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OVERSIGHT OF THE SIGTARP REPORT ON 

TREASURY’S ROLE IN THE DELPHI PENSION 

BAILOUT 

HEARING 

BEFORE THE

SUBCOMMITTEE ON GOVERNMENT OPERATIONS 

OF THE

COMMITTEE ON OVERSIGHT 

AND GOVERNMENT REFORM 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

FIRST SESSION 

SEPTEMBER 11, 2013 

Serial No. 113–60 

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 

JOHN L. MICA, Florida 

MICHAEL R. TURNER, Ohio 

JOHN J. DUNCAN, JR., Tennessee 

PATRICK T. MCHENRY, North Carolina 

JIM JORDAN, Ohio 

JASON CHAFFETZ, Utah 

TIM WALBERG, Michigan 

JAMES LANKFORD, Oklahoma 

JUSTIN AMASH, Michigan 

PAUL A. GOSAR, Arizona 

PATRICK MEEHAN, Pennsylvania 

SCOTT DESJARLAIS, Tennessee 

TREY GOWDY, South Carolina 

BLAKE FARENTHOLD, Texas 

DOC HASTINGS, Washington 

CYNTHIA M. LUMMIS, Wyoming 

ROB WOODALL, Georgia 

THOMAS MASSIE, Kentucky 

DOUG COLLINS, Georgia 

MARK MEADOWS, North Carolina 

KERRY L. BENTIVOLIO, Michigan 

RON DESANTIS, Florida 

ELIJAH E. CUMMINGS, Maryland, Ranking 

Minority Member 

CAROLYN B. MALONEY, New York 

ELEANOR HOLMES NORTON, District of 

Columbia 

JOHN F. TIERNEY, Massachusetts 

WM. LACY CLAY, Missouri 

STEPHEN F. LYNCH, Massachusetts 

JIM COOPER, Tennessee 

GERALD E. CONNOLLY, Virginia 

JACKIE SPEIER, California 

MATTHEW A. CARTWRIGHT, Pennsylvania 

MARK POCAN, Wisconsin 

TAMMY DUCKWORTH, Illinois 

ROBIN L. KELLY, Illinois 

DANNY K. DAVIS, Illinois 

PETER WELCH, Vermont 

TONY CARDENAS, California 

STEVEN A. HORSFORD, Nevada 

MICHELLE LUJAN GRISHAM, New Mexico 

LAWRENCE J. BRADY, Staff Director 

JOHN D. CUADERES, Deputy Staff Director 

STEPHEN CASTOR, General Counsel 

LINDA A. GOOD, Chief Clerk 

DAVID RAPALLO, Minority Staff Director 

SUBCOMMITTEE ON GOVERNMENT OPERATIONS

JOHN L. MICA, Florida, Chairman 

TIM WALBERG, Michigan 

MICHAEL R. TURNER, Ohio 

JUSTIN AMASH, Michigan 

THOMAS MASSIE, Kentucky 

MARK MEADOWS, North Carolina 

GERALD E. CONNOLLY, Virginia Ranking 

Minority Member 

JIM COOPER, Tennessee 

MARK POCAN, Wisconsin 

(III) 

C O N T E N T S 

Page 

Hearing held on September 11, 2013 ..................................................................... 1 

WITNESSES 

The Hon. Christy L. Romero, Special Inspector General for the Troubled 

Asset Relief Program 

Oral Statement ................................................................................................. 10 

Written Statement ............................................................................................ 12 

Ms. Barbara D. Bovbjerg, Managing Director, Education, Workforce, and Income Security Issues, U.S. Government Accountability Office and Ms. A. 

Nicole Clowers, Director, Financial Markets and Community Investment, 

U.S. Government Accountability Office 

Oral Statement ................................................................................................. 71 

Written Statement ............................................................................................ 73 

Mr. Matthew A. Feldman, Partner, Wilkie Farr & Gallagher, LLP 

Oral Statement ................................................................................................. 95 

Written Statement ............................................................................................ 97 

Mr. Steven Rattner, Chairman, Willett Advisors, LLC 

Oral Statement ................................................................................................. 102 

Written Statement ............................................................................................ 105 

Mr. Harry J. Wilson, Chairman, CEO and Founder, The Maeva Group, LLC 

Oral Statement ................................................................................................. 108 

Written Statement ............................................................................................ 110 

Mr. Harvey R. Miller, Partner, Weil, Gotshal & Manges, LLP 

Oral Statement ................................................................................................. 114 

Written Statement ............................................................................................ 116 

APPENDIX 

The Honorable John L. Mica, a Member of Congress from the State of Florida, 

Opening Statement .............................................................................................. 186 

The Honorable Elijah Cummings, a Member of Congress from the State 

of Maryland, Opening Statement ....................................................................... 188 

The Honorable Gerald G. Connolly, a Member of Congress from the State 

of Virginia, Opening Statement .......................................................................... 190 

The Honorable Paul Ryan, a Member of Congress from the State of Wisconsin, Opening Statement ................................................................................. 192 

SEC Charges Steven Rattner in Pay-to Play Scheme Involving New York 

State Pension Fund .............................................................................................. 193 

Response to Questions from Barbara D. Bovbjerg ................................................ 211 

Questions for the Record: The Hon. Christy Romero ........................................... 214 

(1) 

OVERSIGHT OF THE SIGTARP REPORT ON 

TREASURY’S ROLE IN THE DELPHI PENSION 

BAILOUT 

Wednesday, September 11, 2013 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON GOVERNMENT OPERATIONS, 

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM, 

Washington, D.C. 

The subcommittee met, pursuant to call, at 1:30 p.m., in Room 

2154, Rayburn House Office Building, Hon. John Mica [chairman 

of the subcommittee] presiding. 

Present: Representatives Mica, Turner, Amash, Connolly, Pocan, 

and Cummings. 

Also Present: Representatives Brooks, Tiberi, and Ryan of Ohio. 

Staff Present: Molly Boyl, Senior Counsel and Parliamentarian; 

John Cuaderes, Deputy Staff Director; Linda Good, Chief Clerk; 

Tyler Grimm, Senior Professional Staff Member; Christopher 

Hixon, Deputy Chief Counsel, Oversight; Michael R. Kiko, Staff Assistant; Mark D. Marin, Director of Oversight; Laura L. Rush, Deputy Chief Clerk; Scott Schmidt, Deputy Director of Digital Strategy; Matthew Tallmer, Investigator; Sarah Vance, Asistant Clerk; 

Jaron Bourke, Minority Director of Administration; Jennifer Hoffman, Minority Communications Director; Adam Koshkin, Minority 

Research Assistant; Julia Krieger, Minority New Media Press Secretary; Jason Powell, Minority Senior Counsel; and Cecelia Thomas, Minority Counsel. 

