipulations in the early TARP work that said that GM’s wage rates had 

to equal—and Chrysler’s, but I focused on General Motors—GM’s 

wage rates had to equal Toyota’s, and that was an aspect of long 

negotiations in terms of what does that mean—— 

Mr. GUINTA. Let me reclaim my time. The question was, was 

there special treatment or preferential treatment given to union 

members. It sounds like you are doing a lot of explaining and telling me why that is not the case. 

Mr. WILSON. Right. 

Mr. GUINTA. I disagree with you. I think it is very clear that 

there was special preferential treatment given to one group over 

another. Now, you are free to disagree with me—— 

Mr. WILSON. I do, sir. 

Mr. GUINTA.—but it is pretty clear that is exactly what happened. Let me ask about you. Have you gotten any preferential 

treatment since your work with unions on this from unions? 

Mr. WILSON. Of course not. 

Mr. GUINTA. Of course not. You have not done any work since 

this with any union? 

Mr. WILSON. Yes, I have done—— 

Mr. GUINTA. Oh, you have. 

Mr. WILSON. But that is not preferential treatment, sir. I completely resent the—do you have any evidence to suggest that, sir? 

Mr. GUINTA. I am asking the question. 

Mr. WILSON. I answered the question—— 

Mr. GUINTA. I would like to know what work are you doing with 

unions now. 

Mr. WILSON. The Teamsters approached me because I have had 

enormous success in restructuring broken businesses in many 

walks of life, almost entirely as a private investor, and they asked 

for my help in their largest employer, YRC, which we successfully 

restructured out of court, the largest out-of-court restructuring 

done in many years, in record time. And because of that success 

they asked me to work with them in other situations. 

88 

But I have also worked with private investors; I have worked on 

my own; I have been on the other side of the table from unions 

both before and since. So I am an investor and restructuring expert, and I work in situations trying to fix companies before they 

go away. 

Mr. GUINTA. Okay. Thank you very much for your testimony. 

I will yield back the balance of my time to the Chair. 

Mr. MCHENRY. I thank my colleague for yielding back. 

We will now recognize Mr. Johnson of Ohio for five minutes. 

Mr. JOHNSON. Thank you, Mr. Chairman, and to the rest of the 

Subcommittee members for granting unanimous consent to allow 

me to participate in today’s important hearing. 

As you may know, I represent Ohio’s Sixth Congressional District, which includes parts of northeastern Ohio and the southern 

suburbs of Youngstown. A large number of Delphi retirees, both 

salaried and unsalaried, live in the district that I represent. Since 

I was elected to Congress in 2010, I have been looking closely at 

the reason why one class of workers, the union retirees, were given 

preferential treatment over the non-union salaried retirees. 

It has now been almost 20 months and I still have not heard a 

compelling reason as to why this was done, and today I hoped that 

this hearing would produce answers to those questions that many 

of us have been asking. 

Mr. Bloom, last year, when you were still employed by the 

Obama Administration, I asked you whether or not that all parties 

involved were treated fairly and received neither more nor less 

than they would have simply because the Government was involved. Do you still believe, today, that all parties were treated 

fairly? 

Mr. BLOOM. Yes. 

Mr. JOHNSON. Did the newly restructured General Motors have 

any contractual obligations to top-up the union retirees’ pensions? 

Mr. BLOOM. I’m sorry, the newly restructured General Motors? 

Mr. JOHNSON. Yes. Did the newly restructured General Motors 

have any contractual obligations to top-up the union retirees’ pensions? 

Mr. BLOOM. I believe that the newly restructured General Motors, as part of their bankruptcy settlement with the UAW, reaffirmed their commitment to top up the pensions of the Delphi retirees. 

Mr. JOHNSON. Was it a contractual obligation? 

Mr. BLOOM. I believe it was part of their contract with the UAW, 

yes. 

Mr. JOHNSON. Okay. How can you say that all parties were treated fairly when the union retirees kept their full pensions, while you 

and others raising the pension funding status 100 percent and the 

union retirees kept one of the best health care plans in the U.S.; 

on the other hand, the salaried retirees lost up to 70 percent of 

their pension plans and their health care? I mean, I learned this 

principle in kindergarten. Fair is fair. How can you give one group 

100 percent and take 70 percent from another group and call that 

fair? 

Mr. BLOOM. First thing, I would say that the union retirees at 

General Motors did not retain the health care program they had 

89 

before; they received a VEBA, which is going to be responsible providing the health care. It does not have sufficient funds to provide 

the benefits they used to have, number one. 

Number two, when I used the word fair, I did not use the word 

equal. In a bankruptcy, all constituents, and Mr. Feldman made 

this point earlier, all constituents try to use whatever leverage they 

have to try to get the best arrangement they can. It was General 

Motors’ business judgment that the overall deal they made with 

the UAW was fair and the cheapest deal they could make—— 

Mr. JOHNSON. Mr. Bloom, I hate to cut you off. I appreciate your 

explanation. 

Mr. BLOOM. Well, I am trying to answer your question. 

Mr. JOHNSON. Reclaiming my time, Mr. Bloom. I appreciate your 

explanation, but I am running out of time. It is an interesting nuance that now we have changed the definition. There is a different 

between fair treatment and equal treatment under the law. That, 

I don’t understand. 

Mr. Zywicki, it is clear to me and many of my colleagues and the 

public that the Obama Administration’s auto bailout staff used taxpayer dollars to pick winners and losers, and now it seems, in an 

effort to not embarrass the President in a very contentious re-election campaign, members of the auto bailout team have refused to 

be interviewed by the inspector general on their actions. Now, we 

know they have agreed to today, but up until now it hasn’t happened. 

Tens of thousands of salaried retirees saw their retirement funds 

greatly reduced, by up to 70 percent, while the union retirees were 

made whole and were even topped up. Do you think it was fair? 

Mr. ZYWICKI. Equal and fair sound pretty much the same to me, 

Congressman. And I would also say, to Mr. Guinta’s earlier question, which was he asked whether or not the unions were given 

preferential treatment. What I heard Mr. Wilson say was that he 

justified preferential treatment that he thought was reasonable. 

But I don’t think there is any question the unions were given preferential treatment. 

Mr. JOHNSON. Mr. Zywicki, thank you for your answer. 

I would like to yield my last 20 seconds to my colleague from 

Ohio, Mr. Turner, for a follow-up question. 

Mr. TURNER. Mr. Bloom, you were saying that there was a contractual obligation with respect to the top-ups. Those don’t survive 

in bankruptcy, right? So they were free to either affirm or not affirm them. So you can’t say that it was a contractual obligation, 

therefore they must. They were in bankruptcy, correct? 

Mr. BLOOM. What I think I said was in the General Motors bankruptcy, General Motors made a contract with the UAW. That contract included affirming the prior agreement relative to the Delphi 

retirees. 

Mr. TURNER. Because I think you were leaving the impression 

with the Committee that there was some obligation within bankruptcy, and they had no obligation within bankruptcy, it was one 

that they affirmed, correct? 

Mr. BLOOM. That is what I said. 

Mr. TURNER. Thank you. 

Mr. JOHNSON. I yield back, Mr. Chairman. 

90 

Mr. MCHENRY. I thank my colleague for yielding back. 

With that, I will begin a second round of questions for the panel. 

Now, Mr. Wilson, I just want to make sure this is for the record. 

My colleague from Pennsylvania, Mr. Kelly, submitted for the 

record a newspaper article called City and State—I’m sorry, Mr. 

Guinta submitted that for the record. There is a quote in here, and 

I think this is the implication of Mr. Guinta. It is not to impugn 

your character in any way. I understand you took great offense to 

that, but simply saying, this is a quote from Mr. Gold, the Teamsters Director of Strategic Research and Campaigns: ‘‘We are not 

at liberty to discuss any details, but we approached Harry, Mr. 

Harry Wilson, after closely following the work on the Obama Administration’s Auto Task Force, and given the similarities that GM 

faces and YRCW faces, we believe he would be a tremendous help 

in fixing this challenging situation.’’ Now, that is the quote from 

this. 

The implication is that you are pretty agreeable to the unions, 

and based on their experience. It is not about impugning your character in any way, shape, or form. When you testify that you have 

these Republican credentials, you are testifying as an Obama Administration official. He is not talking about your character, he is 

just simply saying that your actions in public life have been agreeable to unions, and I just want to make sure that is corrected for 

the record and that is established. In no way it is a character assassination; that is the context of his questions and comments. 

I want to move on and I want to ask the three auto bailout task 

force folks, Mr. Bloom, Mr. Feldman, and Mr. Wilson about this 

and I want to get your comments on the record. Steven Rattner, 

the Obama Administration’s former car czar and one of your former 

colleagues and boss, admitted to the Detroit Economic Club this 

past December ‘‘we should have asked the UAW to do a bit more.’’ 

You can see the quote on the screen here. ‘‘We did not ask any 

UAW member to take a cut in their pay.’’ 

Do you agree with Mr. Rattner that, in retrospect, you should 

have asked the UAW to make more concessions? Mr. Bloom? 

Mr. BLOOM. I haven’t seen Mr. Rattner’s speech, so I don’t know 

the broader context, and I certainly don’t know what he means by 

a bit, so I can’t comment specifically. If your question is—— 

Mr. MCHENRY. No, I am asking you to comment—— 

Mr. BLOOM. You asked me if I agreed with him. I can’t tell you 

whether I agree with him. I can answer your question. If your 

question is do I think we should have asked the UAW to do more, 

my answer is no. 

Mr. MCHENRY. No? 

Mr. BLOOM. No. I think what we did was reasonable. 

Mr. MCHENRY. Okay. So no pay cut; fine and dandy. 

Mr. BLOOM. I think the aggregate deal that General Motors extracted from the UAW was reasonable. 

Mr. MCHENRY. Okay. 

Mr. Feldman? 

Mr. FELDMAN. Again, I don’t know what the context of Steve’s 

quote is. 

Mr. MCHENRY. Well, let me restate this. 

91 

Mr. FELDMAN. But what I would say about the UAW is you have 

to remember Chrysler went first. Chrysler’s negotiation with the 

UAW was really led by Fiat. So the deal that they established, 

which became part of the pattern bargaining in General Motors, 

was done between two third parties, did not have Task Force intervention, no thumbs on the scale. So, in hindsight, I am perfectly 

content with where everything came out. 

Mr. MCHENRY. Perfectly content. So no, the answer is no. 

Mr. FELDMAN. The answer is no. 

Mr. MCHENRY. Okay. 

Mr. Wilson? 

Mr. WILSON. Sure, Mr. Chairman. I have said publicly that I believe that the only kind of remaining legacy issue of General Motors is this pension under-funding, which is an issue—and drag on 

its stock—an issue for the company, and that I wish that the restructuring had addressed that in some way. It was the judgment 

of General Motors management, in their negotiation with the 

UAW, that they would keep the pension intact, and we didn’t intervene in that because this was our mandate. But I believe that that 

is an issue that could have been better addressed in bankruptcy. 

Mr. MCHENRY. So the answer is yes, no? 

Mr. WILSON. I think more could have been done. 

Mr. MCHENRY. More could have been done, okay. 

Well, thank you for answering the question. I wanted to give you 

an opportunity to respond. This was in Mr. Zywicki’s testimony. 

Mr. Feldman, if you will put up slide two on the screen here, you 

will see an email that you sent on June 30th, 2009. I recognize that 

you are not going to have instant recollection of this. In your email 

you ask GM to bring the UAW into the loop about negotiations over 

the termination of Delphi pension plans, stating that it ‘‘could get 

messy.’’ 

The Obama Administration contended that it would not get involved in the day-to-day affairs of GM. Was it your place to advise 

GM to talk with UAW, and was this advice based on prudent bankruptcy proceedings or was this more about political expediency? 

Mr. FELDMAN. I don’t think it was about either, bankruptcy or 

political expediency. I think if you go back to that moment in time, 

basically the PBGC had made the determination that it was going 

to terminate both the hourly plan and the salary plan. It previously 

made the decision on the salary plan and, really, what I was doing 

was reminding General Motors that, given their relationships with 

the UAW, that they needed to get out in front of the communications, not substantive advice to General Motors. 

Mr. MCHENRY. Well, this was prior to the PBGC terminating the 

plan. 

Mr. FELDMAN. Correct. But I think if I recall, and I don’t have 

perfect recall, but I think if you recall the PBGC, at that point, had 

started its process of thinking about a termination of the Delphi 

hourly and salaried plans. 

Mr. MCHENRY. All right. Thank you for putting that on the 

record. 

With that, for the second round, we will go to Mr. Cummings. I 

will recognize the Ranking Member for six minutes. 

Mr. CUMMINGS. Thank you very much. 

92 

Mr. MCHENRY. Thank you. 

Mr. CUMMINGS. Sorry Mr. Guinta had to leave, I am sure he had 

another engagement, but he said something that was very interesting. He said there are some folks that feel that only the Federal 

Government could bail out folks and whatever, make corporations 

run. I don’t want to take the words out of his mouth, but that is 

what he implied. 

I don’t think there is anyone over on this side that thinks only 

the Federal Government can do what the Federal Government was 

able to do. In other words, there are times when the Federal Government has to step in, and I think I am glad that the Federal 

Government did step in to this situation because we were able to 

save millions of jobs. 

And I know that there are people who are working right now 

who would say thank you very, very much for saving my job. There 

are people who, when their child got that notice about college, 

being accepted to a college, they don’t have to do what the guy did 

in the commercial, drop his head; they are able to say, okay, I can 

afford that college, we can do this. 

There are others that are able to provide food on the table for 

their families; there are others that are able to live the life that 

they want to live, as opposed to being on the sidelines of life, drawing an unemployment check. So I am glad that President Obama 

and this team did what they did. 

In the November 18th, 2008, New York Times op ed entitled, Let 

Detroit Go Bankrupt, Mitt Romney wrote, ‘‘A managed bankruptcy 

may be the only path to the fundamental restructuring the industry needs. The Federal Government should provide guarantees for 

post-bankruptcy financing and assure car buyers that their warranties are not at risk.’’ Mr. Romney predicted that, as a result of direct Government assistance to the auto industry, ‘‘its demise will 

be virtually guaranteed.’’ 

Mr. Wilson, has Mr. Romney gotten it right? Nearly four years 

since Mr. Romney wrote those words, is GM showing signs that it 

is guaranteed to fail? 