Mr. MICA. Good afternoon. I would like to call the Subcommittee 

on Government Operations to order. 

Today we are conducting a hearing entitled ‘‘Oversight of the 

SIGTARP Report on the Treasury’s Role in the Delphi Pension 

Bailout.’’ Given a few minutes for the minority to appear, but I 

want to go ahead with the proceedings. It appears that there will 

be votes and they will probably be the last votes of the day, beginning at a little after 2 o’clock. So we want to try to get through at 

least part of the witnesses and the opening statements, but welcome everyone today. 

I guess I can’t start without remembering that today is September 11th. We did a memorial, a small service on the steps of 

the Capitol, and remembered those who lost their lives and others 

on the day that many of us were alive and have a memory we’ll 

never forget. So I, too, remember them. 

I will remember, too, Barbara Olson, who was killed on the plane 

that crashed into the Pentagon, who worked for this committee, a 

2 

wonderful young professional. We have lost her and lost a number 

of staffers, the 11 who worked with Senator D’Amato, who was 

head of the New York Port Authority. I left him in a room in the 

World Trade Center in a hearing I conducted there about a month 

before September 11th, and he and everyone who helped us during 

our hearing, none of them survived except for one. 

And then remember Terry Lynch, who was an aide to Senator 

Shelby, was in the Pentagon. I left the Pentagon from Secretary of 

Defense office September 11th with a breakfast meeting there just 

a few minutes before he and others were killed, Terry Lynch. So 

we remember him today and others that we lost on that fateful 

day. So remember him. 

And then Members of the Florida delegation also mourn today 

the loss of our recent member of the delegation, E. Clay Shaw, who 

passed away last night. So a day that we do remember both a 

former Member and the tragic events of September 11th. 

In just a minute I will yield to the minority, but I want to again 

welcome everyone. Today we are conducting the business of the 

people, and part of the responsibility of this subcommittee and our 

committee is to look at various operations of government, Federal 

Government, make certain that Americans see that their taxpayer 

dollars are properly spent, that we conduct thorough oversight of 

the legislative and executive process as we intend it and as we pass 

them, as things are executed. So that is an important responsibility 

that we share today in this committee and part of our business 

here. 

The order of business will be opening statements, I will give 

mine. We will recognize other members as they appear. And we 

may be joined with some Ohio members, I think we have, and I 

would like to ask unanimous consent that our colleague from Indiana, Mrs. Brooks, be allowed to participate in today’s hearing. 

Without objection, so ordered. 

So we have one member from Indiana, and I think we may have 

some from Ohio joining us, too, who have interest in this hearing. 

So with that, then, we will recognize our panel of witnesses, hear 

from all of them, and then we will move to questions. So I will 

start with my opening statement. 

Again, welcome. Today’s hearing concerns a very important issue 

that this committee has been working on for over 3 years. In June 

of this year, our subcommittee convened a hearing in Dayton, Ohio, 

an area hard hit by the substantial losses of pensions to the Delphi 

retirees. At that hearing, we heard from retirees who are, unfortunately, feeling the pain of some of the Obama administration’s decision to pick very distinct winners and losers in the context of the 

GM bailout. As part of that, unionized Delphi retirees were made 

whole because they just happened to be a politically favored group 

and, unfortunately, the salaried, non-unionized pensioners were 

left out in the cold. 

This is somewhat sad because we used Federal money to which 

all these folks had contributed in their tax dollars to bail out these 

activities. And some were treated, again, we believe very unfairly. 

In fact, some 23,000, I think Mr. Turner has a great number in his 

district, and others that are affected. 

3 

In addition to this financial hardship, non-unionized Delphi retirees feel betrayed by their government, and also by their former employer. While the unions, we find out from a special investigator 

general report, the unions, we find out, were pretty heavily involved in the negotiations surrounding the GM and Delphi bailout, 

the salaried employees did not have a seat at the table and unfortunately were left in the dark. This whole mess could have been 

avoided were GM to pursue a traditional bankruptcy route and not 

be subject to the political whims of the administration. The traditional bankruptcy route would have been better for GM in the long 

run and would have mitigated the risk of politicized decision making, such as what not just our committee found, but also confirmed 

now by the Special IG report that verifies the way this was conducted and how the Delphi salaried retirees’ pensions were affected. 

The bankruptcy proceedings that occurred were simply a legal 

vehicle for delivering ownership shares in the auto companies to 

the government. In the words of one legal scholar, instead of a traditional bankruptcy, and let me quote, that scholar said, ‘‘The 

Obama administration, working with the automakers, patched together a process without precedent, a bankruptcy without a bailout 

incorporating the worst elements of both.’’ 

The recent release of an audit by the Special Inspector General 

for the Troubled Asset Relief Program sheds light on the facts and 

circumstances surrounding this decision. We know that despite the 

Treasury’s pledge not to be involved in the day-to-day operation of 

GM, that, in fact, Treasury and the auto task force played a major 

role in the decisions concerning GM operations. 

As you may know, just for the record, we tried for several years 

to get data and information which was withheld from this committee. I’m pleased that we have had the cooperation both of the 

pension guaranty fund now supplying the committee information 

we requested that was denied, and also we’ve gotten information 

from Treasury and others that I demanded that this committee 

have. And I appreciate now the compliance that’s 2 years overdue. 

Finally, from the report, and this is not my opinion, this is the 

Inspector General, Special Inspector General said, and let me 

quote, that ‘‘despite the assurances that Treasury’s role, as well as 

the Presidential task force for the auto industry, was purely advisory,’’ and this is what SIGTARP found, the four Treasury auto 

teams, and I again quote, ‘‘played a direct role in GM’s decisions 

and operations up to and through bankruptcy,’’ including replacing 

the then-chief executive officer with Treasury’s choice. So it shows 

a story a little bit different than we have been told and confirms, 

unfortunately, some of our worst suspicions. 

Today we will hear from key members of the President’s automotive task force about the decisions they made, what took place, 

how those decisions led to, unfortunately, some very gross inequity 

between certain classes of employees, some with unions and some 

non-unionized Delphi employees. We will also hear from SIGTARP 

and the Inspector General—Special Inspector General—and GAO, 

both of whom conducted thorough audits relating to this issue. 

Lastly, I can’t help but thank Mr. Turner of this panel for his 

unyielding dedication, determination, to get to the bottom of these 

4 

issues. With his assistance, we are getting more of a complete picture and the information we requested and the taxpayers deserve 

in what took place in this whole process. Mr. Turner has tirelessly 

pursued justice in the area, he represents many of the folks who 

were affected, and our committee is, in fact, committed to finding 

out exactly what happened, when, who was involved, why, and particularly why there was unfair treatment with taxpayer dollars for 

some and, again, the unfairness of the whole process. These decisions were made on the basis of politics and not prudence. Those 

responsible need to be held accountable for their actions. 

I am now very pleased to recognize the distinguished ranking 

member, the gentleman from Virginia, Mr. Connolly, for an opening statement. 

Mr. CONNOLLY. Mr. Chairman, I do have an opening statement, 

and I thank you. But I was running a little bit late. And out of 

courtesy, if the ranking member of the full committee wishes to go 

I would defer to him, 

Mr. MICA. Mr. Cummings, then, is recognized. 

Mr. CUMMINGS. Thank you very much, Mr. Chairman. I want to 

thank the ranking member for his courtesy. 

Mr. Chairman, I want to thank you for convening what common 

sense would suggest will be the capstone on this committee’s fivehearing inquiry into GM’s decision making on Delphi pensions during the extraordinarily successful rescue of the United States automotive industry. 

In 2009 the administration’s auto team members came from the 

private sector, took up the mantle of public service, and assumed 

responsibility of managing the investments that the Bush and 

Obama administrations made to save the United States auto industry from collapse. Thanks to their work, America’s automotive industry today directly employs 1.7 million people, and indirectly this 

industry accounts for roughly 8 million jobs nationwide. That represents 4.5 percent of all private sector employment. It also accounts for roughly $500 billion in wages being paid to workers and 

$70 billion in personal income tax revenue. 

I thank the former auto team officials for their work to protect 

this industry and the American economy. You did a critical job, and 

you did it exceedingly well. 

It is unfortunate that, regardless of these impressive results, Republicans continue to criticize the successful rescue of the American auto industry. The majority, including members of this Committee, has perpetuated the narrative that government officials 

made the decision that the salaried retirees of Delphi would not get 

top-ups. We know now that that narrative is inaccurate. 

SIGTARP’s report makes clear that a high-ranking GM official 

made that decision, not the administration. SIGTARP also found 

that at the time of the Delphi’s spinoff from GM in 1999, the pensions of Delphi’s salaried workers were fully funded. That is why 

the high-ranking GM official believed that giving the salaried 

workers a top-up in 2009 would have been tantamount to paying 

that group of workers twice. 

SIGTARP also found that the unionized workforce did not receive 

fully funded pensions when Delphi was spun off. To the contrary, 

their pensions were underfunded. But their union negotiated conVerDate Aug 31 2005 09:41 Nov 04, 2013 Jkt 000000 PO 00000 Frm 00008 Fmt 6633 Sfmt 6633 C:\DOCS\85115.TXT APRIL
5 

tracts with GM to top up their pensions in the future, and when 

the union insisted that those contracts be honored in the bankruptcy process they were honored without question. SIGTARP 

found that, ‘‘No person SIGTARP interviewed could recall any discussion of the top-up agreement at the negotiations.’’ 

The facts found by SIGTARP are consistent with GAO’s review, 

completed more than a year and a half ago. GAO detailed the business reasons for GM to honor previous agreements with certain 

unions. A failure to honor those agreements would have jeopardized the company’s ability to move forward. 

I feel bad for the Delphi employees who did not receive top-ups. 

There will be hard days ahead for them. They were betrayed by 

Delphi’s management, which did not make pension payments for 

years after spinoff. But none of that is the fault of the government’s effort to save GM. The investigation into this matter has 

been thorough. 

As an investigative body it is critically important that we follow 

the facts wherever they need. And it is equally important that 

when we get answers we accept those answers. We now have the 

facts. We now have the answers. And I ask that the majority accept 

them. 

And with that, Mr. Chairman, I yield back. 

Mr. MICA. Thank the gentleman. 

Yield now to the gentleman from Ohio, Mr. Turner. 

Mr. TURNER. Thank you, Mr. Chairman. 

I am just astonished. And I’m sorry, Mr. Cummings, I usually 

don’t respond directly to what someone else is saying in their opening statement, but all of that has absolutely nothing to do with this 

hearing whatsoever, and I hope that you actually sit down and 

read this report. There is nothing in this report that says that they 

were not involved in the PBGC’s decision making with respect to 

Delphi’s salaried retirees. In fact, this report is about the hourly, 

not the salaried, and you are going to see that when we have this 

discussion. 

In fact, it does say on the hourly the opposite of what you just 

said—again, if you’d read the report. Page 38 says, ‘‘The Auto 

Team’s role in the decision to top up the pensions of Delphi’s 

UAW’s workers was not advisory. Consistent with the Auto Team’s 

practice, as with any liability, it would have been Treasury’s decision as the buyer to assume or reject the liability to top-up the pensions of Delphi hourly UAW employees. The Auto Team actively 

negotiated and made the overall deal.’’ 

Now, there is partisan politics that shouldn’t be happening here 

in this hearing. And the GAO report was not as extensive as this 

SIGTARP report has been. And I want to thank Ms. Romero, thank 

you for your in-depth review. This is the first time we have ever 

really had an insight into what the auto task force did. And I must 

tell you, it is just shocking, because remember the last hearing that 

we had, Mr. Cummings, Mr. Cummings, the last hearing we had, 

we had to have it because these gentlemen refused to even talk to 

the Inspector General. They said, we’ve left the government, we no 

longer have to answer questions on the work that we did. We have 

had to subpoena Treasury just to get to the bottom of what happened in these things. 

6 

So now I want to give some context of what we are doing here 

today because this really, really is important. And this is the fact, 

that in the TARP process what occurred was not just the tragedy 

of the Delphi salaried retirees getting their pensions cut unjustly 

and I believe illegally, and the courts will determine that, but what 

we had with the entire process was thwarted, because of TARP. 

Normally when you have a bankruptcy each of the parties who 

have an interest in either the new entity that is coming out of the 

old entity that is going through the bankruptcy process sits in a 

chair and represents their interests or they have someone who sits 

there in a fiduciary capacity representing their interest. 

But what we had with TARP was this perversion of the process 

where each and every person sitting around the table suddenly became the Treasury Department. The banks became the Treasury 

Department, the lienholders and bondholders, the PBGC became 

the Treasury Department. Each and every one of these people became the Treasury Department. And what we kept saying throughout all of this, which is why we are having this hearing today, is 

tell us how you made your decisions. Tell us once you had all of 

these chairs whether or not you go to the standard of protecting 

the fiduciary interests of the people who were behind you because 

we don’t believe that you did. 