Mr. WILSON. I am going to try not to interject myself into the 

presidential debate, but I think—— 

Mr. CUMMINGS. No, I just want you—you are a Harvard—and 

that is a lot of thing, I was very impressed. A lot of people don’t 

realize this. You are an honor graduate of Harvard College and 

then the business school at Harvard. So I don’t want anybody to 

think you are some lightweights. That is why I am asking you. No, 

I am serious. I heard what they said about you and I am going to 

ask you some questions about your background a little bit later, 

but you can go ahead and answer the question. 

Mr. WILSON. Sure. I think the results, Congressman Cummings, 

speak for themselves. I think that GM had its most profitable year 

ever in its 103 year history in 2011, even though auto sales still 

have not recovered back to their normalized level. And I think it 

has a cost structure and a capital structure that have made it the 

largest and most profitable car maker in the world. So I think as 

long as they keep on the same path, they maintain the same discipline that they now have, I believe the company has a bright future. 

93 

Mr. CUMMINGS. Steve Rattner, the former head of the Auto Task 

Force, wrote, in a February 24th, 2012, New York Times op ed that 

Mr. Romney’s proposal ‘‘sounds like a wonderfully sensible approach except that it is utter fantasy.’’ Mr. Rattner further wrote 

that ‘‘every scrap of private capital had fled to the sidelines’’ and 

without government financing initiated by President George W. 

Bush in December 2008 the companies would not have been able 

to pursue Chapter 11 reorganization. 

Mr. Wilson, Mr. Bloom, Mr. Feldman, is Mr. Rattner’s assessment correct? Do you agree that there simply were no other options 

available aside from complete liquidation or the path that was 

taken? We will start with you, Mr. Bloom. 

Mr. BLOOM. It was our judgment, and I have no reason to question it, and it was based on extensive talking in the market, plus 

our collective experience, that if the Government had not provided 

the debtor-in-possession financing, that General Motors would have 

had to liquidate. 

Mr. CUMMINGS. Mr. Feldman? 

Mr. FELDMAN. I completely agree. We were in touch with the 

largest financial institutions in the world. They were simply not 

going to provide capital. We spoke to the largest private equity 

funds in the world; they were talking about needing nine months 

to due diligence General Motors to make a determination as to 

whether they would make an investment. The U.S. Government, 

unfortunately, was a lender of last resort, but it was the only lender, in my view. 

Mr. CUMMINGS. Mr. Wilson? 

Mr. WILSON. That is correct, sir. I talked about, in my written 

testimony, this unique confluence of events of both the failures of 

the companies at the time of a complete freeze in the financial 

markets, and it was those two things that made this so unusual. 

In normal times, even in bad economic normal times, you can find 

private capital. We beat the bushes to try to find private capital 

and there was no one willing to step forward with any kind of reasonable terms or any terms at all to fund even a few billion dollars, 

much less the $80 billion we needed to effectuate the rescue. 

One private equity firm approached us and said they would put 

in $1 billion, so we were still $79 billion short, if we guaranteed 

them an 8 percent return. Now, what would the reaction of the taxpayer have been, or this panel, had someone agreed to do that? It 

should have been, rightfully, outraged and, of course, we said no. 

So that was the state of the world in which we lived in March of 

2009 and the context in which we had to make decisions. 

Mr. CUMMINGS. I guess it is easy for people to sit in the bleachers and look down at the game and then try to second guess the 

efforts of the team, and even when the team wins and wins big 

time, sit on the sidelines and criticize the calls of the game. That 

is just my opinion. 

I yield back. 

Mr. TURNER. [Presiding.] Mr. Kelly? 

Mr. KELLY. I thank the Chairman. 

Just so we can be clear on this, and I sometimes get confused; 

I have only been here for a year and a half, but I think the confusion comes are we in Washington, D.C. or are we on Mt. Olympus. 

94 

Because the decisions made by government, really, we talk about 

they bailed out the auto industry. I understand you bailed out the 

auto industry, being the guy who sold cars his whole life in a family that has been in it over 60 years: it is the market that saved 

the auto industry. 

We are not talking, by the way, gentlemen, about union jobs and 

non-union jobs, Republican jobs and Democrat jobs; we are talking 

about American jobs. There is such a fragility to this market, and 

I really get confused sometimes when people who have never actually done it can tell you exactly what caused this. I mean, wow, I 

can tell you what caused it: overcapacity, over-production. 

When you are structured to do 16.5 million units a year and it 

goes down to 9 million units a year, my goodness, do you think you 

have a problem when you have lost over 40 percent of your market? The answer is yes. 

The Government interfered with the natural flow of the business 

cycle. They picked winners and losers. There is absolutely no doubt 

that they picked winners and losers. This idea that we have an 

evolving truth that, as time goes forward, we can talk about what 

is fair and what is equal, that we can pick and choose winners and 

losers and then sit back and say, but if we hadn’t done it, you don’t 

understand, the market would have collapsed. 

The market did collapse. It collapsed because people didn’t know 

what their future looked like. A guy who doesn’t know if he is 

going to have a job next year does not go into a 48-month commitment or a 60-month commitment to buy a new car. How do I know 

this? I stand on the lot with them, I sit in the showrooms with 

them, and I see their pain. 

But whenever you determine that one group will be bailed out 

and another will not, that is just flat outright wrong. Let’s not become confused. It is pure folly that if it had not been for this measure all of the manufacturers would have collapsed. Are you kidding 

me? Do you know there were auto manufacturers that actually 

gained market share during that time period? The market, not 

Government, determines success and failure. 

What happened in this situation is that the Government decided 

who wins, who loses; who gets fully funded, who gets nothing; who 

gets to sit at the table and eat, and who gets to sit outside. Let 

there be no confusion over the definition between of fair and equal. 

In the Country that I grew up in, it is the same thing. 

And I get sick and tired when people use a legal argument to do 

an end-run on what is right for the American people. That is absolutely pathetic. And if that is what we have reverted to, no wonder 

the American people don’t have faith in this institution anymore. 

No wonder they don’t have any faith in a judicial system anymore 

that picks and chooses winners and losers. Oh, yeah, you can fight 

it if you have enough money. 

I have to tell you, and you know and I know it and everybody 

else knows it in this Country, I am not against the unions. Listen, 

I love the unions. I love what they do. But why did you bring them 

to the table? There is an old saying right now that I really believe 

in: if you are not at the table, you are on the menu. 

This Government picked and chose who the winners and the losers were. The recovery of the American automobile industry has 

95 

nothing to do with this. There would still have been companies. 

These companies would have gone through a bankruptcy, would 

have come back. We didn’t save millions of jobs. A bankruptcy with 

historical, what a recovery period. The biggest bankruptcy in America history, bam, 36, 60 days we are back on the street and running 

again, and no problems. 

So when we talk about what is clear and what is transparent, 

when we talk about what is fair, when we talk about the 99 percent and the 1 percent, fairness, to me, is pretty much handpicked. 

I will be fair with certain people, but I won’t be fair with others. 

Mr. Chairman, I appreciate the hearing today and I know that 

there is some confusion about it, but from having been there and 

having to navigate through those very difficult times, keep in mind 

one thing: it is the market that will always be the opportunity. 

How you address that market, your ability to compete in a market 

that is global, your ability to build cars of the highest quality has 

never been contested. You know what the problem was? It cost too 

much to build them here. American people go out and the people 

I talk to, you know what they look at? How much is it going to cost 

me a month. So that is what it comes down to. 