What we find now from the SIGTARP report, which is the first 

time we have ever had any insight into what occurred in the decision making, we understand that they have set this unnecessary 

and artificial timeline of the quick wash, that they set the terms 

and the conditions, they determined who had leverage and who did 

not, some political, some not, and clearly throughout all of this is 

this concept of exceeding and abusing authority. This concept of 

commercial reasonableness that this group used as a standard for 

determining their decision making that had no definition and no 

legal justification, had people rewarded and people who were penalized. The administration picked winners and losers, and that is 

what this report says. And that is what we are going to get to 

today. 

Now, this does not decide the issue of PBGC and the Delphi salaried retirees. It was not intended to. This hearing is not to determine the end of the PBGC issue and GM issue with respect to the 

Delphi salaried retirees. That we will have to continue. GAO when 

they did their report only looked at public sources. They didn’t 

have access to what the Inspector General did where they looked 

at the documents and looked at the emails between these individuals. And the SIGTARP Inspector General did not check or review 

the GAO work to determine whether or not additional documents 

were necessary or whether or not the documents that they had 

needed to have the GAO report amended or redone. 

But it tells us what we didn’t see before: The administration has 

said they were not involved. They said they didn’t do it, that they 

only were on the sidecar and watched as General Motors made the 

decisions. And what we know now from this report is the decision 

making was absolutely being made by the auto task force individuals themselves, that they were—the four Treasury auto team officials played a direct role in GM’s decisions and obligations up to 

and through GM’s bankruptcy. Treasury’s auto team had signifiVerDate Aug 31 2005 09:41 Nov 04, 2013 Jkt 000000 PO 00000 Frm 00010 Fmt 6633 Sfmt 6633 C:\DOCS\85115.TXT APRIL
7 

cant leverage and influence on GM’s decisions leading up to and 

through the bankruptcy first exerted by replacing the GM chief executive. 

So if the document itself is allowed to go through this hearing, 

instead of us just reading our own texts that our staffs have written, I think we will get to what really is the truth, what really happened, what needs to happen, was there injustice, and what this 

committee needs to do in further investigation, because this is not 

over. 

Thank you, Mr. Chairman. 

Mr. MICA. Thank the gentleman. 

Mr. Connolly. 

Mr. CONNOLLY. Thank you, Mr. Chairman, and thank you for 

holding this hearing. 

Let me just say as a member of this committee I would caution 

my colleague as to characterizations about what homework is done 

or what reading is done or not done by the distinguished ranking 

member of this committee. I have known Mr. Cummings a long 

time. He does his homework. To suggest that his opinion is wrong 

because he didn’t read the report I think crosses the line. If you 

want to disagree, disagree. But to impugn the reputation of the distinguished ranking member as somebody who comes here unprepared I take exception to on his behalf and on behalf of this side 

of the aisle. And I urge my friend from Ohio to restrain from such 

characterizations. 

Mr. Chairman, SIGTARP’s report directly and definitively refutes the narrative we have just heard on this subject. And we just 

heard, for example, that this report didn’t really address certain 

subjects. And I put up this slide. 

[Slide]. 

Mr. CONNOLLY. On Page 29 it most certainly does. It most certainly does talk about the salary plan and explains what happened, 

at least from somebody’s point of view, SIGTARP’s, why they didn’t 

top-off the nonunion salaried retired pensions after the 1999 separation. 

This committee has explored in great depth the Federal Government’s unprecedented intervention that not only rescued our Nation’s auto industry, but enhanced the global competitiveness of the 

auto sector. Hopefully with the issuance of SIGTARP’s report and 

today’s hearing, we can finally put to rest the unsubstantiated conspiracy theories about picking winners and losers to benefit political allies. 

Unfortunately, some refuse to acknowledge the sheer complexity 

of the challenge then facing the administration in assisting General 

Motors to navigate what SIGTARP characterized as; ‘‘one of the 

largest and fastest bankruptcies in the Nation’s history.’’ 

It is easy to discount the monumental achievement in light of 

current auto industry conditions. Consider, just 2 years ago GM 

sold more than 9 million vehicles on its way to posting a recordbreaking profit of $7.6 million, a company on the ropes that was 

looking at liquidation in 2009. Just last month GM posted its best 

month ever since the great recession. 

We must not forget the perilous days in late 2008 when leading 

economic think tanks were projecting the bankruptcy of all U.S. 

8 

automotive manufacturing and that would trigger a collapse in the 

domestic auto industry costing us an additional 3 million jobs while 

we were shedding 750,000 a month. Indeed, it was estimated just 

the liquidation of GM alone would lose 900,000 industry jobs. And, 

of course, SIGTARP found; ‘‘Ultimately, GM did not fail and the 

broader systemic consequences of a GM failure that Treasury had 

feared were avoided.’’ 

Yet, the majority narrative continues to appear disinterested in 

convening a hearing to examine the lessons learned from all of that 

and from the effective Federal initiative to save the U.S. auto industry. Instead, we find ourselves holding what is now the fifth 

hearing to rehash some hackneyed assertions from the past. 

Of course a thorough review of SIGTARP’s report enables one to 

test, and I think ultimately debunk, those unsubstantiated claims. 

For example, did the administration inappropriately intervene in 

the decision to deny Delphi’s salaried workforce top-ups as part of 

the nefarious scheme to use GM’s bankruptcy proceedings as a 

cover to protect political allies? No. As SIGTARP itself reports, 

there was no impropriety, and it was a sound business decision, 

from a substantial point of view, for GM to deny pension top-ups 

to certain Delphi employees. 

According to SIGTARP, more than a decade ago Delphi’s salaried 

workers received full funding of their pensions when the firm was 

spun off from GM, while the unionized workforce did not. Instead, 

in exchange for underfunding union pensions in the spinoff, labor 

negotiated contractual agreements with GM legally binding contracts to protect the pensions of certain unionized Delphi hourly 

employees, not in the context of TARP, but 9 years earlier than 

that. This strategic decision paid off when the financial crisis hit 

and Delphi’s unionized workforce emerged with its pensions protected. 

Regrettably, Delphi’s salaried workforce had not negotiated similar contracts. And when GM entered bankruptcy, the firm had no 

contractual obligations to top-off their pensions. As SIGTARP 

noted, a hypothetical GM decision to top-off those pensions, a cohort that no longer worked for nor had any association with GM 

by the time of TARP, would be equivalent to GM paying for the 

Delphi salaried pensions twice from their point of view. 

The bottom line is that GM’s refusal to top-off the pensions was 

a business decision, not a government policy decision. Nor is GM 

in the position before a bankruptcy judge to undertake a new financial obligation while it is trying to go through bankruptcy. In 

a perfect world, perhaps GM would have prioritized fairness over 

commercial interests and treated the pensions of all of its former 

employees at Delphi equally. But bankruptcy is not a perfect world. 

It is an unfair and staggeringly difficult battle for survival itself. 

And I believe the record presented by SIGTARP and the witnesses 

before us today clearly demonstrates that GM, supported by Treasury and the auto task force, made those tough decisions under tremendous pressure, but not political pressure. 

Thank you, Mr. Chairman. 

Mr. MICA. I thank the gentleman. 

Mr. Amash, did you have an opening statement? 

Mr. Pocan? 

9 

Mr. CONNOLLY. Mr. Chairman, could I ask unanimous consent to 

allow our colleague Mr. Tim Ryan of Ohio to participate? 

Mr. MICA. Yes. And what I’m going to do then is we’ve had Mrs. 

Brooks, who is not a member of the panel, and we approved her. 

I have your request for Mr. Ryan, gentleman from Ohio. And then 

we have a request for Mr. Tiberi, also a gentleman from Ohio. I ask 

unanimous consent that both of these colleagues be allowed to participate in today’s hearing. Without objection, so ordered. 

Mr. CONNOLLY. Thank you, Mr. Chairman. 

Mr. MICA. And our usual rule and procedure for those who have 

joined us would be we will recognize the members of the panel first 

and then we will go to you. I think what we are going to do, 

though, is if we have no further opening statements, is go right to 

our panel of witnesses. We are expecting votes shortly, as I said. 

So with that, let me introduce our panel of witnesses. We have 

the honorable Christy Romero. 

Before I do that let me say that, without objection, the record 

will also be open for additional statements to appear in the record 

at this point and throughout the proceedings to be fair to everyone 

who is now participating. 

Mr. MICA. Again, the panel of witnesses, the Honorable Christy 

Romero is the Special Inspector General for the Troubled Asset Relief Program. Ms. A. Nicole Clowers is director of the Financial 

Markets and Community Investments at the United States Government Accountability Office. Ms. Barbara Bovbjerg is managing director of Education, Workforce, and Income Security Issues at the 

Government Accountability Office. 

Mr. Matthew Feldman is a partner at the law firm of Wilkie Farr 

& Gallagher, and he served as legal adviser to the Treasury auto 

team. Mr. Steven Rattner is the chairman of Willett Advisors and 

served as the head of the Treasury auto team. And then we have 

Mr. Harry J. Wilson is the chairman, CEO, and founder of MAEVA 

Group and served as a member of the Treasury auto team. 

And finally, Mr. Harvey Miller is a partner at the law firm of 

Weil, Gotshal & Manges and served as lead counsel in the General 

Motors bankruptcy case and was the vice chairman and managing 

director of Greenhill & Co. 

So I welcome all of our witnesses. Let me say that this is an investigative panel, and it is our procedure to swear in all of our witnesses. So if you will stand now, all of the witnesses, raise your 

right hand. Do you solemnly swear or affirm that the testimony 

you’re about to give before this subcommittee of Congress is the 

whole truth and nothing but the truth? 

All of the witnesses, the record will reflect, answered in the affirmative. Thank you. 

And let me just give you the ground rules here, too. We give you 

5 minutes. If you have a lengthy statement, information you would 

like included in the record, just through the chair or a member, 

and ask consent, and we will include all of that in the record. So 

I would like you to summarize, try to keep it to 5. 

We will also go through the entire panel and then go to questions. We are going to try to get to as many as you can of you with 

the 5 minute. Then we will probably have to recess for, and the 

staff will tell us the amount of time the votes are—actually only 

10 

one vote, so we will only recess for about 15 minutes. Give you a 

chance to scoot out but be back. And then we will proceed immediately until we have heard from all of you. Then we will begin the 

questioning. So that is the order of business. 

So, again, thank you. Let me turn to our first witness, which is 

Christy Romero, and she is the Special Inspector General for the 

Troubled Asset Relief Program. 

Thank you for your work, and we recognize you now for your testimony. 

STATEMENT OF CHRISTY L. ROMERO 

Ms. ROMERO. Chairman Mica, Ranking Member Connolly, and 

members of the committee, it is my honor to appear before you 

today. 

SIGTARP was created by Congress to conduct investigations and 

audits related to the TARP bailout. In our investigations we have— 

we are a law enforcement agency and we have authority to search, 

seize, and arrest. So far 151 people have been charged with crimes 

as a result of a SIGTARP investigation, 111 of them have been convicted so far, while others await trial or a guilty plea, and of those 

that are convicted, so far 58 have been sentenced to prison while 

others await sentencing. And the average prison sentence for a 

SIGTARP investigated crime is 68 months, which is nearly double 

the national average for white collar crime. 

We also conduct audits of decisions that were made related to 

TARP. And we issue these audits not to criticize for criticism’s 

sake, but we issue them to ensure that our government functions 

at its best. We issue them to bring transparency, and we issue 

them so that we can learn from the past in case the government 

faces similar situations and decisions in the future. 

Our latest audit reviewed Treasury’s role in the decision to top 

up, or make whole, certain unionized former GM employees who 

worked at Delphi. And Treasury’s public statement that its role in 

that decision was advisory has caused unnecessary confusion. It’s 

also inconsistent with Treasury’s rights under the 2008 TARP loan 

agreement and as the purchaser of GM in bankruptcy. 

Under the TARP contract, there are certain big things, like the 

collective bargaining agreement with the union, where Treasury 

made the decision. And there are other things where Treasury 

could only advise GM. The top-up agreement and the collective bargaining agreement are not two separate things. The top-up is in 

the collective bargaining agreement. The UAW came to the negotiation with Treasury and GM with a priority list that included the 

top-up. There were no negotiations of the top-up. GM did not come 

to Treasury later to discuss it. It became a foregone conclusion that 

it would be included, with Mr. Rattner and Mr. Bloom of the auto 

team telling us that because it was on the UAW’s list, it was clear 

that the UAW expected it to be part of the deal. 

As the purchaser, known as New GM, it was Treasury who made 

the decision on the collective bargaining agreement, because only 

the purchaser could define the relationship with the union and only 

the purchaser could determine which obligations to take on. Both 

GM officials and auto team officials told us that Treasury was the 

purchaser who made decisions on which obligations to take on. 

11 

GM’s lawyer, Mr. Miller, testified as to that today. Therefore the 

auto team’s role could not be advisory. Who would they be advising? 

It would have been much better if Treasury had been transparent, saying that we had made the decision with GM to agree to 

the top-up because the UAW really wanted it and we are under 

time pressure. It would have been much better if Treasury had 

simply stated that we were concerned that in addition to the traditional strike leverage, that UAW had the leverage to prolong the 

bankruptcy, that they did not think that GM could survive a 

lengthy bankruptcy and that could hurt the auto industry. They 

should have explained their decision and trusted the American people to hear their reasoning. American taxpayers can either agree 

or disagree with what the auto team did, but they are entitled to 

full transparency, and that is why we put that report out. 