So I am going to yield back, but I have to tell you, having been 

there and having been in those waters without a life jacket, without anybody throwing me a line, it is offensive to me that somebody 

was picked to win and the other people were picked to lose. 

Mr. CUMMINGS. Will the gentleman yield? 

Mr. KELLY. I do. 

Mr. CUMMINGS. I have tremendous respect for you and I know 

you know that. I just want to make sure I understand. Are you 

saying that this situation could have gone into bankruptcy and we 

would have still had the results that we have? Is that what you are 

trying to say? 

Mr. KELLY. Well, reclaiming my time. 

Mr. CUMMINGS. Yes, please. I say this most respectfully. 

Mr. KELLY. And I appreciate that, Mr. Cummings, because you 

and I do have a good relationship. It did go through bankruptcy 

and it came back. The question is who was made whole, who was 

made partial, who was left out in the cold. 

And I have to tell you, gentlemen, I appreciate you being here 

today, but it took a year? It took a year to come? It took a year 

to answer these things from SIGTARP? Really? I have a passion 

for this too. In fact, my friends say to me all the time, Kelly, you 

don’t make any sense to me; you left what was probably the next 

to the last on the list of what people respect, being the automobile 

business, and you went to the worst. 

[Laughter.] 

Mr. KELLY. We rely on you. You are the people who we rely on 

for the answers. And when you don’t testify, what does that look 

like? Tell me. Not in legal jargon, but in common sense, everyday 

American jargon. What does that look like to the people who pay 

for all this, the American taxpayers? It is pathetic. The fact that 

you can do it and you take advantage of it is even more pathetic. 

I yield back my time. 

Mr. TURNER. Thank you. As we proceed with additional questions, I just want to remind everyone that the topic of this hearing 

96 

is The Administration’s Auto Bailouts and the Delphi Pension Decisions: Who Picked the Winners and Losers. It is not the issue of 

the auto bailout itself, the bankruptcy itself; it is what happened 

with the Delphi pension decisions. We are having this hearing because these three gentlemen refused to answer questions. Mr. 

Bloom agreed to answer written questions for me a year ago at a 

hearing, refused since to answer them, and these three gentlemen 

have refused to answer SIGTARP’s questions. The GAO report is 

not sufficient; we need the SIGTARP report. 

So, with that clarification, I will turn them to Mrs. Maloney. 

Then after her question we will open it up to an unlimited time period since Mr. Bloom indicated that the only way he was going to 

answer the questions that he had promised Congress that he would 

answer a year ago in writing is to be asked those questions in this 

hearing room. I will stay and ask him those questions. 

Mrs. Maloney. 

Mr. CUMMINGS. Would the gentleman yield just for one second, 

one question, Mr. Turner? 

Mr. TURNER. Yes. 

Mr. CUMMINGS. I just want to make clear on this. Did Mr. Bloom, 

I have been here and I have listened. Did he say the only way that 

he would answer questions is to answer—— 

Mr. TURNER. Well, he is before us. 

Mr. Bloom, I asked you—— 

Mr. CUMMINGS. Is that what you said? 

Mr. TURNER.—if you would answer these in writing, and you said 

that you would not. I certainly intend to ask you these questions 

here because of that, and your answer stands in the record. 

Mr. BLOOM. What I said was if you want to go through these 

questions, I am here today. I also said I would talk to SIGTARP. 

If you would like to have SIGTARP ask me these questions, I will 

do it. 

Mr. TURNER. But you refused to provide me in writing the answers that you promised, and we showed the video—— 

Mr. BLOOM. As I said—— 

Mr. TURNER.—before this Committee previously in writing. 

Mr. BLOOM. I responded to that already. 

Mr. CUMMINGS. I just wanted a clarification. That is all. 

Mr. TURNER. Thank you. 

Mrs. Maloney. 

Mrs. MALONEY. Well, pertaining to the pension, I would say that 

members of Congress recognize and sympathize with the pain that 

many Delphi workers are experiencing since GM decided not to 

top-up their pensions, and since everybody seems to want to attack 

Mr. Bloom, I will just ask him. Do you recognize that pain too, Mr. 

Bloom, of some people who were not made whole? 

Mr. BLOOM. Of course. Speaking personally and to my knowledge, everybody on the Auto Task Force understood and had great 

sympathy for all of the people involved in this tragic circumstance 

who had to make sacrifices. The Delphi salaried employees are on 

the list, but unfortunately, Congresswoman, the list is very long. 

And as I have said repeatedly, our judgment was, on balance, while 

there was terrible suffering, much greater suffering was averted. 

But that in no way is to suggest that there was not suffering. 

97 

Mrs. MALONEY. Well, I agree with your statement. Had Delphi 

failed, had GM failed, not only would their workers have suffered, 

but also the entire communities. And I would say our overall economic health of our Country would have been much worse. 

I would like to take issue with the prior gentleman’s statement. 

He said that it could have been handled and it would have worked 

itself out on it own. But I want to reference and put into record 

a November 17th publication of 2010, and this publication is entitled The Impact on the United States Economy of the Successful 

Automaker Bankruptcies. This was issued by the Center of Automotive Research, so this is an independent validation, and in this 

research, which is independent from the GAO research that basically says the same thing, the Government’s actions avoided personal income losses totaling over $96 billion and avoided 1.1 million net job losses in 2009 and another 314,000 in 2010. 

So, Mr. Bloom, since everybody wants you to answer the questions, I will ask you—and, Mr. Feldman, Mr. Wilson, if you would 

like to comment—is that correct? Do you agree with this independent source? Had it not been for the Government intervention, 

your work for crucial months in 2009, could the Country have experienced more than a million net job losses? I predict is even more. 

The impact even hit New York State for the suppliers that went 

out of business that were supplying the auto industry. 

So I just wonder do you agree with this statement from this independent research organization? 

Mr. BLOOM. I haven’t reviewed the exact—— 

Mrs. MALONEY. Well, it basically says had we not acted, we 

would have lost—— 

Mr. BLOOM. But our judgment at the time, and the material I 

have seen since then that I have reviewed that suggests that the 

losses would have been very significant in jobs. Cars said a million; 

others have used larger numbers. Mark Zandi recently said 2.5 million jobs were at risk. So I am not enough of an economist to choose 

between them, but I think our judgment that the losses could have 

been quite catastrophic has been confirmed. 

Mrs. MALONEY. I just want to ask you, Mr. Bloom, has any member of Congress congratulated you and thanked you for your hard 

work in what resulted in, by all accounts, saving over a million jobs 

that impacted many of our great States like Ohio, Michigan, Pennsylvania, Missouri, and Illinois? They are all interrelated in the 

supply chain of the auto industry. 

I just would like to ask Mr. Bloom, Mr. Feldman, and Mr. Wilson 

has any member of Congress ever thanked you? Today I want to 

thank you for your public service. I want to thank you for your 

hard work in saving American jobs and I would say saving American industry and prestige. I personally cannot even think of an 

America that doesn’t make her own cars. And now we have 

bounced back with that American spirit, can do, and are even exporting cars and employing people and growing. I just want to 

know has any member of Congress said thank you? 

Mr. BLOOM. Congresswoman, I very much appreciate your kind 

words. From time to time, other members of Congress have acknowledged that some good things happened. 