So what was the alternative? Well, one alternative would have 

been to actually raise and actually negotiate the top-up with the 

UAW. But Treasury conditioned the TARP funds on GM finishing 

the bankruptcy in 40 days—which had never been done—or else 

they would default. This severely limited the alternatives available 

to GM. GM’s then-CEO told us they were under pressure to get the 

deal done, and that is why the top-up was not negotiated. 

But we found that the pressure came, in part, from the 40-day 

time constraint, a timeframe that gave the UAW additional leverage. GM thought 40 days was unrealistic, that they needed 60 to 

90 days. No one will ever know if more time in the bankruptcy 

would have allowed for negotiation of the top-up, but Treasury 

should take accountability that their 40-day condition had the effect of limiting GM’s options. 

Finally, there’s an alternative still available today, which is for 

GM to consider topping-up, or contributing to, the Delphi salaried 

retirees today. 

Thank you again, and I’m happy to answer your questions. 

Mr. MICA. Thank you. 

[Prepared statement of Ms. Romero follows:] 

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Mr. MICA. And as I said, we will withhold questions. 

Now we have two GAO representatives, and we are going to recognize, I guess, Barbara Bovbjerg as the witness from GAO. 

So welcome, and you are recognized. 

STATEMENT OF BARBARA D. BOVBJERG AND A. NICOLE 

CLOWERS 

Ms. BOVBJERG. Thank you so much, Mr. Chairman, Mr. 

Connolly, members of the committee. Thank you for inviting me 

and my colleague, Nicole Clowers, here today to speak about the 

termination of the Delphi pension plans. Our testimony today will 

address the timeline of key events leading to the plan’s termination 

and the role of Treasury in these activities. This information is 

drawn from our 2011 reports prepared for Mr. Turner and others 

and relies on publicly available documents. 

First, the pension plan terminations. In 1999, the Delphi Corporation, once part of GM, was spun off as an independent company, and as part of that arrangement GM was required to bargain 

with the unions affected by the spinoff. In those negotiations, GM 

agreed to provide top-ups to the unionized employees, meaning that 

if something went wrong with the pension plans for these employees under Delphi, GM would make good on their promised benefits. 

At the time of these agreements Delphi’s hourly plan was not fully 

funded. In contrast, the salaried employees’ plan was fully funded. 

So fast forward to October 2005 when Delphi filed for bankruptcy. All Delphi pension plans were underfunded, and Delphi 

was not planning to make any contributions to these plans during 

the bankruptcy process. Hence, the prospects for those plans, and 

for the participants’ future benefits, got substantially worse. 

By the fall of 2008, Delphi was still in bankruptcy, and economic 

conditions had deteriorated throughout the auto industry. GM’s 

losses led the company to seek assistance from the Federal Government. By April 2009, the Department of the Treasury was working 

with GM to develop a restructuring plan. And by June, GM, too, 

had filed for bankruptcy. 

In June, as part of an arrangement for GM to emerge from bankruptcy, GM and the UAW agreed to modify wages, benefits, and 

work rules to be more cost competitive and agreed that New GM 

would assume all employment-related obligations and liabilities for 

any employee benefit plan covered by collective bargaining agreements. This, in effect, maintained the benefit guarantees GM 

agreed to in 1999. 

Meanwhile, Delphi and PBGC began the process of what is called 

the distress termination of Delphi pension plans. In accordance 

with governing statutes, PBGC estimated that Delphi plans were 

$7 billion underfunded, with PBGC expected to bear $6 billion of 

that shortfall and Delphi plan participants the remaining billion. 

However, per the settlement agreement, GM provided top-up payments to all unionized workers. No such agreement pertained to 

salaried workers, and this is where the situation stands today. 

So let me turn to the role of Treasury in these decisions. As GM’s 

primary lender, Treasury played a significant role in helping GM 

emerge from its bankruptcy, which included resolving the Delphi 

bankruptcy. However, with regard to GM decisions about the DelVerDate Aug 31 2005 09:41 Nov 04, 2013 Jkt 000000 PO 00000 Frm 00075 Fmt 6633 Sfmt 6633 C:\DOCS\85115.TXT APRIL
72 

phi pension plans, the court filings and statements from GM and 

Treasury officials that we reviewed suggest that Treasury deferred 

to GM’s business judgment. 

According to these records and to Treasury officials, Treasury 

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

the potential costs of sponsoring the entire 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 Treasury did not 

explicitly approve or disapprove of GM’s proposal to honor previously negotiated top-up agreements with some unions. Treasury 

stated that its aim was to ensure that the New GM would only assume the liabilities of the old GM that were commercially necessary. Due to New GM’s continued dependence on the UAW workforce and the workforce of the other unions, Treasury officials felt 

GM had solid commercial reasons to agree to the top-up pensions 

of those retirees. 

I’d like to conclude with a few thoughts about these pension terminations. Under pension insurance laws, when companies go 

bankrupt and leave their plans with large unfunded liabilities, 

some participants may not get the full benefits promised to them 

by their employer. This, unfortunately, is not unusual. What makes 

the Delphi terminations different is the linkage to the GM bankruptcy and GM’s role as a pension benefit guarantor. 

Additionally, Treasury’s multiple roles in this process, as 

SIGTARP just noted, have led to concerns about transparency to 

Congress and to the public. Although Treasury has established 

policies to separate its multiple interests, we believe the most effective means of addressing concerns about these different roles is for 

Treasury to be as transparent as possible about its activities. 

And that concludes our statement, Mr. Chairman. Ms. Clowers 

and I are happy to answer questions. 

Mr. MICA. Thank you. 

[Prepared statement of Ms. Bovbjerg and Ms. Clowers follows:] 

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Mr. MICA. And as I said, we will get to questions in a little while 

after we have heard from the others. 

Let’s see. We have next Mr. Feldman. Matthew Feldman is a 

partner in Wilkie, Farr & Gallagher. 

Welcome, and you are recognized. 

STATEMENT OF MATTHEW A. FELDMAN 

Mr. FELDMAN. Thank you. Mr. Chairman and members of the 

committee, I understand that I have been invited to appear before 

you today to discuss my role with the Treasury Department’s auto 

team, which I joined in March 2009 as legal adviser and on which 

I served until August 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 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. Now, 

just 4 years after emerging from bankruptcy, both General Motors 

and Chrysler are selling cars and adding jobs at a pace most 

thought unachievable. I remain proud of my service, and I’m prepared today to assist the committee in reaching a complete understanding of the auto team’s work with respect to General Motors 

and in particular its relationship with its critical supplier, Delphi 

Corporation, 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 and have been created as a result of our work, I’m 

mindful that the restructurings that the auto team worked on required many Americans to make great personal sacrifices. As a result of the Delphi bankruptcy, for example, Delphi’s lenders, some 

of which had purchased Delphi’s debt at a steep discount, exerted 

significant influence over Delphi, and ultimately the PBGC, which 

forced the PBGC to terminate Delphi’s pension plans. As a result 

of what occurred during the Delphi bankruptcy, there are Delphi 

retirees who, unfortunately, will collect less than their full pension 

benefits. 