98 

Mrs. MALONEY. Mr. Feldman, has anyone ever thanked you? I 

thank you today. Has anyone ever thanked you? 

Mr. FELDMAN. I appreciate that, Congresswoman. I think this is 

the first time I have been thanked. 

Mrs. MALONEY. Well, thank you very much. You are an American 

hero. I appreciate your hard work. 

Mr. Wilson? 

Mr. WILSON. Thank you as well, Congresswoman. I have had a 

few Democrats and Republicans thank me over time, but it is always nice to hear it. Thank you. 

Mrs. MALONEY. Well, I think more of us should be saying thank 

you. Thank you for your public service. You saved jobs; you helped 

America; you grew our economy. Thank you. 

Mr. TURNER. Ms. Romero, I would like to thank you for bringing 

forth the light that these three gentlemen have refused to talk to 

you and for your bringing it to our attention in a way where we 

could pull them before us and get them to talk to us to commit to 

talk to you. 

We are going to go to a 10 minute round of questioning. My next 

questions are going to be for Mr. Feldman. 

I do have a quick question for you, Ms. Romero, first. You said 

in your letter SIGTARP believes that the Auto Task Force played 

a role in the pension decision and these individuals’ failure to 

speak are a significant obstacle. You do believe that, right, that 

they played a role? 

Ms. ROMERO. Yes. Yes. 

Mr. TURNER. Thank you. 

Mr. Feldman, we are going to spend a significant amount of time 

on the issue of what you did, what your role was, because that is 

really what you guys aren’t speaking about. I mean, the whole 

question from SIGTARP, GAO, this Congress, have been what did 

you do; what was your role; what was the basis of the decisionmaking. 

Now, I am going to read you your bio, that I am assuming you 

either approved or wrote yourself. Mr. Feldman was recruited to 

service as chief legal advisor for the Obama Administration’s Task 

Force on the auto industry. This cabinet level Treasury Department Task Force was assembled to, quoting your bio, help develop 

the overall strategy to restructure and recapitalize General Moors 

Corporation and Chrysler, a ‘‘strategy’’ which resulted in the 

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

Now, SIGTARP believes that you were involved. You said you 

were negotiating among the parties. I understand that, from an absolute legal standpoint, that PBGC is a party to this and has an 

ability to make its own decision in settlement negotiations, but 

they didn’t do that in a vacuum, right, Mr. Feldman? They had you 

running in between a bunch of different other people making proposals to PBGC as to what they should or should not do. Now, isn’t 

that correct, Mr. Feldman? 

Mr. FELDMAN. I think really what they would or would not be 

willing to do—and to just take a step back, the Auto Team, which 

was the working group at Treasury that reported to the Auto Task 

Force, was really charged with helping restructure Chrysler and 

99 

General Motors. We took on additional tasks that were critical to 

those two entities, including the financial arm of Chrysler, the financing arm of General Motors, and then ultimately Delphi because General Motors was providing funding and at the time we 

got involved was really the sole source of funding for Delphi. But 

we did not—go ahead, you can take back. 

Mr. TURNER. Thank you. Going to the issue, then, using your 

language instead of mine, of determining what they would or 

wouldn’t do, who are the parties that you ran in between of doing 

the negotiating determining the would or wouldn’t do? Because 

would or wouldn’t, it is still going to PBGC and saying someone 

would like you to do X; will you do X, right? 

Mr. FELDMAN. The PBGC and General Motors were the main 

parties involved in making decisions—well, the PBGC was the 

main party involved in making decisions about the termination of 

Delphi’s pension plans. What the impact of that was had an impact 

on General Motors, and I was playing essentially shuttle diplomacy 

between General Motors and the PBGC, which candidly didn’t get 

along very well. 

Mr. TURNER. And who else? 

Mr. FELDMAN. On that issue? 

Mr. TURNER. Yes. 

Mr. FELDMAN. I reported to the Auto Team, but I didn’t—there 

wasn’t a—I am not thinking of a party that was directly involved 

in that. 

Mr. TURNER. You didn’t share any information about what the 

package was in developing this strategy that is in your bio with individuals at the White House, with individuals at Treasury? Is that 

what your testimony is? 

Mr. FELDMAN. Well, I worked for Treasury, so certainly I reported to the Auto Team—— 

Mr. TURNER. Outside of the Auto Team. 

Mr. FELDMAN. I kept George Madison informed. 

Mr. TURNER. In Treasury, outside of the Auto Team. 

Mr. FELDMAN. George Madison was General Counsel of Treasury, 

not part of the Auto Team. I was in the Legal Department at 

Treasury, so I did keep Mr. Madison updated; he was the General 

Counsel of Treasury. But in terms of the White House, the only 

people I ever spoke to at the White House was Brian Deese and 

Larry Summers. 

Mr. TURNER. Okay, we are going to turn to emails now. We have 

a July 6th email from Joseph House at PBGC. This one we don’t 

have on the top. 

Mr. FELDMAN. Okay. 

Mr. TURNER. It is a July 6th email, 9:45 p.m., so he is emailing 

late, and he said I just spoke with Matt Feldman, who relayed the 

following: ‘‘We agreed that any settlement discussions would be 

best saved for direct coordination between U.S. Treasury and 

PBGC at this point, rather than a subject of group coordination.’’ 

Now, he is saying that the settlement discussions were, at that 

point, as a result of his conversation with you, a direct coordination 

between Treasury and PBGC. He does not mention General Motors. Do you disagree with his email? 

100 

Mr. FELDMAN. You would have to ask Mr. House what he meant 

by the email, but I interpret what he meant to mean that we were 

going to talk to the PBGC and then we, meaning Treasury, were 

going to talk to General Motors. Treasury did not play a role or did 

not have authority to settle issues between the PBGC and General 

Motors. 

Mr. TURNER. But you did have a role in making recommendations and making proposals. 

Mr. FELDMAN. I would certainly comment on proposals and recommendations. The PBGC would ask me did I think that something would be acceptable; General Motors would say do you think 

the PBGC would find something acceptable. I certainly gave them 

my judgment. 

Mr. TURNER. Well, what occurred after the July 6th email—I am 

going to read that one again. This is Joseph House saying that he 

had just spoken to you and that he agreed with you that any settlement discussions would be saved for group coordination between 

Treasury and PBGC, rather than direct coordination, is followed by 

the email that I showed you previously, which is slide 6 on July 

8th. 

If we could have slide 6, please. 

[Slide.] 

Mr. TURNER.—where again Mr. House is reporting that he had 

spoken to you. This one is 6:23 p.m. and this is July 8th. So subsequent to your reported agreement by Mr. House that we are going 

to directly coordinate this settlement negotiation between Treasury 

and PBGC, he then reports that you say that Feldman reported 

that he made progress discussing our proposal with a number of 

key folks in Treasury and at White House, but has not yet wrapped 

up his coordination. 

Let’s turn to slide 5, then. 

[Slide.] 

Mr. TURNER. This is July 15th, 10:57 a.m. This is Karen Morris 

forwarding one from John Minke and it says, Feldman will then 

take it to GM and get their approval, which will either be a rubber 

stamp or one last chance to nick us on the deal. 

We all accept that PBGC has the legal authority with respect to 

its decision-making. We also know that it did that in the environment of the pressure of these negotiations and we also understand 

that there were a number of parties who had positions and roles 

and proposals as to what PBGC should do or, using your language, 

would or wouldn’t do. 

Mr. Feldman, we would like to get a better understanding of 

that, which is why you have been called this Committee and why 

SIGTARP wants to talk to you, because they believe that you were 

actively involved in the decision-making. Now, I am going to ask 

you a very simple question. I am assuming that with respect to the 

Delphi salaried pensions, that the proposals that ended up with the 

pensions being cut were not solely generated by PBGC; that in the 

negotiations with your liaison with the White House, others in 

Treasury outside of the Auto Task Force, the Auto Task Force, and 

General Motors, that they had positions and recommendations as 

to how those pensions should be handled. Is that correct? 

101 

Mr. FELDMAN. I never had a conversation, nor do I recall any 

conversations where we told the PBGC how the—— 

Mr. TURNER. I didn’t ask you that. 

Mr. FELDMAN. I am sorry. 

Mr. TURNER. I ask you whether or not anyone else had a position 

or a proposal in your shuttle negotiations with respect to the Delphi salaried pensions other than PBGC. That is a pretty simple 

question. I would assume the answer has to be yes. 

Mr. FELDMAN. I don’t believe so, not with respect to the salaried. 

Mr. TURNER. So you are testifying under oath before this Committee that at no time did anyone else that you were working with 

in your position as the chief legal adviser shuttling negotiations, no 

one else offered you and no one else provided you any other proposal with respect to the Delphi salaried pensions in any aspect? 

Mr. FELDMAN. Let me correct it. Delphi certainly, its position 

was it wanted to retain the pension plans and have General Motors 

pay for it or assume it. As I recall, and the time frame is a little 

bit fuzzy, but, as I recall, Delphi certainly did not want to give up 

its pension plans in the early stages of my involvement. 

Mr. TURNER. Anyone else have a position or a proposal with respect to those pensions during your settlement negotiations? 

Mr. FELDMAN. I don’t want to be unequivocal, but not that I recall. 

Mr. TURNER. As you were before. Well, that is part of the subject 

matter of this investigation and SIGTARP’s investigation, so I wish 

you well in your recollection process with the—— 

Mr. FELDMAN. I am happy to look at more emails or other information you might have. 

Mr. TURNER. Excellent. 

Mr. FELDMAN. I don’t recall it. 

Mr. TURNER. Excellent. 

Mr. Cummings? 

Mr. CUMMINGS. Mr. Chairman, just out of curiosity, are you 

planning to end the hearing now or are you getting ready to just 

go on and on and on? 

Mr. TURNER. No, I am going next to Mr. Bloom for him to answer 

the questions that he is now refusing to answer in writing that he 

had promised Congress in June of last year that he would answer 

in writing, because he invited those questions, and I will entertain, 

with your concurrence, the dismissal of the other panel members 

if there are no other questions for those other panel members, so 

Mr. Bloom can stand before us and answer the questions he has 

refused to answer. 

Mr. CUMMINGS. Well, that is fine with me. And I hate to waste 

people’s time, so I think that is very generous of the Chairman. 

You know, one of the things, Mr. Chairman, it has come to my attention that your questions of Mr. Bloom have been answered by 

the Secretary of the Treasury, and Mr. Bloom forwarded your questions after the hearing. 

Mr. TURNER. Actually, no, they haven’t. I have the Secretary’s 

answers and his answer was this is a matter of litigation; I cannot 

answer. 

102 

Mr. CUMMINGS. I see. All right. But if the Chairman wants to 

dismiss, I think we should allow these folks to go. I have no problem with that. 

Mr. TURNER. I am certainly fine with that. 

At this point, then, we will take—— 

Mr. CUMMINGS. One other thing. I did forget to say one thing. 

When Mrs. Maloney was asking the question about anybody saying 

thank you, I just want you all to know I am thanking you, and I 

thank you very much. 

To Ms. Romero, I am hoping that this has been helpful to you. 

I am hoping that you get the cooperation you need. We, on both 

sides of the aisle, support your efforts and we want to make sure 

you have access to the information that you need in order to do 

your job, and I want to thank you for working with both of our offices to try to make this thing move along. Thank you. 

Ms. ROMERO. Thank you so much, Ranking Member Cummings. 

Mr. TURNER. At this point we will take a one minute recess while 

the other members of the panel but for Mr. Bloom excuse themselves. 

[Pause.] 

Mr. TURNER. Mr. Bloom, we are going to get started. We have 

votes that are going to occur, so we are going to be limited, as I 

am certain you are very sad to hear, in the number of questions 

that we are going to ask you. I want to reiterate that these are 

questions that were given to you on June 22nd that to this Committee, in a seat similar to the one you are sitting in, you said absolutely that you would answer in writing. You did not answer 

them and today you are refusing to answer them in writing, so we 

are going to go through this where I ask you the question and get 

your answer. 

Mr. BLOOM. Congressman, the only clarification I would like to 

make is that I believe that the letter that the Secretary of the 

Treasury or Tim Madson, on behalf of the Secretary of the Treasury, sent you on November 1st, 2011, did not refuse to answer the 

questions because of the litigation. In fact, there are two and a half 

pages of response to the issues raised in the letter. But that said, 

if you have questions, I will do my best to answer them. 

Mr. TURNER. We will submit those questions and answers, because we have them, obviously, for the record and everyone can see 

that in fact they say this is subject to litigation. But we are not 

going to waste our time on this. 

Mr. CUMMINGS. Mr. Chairman, Mr. Chairman, Mr. Chairman. 

Just a point of clarification. I have the letter, the November 1st letter, and I have just kind of perused it, but my staff has read it in 

detail, and just for clarification, you said that he said that it was 

under litigation. It just seems like there is a lot more to this letter 

than that. He seems to be answering quite a few things in detail. 

I just wanted clarification on it, that is all. 

Mr. TURNER. We have answers both in this letter and also letters 

answered directly from Secretary Geithner, and in that letter he 

specifically states, he cited both and you cited it previously, an answer of litigation. And this does not answer the questions, but we 

will go forward. 

103 

Mr. Bloom, in the discourse between Treasury and PBGC, what 

role did the Auto Task Force play in the decision-making to terminate the pension plan of the Delphi salaried retiree workers? 

Mr. BLOOM. I couldn’t really expand on what Mr. Feldman said. 

I think that would be my answer. 

Mr. TURNER. So you have no separate answer of yourself. 

Mr. BLOOM. No. 

Mr. TURNER. Well, Mr. Feldman indicated that it was an advisory position, and what we would like to know is what was the position of the Auto Task Force in those discussions with respect to 

the Delphi salaried workers and their pensions. 

Mr. BLOOM. I think it was what Mr. Feldman said it was. 

Mr. TURNER. You are going to do that for every answer? 

Mr. BLOOM. I don’t know. 

Mr. TURNER. You don’t have an independent answer? 

Mr. BLOOM. On that question, Congressman, I do not have a different answer. If I agree with what has already been said, I 

thought it would be expeditious for me to—— 

Mr. TURNER. If you had answered it in June would you had your 

own answer? 

There are many that believe that there were significant numbers 

of conflicts of interest between the Treasury, PBGC, the Auto Task 

Force, and new GM. Secretary Geithner serving on both the board 

of PBGC, being the Secretary of the Treasury, the Auto Task Force 

being part of Treasury, and, of course, new GM receiving from the 

Treasury its capital infusion. 