As stated by the Special Inspector General for the Troubled Asset 

Relief Program in her August 15 report to Treasury Secretary Lew, 

in 1999, when General Motors spun out Delphi as a separate company, Delphi’s pension plan for its salaried employees was significantly overfunded, but the pension plans for hourly workers were 

significantly underfunded. To garner support and consent from the 

UAW and other unions for the Delphi spinoff and to avoid having 

to make a significant payment in 1999, General Motors and the 

UAW entered into a top-up agreement whereby General Motors 

agreed to make whole hourly employees being transferred to Delphi 

on their pension obligations in the unlikely but ultimately real 

event that Delphi defaulted on its pension obligations. 

Following years of mismanagement and malfeasance, Delphi was 

forced to file for bankruptcy in 2005 after having allowed both its 

salaried and hourly pension plans to become underfunded, a situaVerDate Aug 31 2005 09:41 Nov 04, 2013 Jkt 000000 PO 00000 Frm 00099 Fmt 6633 Sfmt 6633 C:\DOCS\85115.TXT APRIL
96 

tion that ultimately led the PBGC to conclude it needed to take action to terminate both plans. 

As stated by the GAO in its March 30, 2011, report to Congress 

on the topic, the PBGC reached its own conclusion to terminate the 

Delphi pension plans, presumably after concluding that this was 

proper action to take under applicable law and that among the limited options available for these plans, the termination and takeover 

by the PBGC was the best choice available. While I can understand 

why all parties involved would have preferred if General Motors 

had assumed these Delphi pension plans, taking on these liabilities 

in full would have threatened GM’s future success as it exited from 

its own bankruptcy. While General Motors was not willing to assume all of the pension plans, as the SIGTARP report makes clear, 

because GM viewed a well motivated workforce at its own facilities 

and at its largest supplier as critical to ensuring an uninterrupted 

supply chain, General Motors made the commercially reasonable 

and necessary decision to honor its legal obligation memorialized in 

the top-up agreement with the UAW. 

The decision to assume the UAW top-up agreement was bargained for by the UAW and agreed to by General Motors after having been extended by the parties once in 2007. As this committee 

is aware, unfortunately, many of Delphi’s employees did not have 

similar top-up agreements with General Motors, and some of the 

employees will face a shortfall in their pension placements. 

The auto team agreed that honoring the top-up agreement was 

a prudent business decision. We believed that doing so would protect both General Motors’ and the American taxpayers’ collective 

investment in the company. The desire to limit General Motors’ 

stay in bankruptcy was purely economic. Every week of bankruptcy 

where General Motors continued to carry all of its costs but generated little or no revenue would cost the American taxpayers $1 

billion. The need for General Motors to complete a 363 sale in a 

short time period was intended, among other benefits, to limit the 

costs being borne by taxpayers. 

While I’m pleased that General Motors and other American automobile manufacturers have become successful, profitable contributors to our economy, I recognize that the restructuring process has 

resulted in painful but necessary sacrifices on many of Delphi’s 

stakeholders. As a bankruptcy practitioner and restructuring specialist, I’ve 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 sympathies for everyone affected. I’m 

here today and prepared to answer any of the questions of the committee. 

Mr. MICA. Well, thank you. 

[Prepared statement of Mr. Feldman follows:] 

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Mr. MICA. We have 4 minutes left before the vote, so what we 

are going to do is we will recess now. Now, I’m told there will be 

three votes, so this will be a little bit longer. It usually takes us 

15 minutes, another 5 and 5, probably be back here about 10 minutes of, to 5—10 minutes of to the hour of 3 o’clock, somewhere 

there, and we will come back. 

Mr. Rattner, you will be the first recognized, Mr. Wilson and Mr. 

Miller we will go through. And so you don’t want to wander too far 

off. 

So with that, the committee stands in recess until after these 

votes. 

[Recess.] 

Mr. MICA. I’d like to call the subcommittee back to order. I appreciate everyone’s patience in dealing with the votes. We ended up 

with—first they said one, then they said three, and we ended up 

with two. So we should have some other members returning, but 

we’re going to go ahead and take off where—I’m sorry—take—continue as to where we left off, and I think we left off with Mr. Feldman and we’re going to go to Mr. Rattner now. 

Mr. Steven Rattner is Chairman of the Willett Advisors. Welcome, sir, and you’re recognized. 

STATEMENT OF STEVEN RATTNER 

Mr. RATTNER. Thank you, Mr. Chairman. It is sometimes difficult to recall that just 5 years ago the American auto industry 

was in a severe crisis that threatened its very existence and the 

broader American economy. It is incontrovertible that absent government intervention, both General Motors and Chrysler would 

have been forced to cease production, close their doors, and lay off 

virtually all their workers. These shutdowns would have reverberated through the entire auto sector, causing innumerable suppliers 

to almost immediately also stop operating. More than a million jobs 

would have been lost, at least for a time. Michigan and the entire 

industrial Midwest would have been devastated. Everything we did 

in the government at that time was driven by our profound desire 

to prevent such an economic calamity while honoring our responsibilities to the taxpayers, and by any objective measure, I believe 

our efforts were a success. 

Today, General Motors is once again profitable and healthy. It 

has gone from a company that was hemorrhaging money before the 

financial crisis to one that turned a $1.2 billion profit in its most 

recent quarter, driven by strong North American sales. 

The restructuring of GM’s contract with the United Auto Workers provided the company with new flexibility to use its workforce 

efficiently and expanded its ability to hire new workers at considerably lower costs. And GM has vastly improved its product lineup 

so that it is once again selling the kinds of cars consumers want 

to buy, and demonstrating the power of American ingenuity, engineering and manufacturing. At the same time, the government is 

successfully winding down its ownership stake in GM and returning the company to private hands. 

Of the $51 billion that the taxpayers invested in GM, more than 

$34 billion has been repaid to the Treasury, and Treasury has stated that further GM stock sales are planned in the coming year. It 

103 

makes clear that the government’s actions were a necessary and 

prudent emergency measure to get GM back on its feet, not a permanent government takeover of private industry, as some at the 

time feared. 