Did you ever have a discussion at the Auto Task Force, the actual or potential conflicts within Treasury and the Auto Task Force 

with respect to this bankruptcy proceeding and the Delphi salaried 

pensions? And what was the subject of those discussions? 

Mr. BLOOM. I do not recall a conversation in Treasury about 

whether or not the issues you raise would pose a conflict of interest. I do not recall such a discussion. 

Mr. TURNER. Do you believe now that they do? 

Mr. BLOOM. I don’t see where a conflict of interest would have 

been, no, sir. 

Mr. TURNER. In the termination of the Delphi salaried pension 

plans, a significant issue of dispute are the foreign assets held by 

Delphi and the liens that PBGC either asserted or might have asserted against those liens. Ultimately, PBGC released these liens 

as part of a settlement in exchange for payments by new GM that 

did not include the Delphi salaried retirees’ pension plans; the liens 

did. Do you recall any discussions at the Auto Task Force concerning Delphi’s foreign assets, the liens, and PBGC? 

Mr. BLOOM. I do not recall any such discussions. 

Mr. TURNER. Would you assert today that those discussions did 

not occur? 

Mr. BLOOM. No. 

Mr. TURNER. Is it possible they occurred? 

Mr. BLOOM. I think anything is possible. I do not recall any 

such—— 

Mr. TURNER. Did you ever have a conversation about Delphi’s 

foreign asset and the liens of PBGC? 

104 

Mr. BLOOM. I have no recollection of having any conversation of 

that nature. 

Mr. TURNER. We are getting pretty far here. So far we get you 

will give us the answer of the gentleman who answered previously 

or you don’t recall. Helpful. 

Mr. BLOOM. I can only testify to the best of my ability, Congressman. 

Mr. TURNER. Clearly. There is a significant amount of concern 

that has been raised about political considerations with respect to 

the PBGC negotiations and the pension plans, salaried retirees’ 

pensions, and even the issue of the foreign asset liens of PBGC. 

Did you ever have any consideration or any discussions concerning 

the political effects of the outcomes of your recommendations? 

Mr. BLOOM. Could you clarify what you mean by the political impacts of the outcomes? 

Mr. TURNER. I think it is fairly clear. Did you have any discussions concerning the political aspects or consequences of your decision-making? 

Mr. BLOOM. No, not that I recall. 

Mr. TURNER. The United Auto Workers have stated that the Delphi salaried retirees should be treated with fairness and equity. 

Additionally, the UAW stated in a letter dated January 15th, 2010, 

that it supports providing the same top-ups to the salaried workers 

as a matter of fairness and equity that had bee provided to other 

Delphi workers. You answered Mrs. Maloney and indicated that 

you understand the pain that people have. Do you agree with 

UAW? 

Mr. BLOOM. I am not familiar with the full context of the UAW’s 

comment, but I can answer your question. I can’t say whether I 

agree with them or not because I haven’t read that document. I 

think a lot of people, as I said earlier, have suffered as a result of 

the GM bankruptcy, and if Congress would choose to help one of 

those constituents who was hurt, that would be up to Congress to 

do. I think it would open a can of worms, but I don’t have a judgment as to whether Congress ought or ought not to do it. 

Mr. TURNER. Mr. Cummings? 

Mr. CUMMINGS. I guess I have about, what, about 10 minutes? 

I am going to read this letter into the record. 

November 1st, 2011, Department of Treasury. It is addressed to 

the Honorable Michael R. Turner and it says, Dear Representative 

Turner. This is from Mr. Massad, the Assistant Secretary, Department of Treasury. And this is one of the letters that we were just 

talking about in response to questions that were raised sometime 

earlier by Congressman Turner. 

It says I am writing in response to your recent letter to Secretary 

Geithner in which you raise certain questions regarding the Pension Benefit Guaranty Corporation’s decisions related to the pensions of certain former employees and retirees of the Delphi Corporation. You submitted these questions previously to Mr. Ron 

Bloom, who has since left his position with the Administration. 

Please allow me to respond on behalf of the Secretary. 

We recognize that the bankruptcy of Delphi has been extremely 

difficult and challenging for all its employees and we are acutely 

aware of the significant hardships that the entire United States 

105 

automobile industry has faced in recent years. The issues you raise 

in your letter pertaining to certain agreements entered into by 

General Motors Corporation in 1999, when the old GM spun off 

Delphi into a separate company, as well as decisions made in connection with Delphi’s 2005 bankruptcy filing. 

Around the time of Delphi’s 1999 spinoff from old GM, old GM 

entered into ‘‘top-up agreements’’ commitments to pay supplemental pension benefits to certain participants in the Delphi hourly 

pension plan, represented by three unions, United Auto Workers, 

the International Union of Electrical Workers, and United Steel 

Workers. Those agreements provided that, in the event that benefits under Delphi hourly plan were frozen or the plan was terminated, old GM would cover any shortfall below the level of benefits 

promised. 

Over the next several years, Delphi suffered large losses and 

filed for bankruptcy in October 2005. In 2007, old GM, Delphi, and 

the three unions who were party to the top-up agreements agreed 

to extend these commitments. Although there were negotiations between old GM and other unions concerning similar arrangements, 

old GM did not enter top-up agreements with any other union, nor 

did it enter into an agreement with participants in the Delphi salary pension plan. At the time of the 1999 spinoff, the Delphi salary 

plan was fully funded; whereas the Delphi hourly plan was underfunded. Delphi’s original plan was to emerge from bankruptcy proceedings without terminating its pension plans. 

In 2009, four years after Delphi filed for bankruptcy protection 

in 2005, it was determined that, for Delphi to emerge from Chapter 

11, its pension plans would need to be terminated. As a result, Delphi entered into agreements with the PBGC to terminate the Delphi salary plan and the Delphi hourly plan, and placed both plans 

under the trusteeship of the PBGC. 

Treasury did not have a role in authorizing, approving, or consenting the termination of the Delphi salary plan. In 2009, in connection with the bankruptcy proceeding of old GM and Delphi, 

General Motors Company agreed to honor certain commitments 

into which old GM had entered, including the 1999 top-up agreements. New GM has stated publicly that although the Delphi bankruptcy was ‘‘a very difficult situation,’’ it felt that it had made appropriate provisions for the Delphi salary plan at the time of the 

spinoff in 1999. 

The questions you submitted to Mr. Bloom primarily asked 

whether the Presidential Task Force on the auto industry was involved in the decisions made by the PBGC and GM regarding the 

pensions of former employees and retirees of Delphi. As Mr. Bloom 

explained in various congressional testimonies in 2009, and more 

recently before the Subcommittee, the previous administration provided temporary loans to General Motors and Chrysler to avoid uncontrolled liquidations of these companies at a time when our economy and financial system were already severely stressed. 

President Obama agreed to extend that assistance provided that 

the companies produce viability plans as to how they could become 

competitive. On February 15th, 2009, President Obama created the 

Auto Task Force, made up of cabinet level officials and staffed by 

Treasury, to review the viability plans for the companies. The overVerDate Aug 31 2005 13:48 Sep 19, 2012 Jkt 000000 PO 00000 Frm 00109 Fmt 6633 Sfmt 6633 C:\DOCS\75807.TXT APRIL
106 

riding objective that guided the Auto Task Force was to bring much 

needed stability to this crucial sector of our economy, keep hundreds of thousands of Americans working, and give General Motors 

and Chrysler a chance to become viable and competitive American 

businesses. 

As Treasury officials have stated, the President directed the Auto 

Task Force to take a commercial approach and ensure that in any 

restructuring the companies took on only those liabilities necessary 

for successful operation. The Auto Task Force refrained from intervening in the day-to-day decisions of these companies. These companies’ restructuring, including GM’s decision to assume top-up 

agreements entered into by GM in 1999, were consistent with those 

principles. 

These matters have also been reviewed by our Nation’s judiciary 

in two contexts, as well as by the Government Accountability Office. As you may know, the termination of Delphi salary plan and 

its placement under the trusteeship of the PBGC are currently the 

subject of litigation in black versus Pension Benefit Guaranty Corporation. On September 2nd, 2011, the court dismissed the portion 

of the case against Treasury, the Auto Force, Secretary Geithner, 

Steve Rattner, and Ron Bloom. 

In addition, the bankruptcy court in the Southern District of 

New York reviewed and approved GM’s bankruptcy and reorganization. In assessing the new GM’s decision to honor the top-up 

agreements, the bankruptcy court found no violation of the bankruptcy code or applicable case law, and concluded that, as a matter 

of reality, the purchaser needs a properly motivated workforce to 

enable the new GM to succeed, requiring it to enter into satisfactory agreements with UAW, which includes arrangements satisfactory to the UAW for UAW retirees. 

In addition, the bankruptcy judge and the district court approved 

the transaction at every step. None of those judges seriously questioned the validity of the legal process, which was typical for a 

bankruptcy sale. In fact, the bankruptcy judge stated, ‘‘While because of the size of this case and interests at stake, GM’s Chapter 

11 case can hardly be regarded as routine. GM’s proposed Section 

363 sale breaks no new ground. This is exactly the type of situation 

where there is a good business reason for immediate sale.’’ 

In its March 30th, 2011, review of the key events leading to the 

termination of the Delphi hourly and salary plans, GAO stated that 

‘‘The Auto Task Force did not indicate what should be done with 

the Delphi pensions.’’ 

We are committed to continue transparency regarding the restructuring of General Motors. There is an extensive public record 

available concerning treatment of the pensions of Delphi employees 

and retirees. Congress has held several detailed hearings on the 

subject and there are a number of publicly available court filings, 

bankruptcy court opinions, oversight reports, and statements from 

Delphi and General Motors. 

Treasury has posted online certain key automotive industry financing program documents which are available at 

FinancialStability.gov. Additionally, pursuant to a request from 

you and other members of the House Committee on Oversight and 

107 

Government Reform, Treasury has provided you numerous documents related to the Delphi pension matter. 

In the end, GM underwent a fair and open bankruptcy. This 

process required deep and painful sacrifices from all stakeholders, 

including workers, retirees, suppliers, dealers, creditors, and countless communities that relied on a vibrant American auto industry. 

However, the steps that the Administration took not only avoided 

a catastrophic collapse and brought needed stability to the entire 

auto industry, they also kept hundreds of thousands of Americans 

working and gave GM a chance to once again become a viable, competitive American business, and they avoided further shocks to our 

financial system and economy at a time when we could least afford 

it. 

Thank you for your continued attention to this important matter. 

Please feel free to contact me or my staff if we can be of further 

assistance. Sincerely, Timothy G. Massad. 

Mr. Bloom, do you have anything you can add to that? Have you 

learned anything else in an effort to satisfy the Chairman’s questions? 

Mr. BLOOM. No. 

Mr. CUMMINGS. I yield back. 

Mr. TURNER. Mr. Bloom, I want to thank you for sitting through 

and answering some of the questions that I provided you in writing 

on June 22nd of last year that you had committed to answer in 

writing that you have never submitted answers to. And the reason 

why I appreciate you sitting here and answering them is because 

I wanted, on television and on the record, both your demeanor and 

your lack of answers to be evident. 

Mr. Bloom, we have had this hearing because you refused, for 14 

months, to answer SIGTARP’s questions. You had to come to our 

hearing because we have subpoena power; they don’t. You come 

and you say I will be glad to answer SIGTARP’s questions. Mr. 

Bloom, you are not glad to answer anybody’s questions. You are not 

glad to answer mine; you are not glad to answer anybody’s. And 

you were responsible for affecting billions of dollars and thousands 

of people’s lives with our taxpayers’ dollars. 

People are not only hurt, they are angry, and this is exactly, contrary to what President Obama promised us with the most open 

administration, not someone like you sitting in front of us, unwilling to answer the questions. 

Now, I want to—Mr. Cummings read the letter. I want to re-emphasize the paragraph that he read that is on page 2, at the bottom, that says, As you may know, the termination of the Delphi 

salary plan and its placement under the trusteeship of the PBGC 

are currently the subject of litigation in Black v. Pension Benefit 

Guarantee Corp. 

This letter is not an answer to the questions that I had submitted to you. 

Then we have, and I am going to submit these for the record, 

Secretary Geithner’s answers, which were similar questions that 

were posed as posed to you, where we were just trying to find out 

how were these decisions made, who made them, so that you can 

have the appropriate type of oversight over taxpayers’ dollars, because that is how Government works; it is open, it is a democracy. 

108 

You are not playing with the undiscretionary dollars of the President, you are actually effectuating and administrating taxpayers’ 

dollars. 

So Geithner had the same questions. I am going to submit these 

for the record. And he says openly in the beginning answer that 

the termination of the Delphi retirement program for salary employees and its placement under the PBGC’s trusteeship are currently the subject of litigation in Black versus PBGC. I cannot comment on the specifics of any pending litigation. 

And then for the next eight pages, these are the Secretary’s response. I cannot comment specifically on these topics as they are 

the subject of pending litigation. I cannot comment specifically on 

these topics as they are the subject of pending litigation. I cannot 

comment specifically on these topics as they are the subject of 

pending litigation. And he goes on for the next 33, almost 35 questions to answer the same way, that he can’t answer us. 

So here we sit. People have lost their pensions; billions of dollars 

spent. The Secretary of the Treasury won’t answer the questions. 

You won’t answer the questions. SIGTARP has many of them. We 

are going to work with SIGTARP on their processes of trying to solicit from you substantive and valuable answers to the questions. 

This Committee has subpoena power, it has deposition power. 

Mr. Bloom, I assure you, we can continue to revisit this with you 

and your panel members. I would certainly hope that when you say 

you are going to participate and answer SIGTARP’s questions, that 

it is certainly going to be more thorough than your answers here. 

Now, Mr. Bloom, we are all waiting for a SIGTARP report that 

is going to tell us what happened. GAO can’t give it to us. This 

process should not be in this manner because of your commitment 

to the taxpayers. Do we have your commitment that you will work 

to refresh your recollection, that you will try to answer fully, to 

your greatest ability, the questions that SIGTARP is going to have 

for you? 

Mr. BLOOM. I will answer the questions that SIGTARP asks me 

to the best of my ability. 

Mr. TURNER. Mr. Bloom, with that, we have votes that have been 

called. We are going to adjourn the hearing. 

[Whereupon, at 12:52 p.m., the subcommittee was adjourned.] 

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