This remarkable turnaround could not have occurred without significant restructuring at GM, a restructuring that regrettably but 

inevitably involved painful sacrifices from all of GM’s stakeholders, 

but particularly its bond holders, dealers, suppliers, employees and 

retirees. 

It is not easy to make these kinds of decisions under any circumstances. It was particularly challenging in the crisis atmosphere that GM was facing at the time. No one wants to get cents 

on the dollar of their investment or have their dealership closed or 

see their incomes or benefits reduced. These are personal pocket 

book issues for those affected, and unfair almost by definition. 

To understand the decisions that were made, I believe it is important to appreciate that the Auto Task Force had two overriding 

goals: to restore a viable and thriving auto industry while acting 

as a prudent custodian of taxpayer funds. To achieve these goals, 

we were guided by the principle that Treasury, as GM’s partner in 

bankruptcy, was entitled to set parameters and provide guidance 

to GM that was consistent with what would be commercially reasonable. 

In accordance with that principle, the Auto Task Force helped 

GM determine the broad strategic policies that would return the 

company to competitiveness at the least cost and risk to taxpayers. 

Day-to-day management remained the responsibility of GM. 

I know the subcommittee is interested in one of those decisions 

in particular, which was GM’s decision to honor a pre-existing commitment to provide supplemental pension benefits, or top-ups, to 

certain hourly employees at Delphi, a critical GM parts supplier 

that was itself in bankruptcy. Other hourly employees and salaried 

employees at Delphi were not provided similar top-ups. 

Although I fully understand that it was painful for the salaried 

employees who saw their pensions cut and perhaps made more 

painful by the fact that some of their hourly colleagues did receive 

top-ups, I believe the Special Inspector General’s report makes 

clear that GM’s decision to honor its top-up agreement in bankruptcy was consistent with a commercially reasonable approach. 

The Delphi hourly employees who received top-ups were differently situated from the salaried employees who did not. For reasons that predated GM’s bankruptcy and the work of the Auto 

Task Force, GM had fully funded the salaried employees’ pensions, 

but not the hourly employees’ pensions before the Delphi spin-off 

in 1999. At that time, the hourly employees negotiated for a topup agreement from GM, but the salaried employees, who were fully 

funded, did not. 

As the Special Inspector General’s report explains, GM was 

therefore under no obligation to top-up the salaried employees’ pension, and indeed doing so on its own initiative would have been like 

paying for the pensions twice. Such an action, while generous, 

would not have been consistent with the goals of restoring the 

GM—of restoring GM to viability or protecting U.S. taxpayers’ investment. 

104 

It is certainly true that in bankruptcy GM had the option of refusing to honor its agreement to top up the hourly workers’ pensions as well. Again, I think the Special Inspector General’s report 

makes clear that its decision to honor the prior agreement was consistent with what was commercially reasonable. 

Those employees were represented by the UAW, the same union 

that represented 99—represents 99 percent of GM’s unionized 

workforce. UAW is an absolutely critical party to bring to the negotiating table. They had the power to hold up the deal in bankruptcy 

or to strike, either of which could have been devastating to GM’s 

efforts to get back on its feet, and in turn, to the U.S. economy. 

This disparity in bargaining leverage may not seem fair, but it was 

the reality. And as I mentioned earlier, GM extracted considerable 

concessions from the UAW in order to reduce GM’s labor costs 

going forward and get it on a sustainable profitable path. Five 

years later, I think it is clear that the government’s extraordinary 

intervention in the American auto industry has been a success. 

I deeply wish that the actions we took did not have to be taken, 

but I am proud that we avoided a devastating dissolution of this 

vital sector of the economy and gave the American auto industry 

the opportunity to once again lead and succeed. Thank you. 

Mr. MICA. Thank you. 

[Prepared statement of Mr. Rattner follows:] 

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Mr. MICA. We will recognize now Mr. Harry Wilson, Chairman 

and CEO of the MAEVA Group. Welcome, and you’re recognized. 

STATEMENT OF HARRY J. WILSON 

Mr. WILSON. Thank you. Mr. Chairman, Ranking Member 

Connolly, and members of the subcommittee, thank you for the opportunity to testify before you today on this somber anniversary of 

the attacks on 9/11. 

I’m here to report, at your request, on the 2009 auto rescues and 

the recent SIGTARP report on Delphi pensions. I’d like to make 

several comments on the report. First, I believe the value of the report makes clear that General Motors’ management acted in a commercially reasonable manner in determining how they would treat 

various groups of Delphi retirees. 

As the report makes clear, General Motors had a choice: Option 

A, they could choose to not provide any funding at all for Delphi’s 

underfunded pension plan; option B, they could choose to fully 

fund, top-up or even assume all of Delphi’s underfunded pension 

plans at great cost; or option C, they could choose to fund or topup only the plans they needed to preserve the viability of GM’s own 

reorganization process. 

As the SIGTARP report clearly shows, Option A was not a viable 

option. GM’s CEO at the time, Fritz Henderson, indicated that if 

the pension guaranty of the UAW was not assumed by New GM, 

there would have been a strike, and thus it was: mission impossible. 

On Option B, GM management believed there was no commercial 

justification for it, which would have involved assuming the pensions of nearly 70,000 salaried and hourly pensioners, a majority 

of whom GM had never committed to support after the 1999 Delphi 

spin-off, a group that included 20,000 salaried employees, 18,675 

hourly employees and 2,000 other employees. 

At Delphi itself, none of the prospective investors in Delphi had 

indicated any willingness to maintain Delphi’s pension funds, so 

unfortunately there was just no contractual or market-based support for Option B. 

And that left only Option C, the path GM ultimately pursued, 

where they agreed to assume existing top-up agreements only in 

cases where they felt they needed to in order to successfully emerge 

from bankruptcy and operate successfully thereafter. 

The record clearly supports these facts; however, I do need to disagree with and correct for the record several characterizations 

made in the summary and conclusions sections of the SIGTARP report. First, the report makes several points criticizing the commercial approach which the auto team was tasked to utilize. For example, SIGTARP implies the auto team worked too closely with GM 

management in developing a viable plan for GM’s restructuring; 

however, the facts at the time and the results since repudiate this 

criticism. 

When the auto team was first formed, GM had already failed 

multiple times to develop a viable plan on its own, and the Treasury, and thus the American taxpayer, was funding multi-billiondollar monthly losses with no end in sight. Time was of the essence. And in that spirit, the auto team worked closely with GM 

109 

management as they developed their revised viability plan, offering 

real time feedback and helping speed along a process that would 

normally take months and would have costs tens of billions of dollars more than it ultimately did. 

This was exactly the type of work which the auto team had been 

created to do: to determine if there was a path to viability for General Motors, and if so, work with management to achieve that path. 

The commercial success of General Motors since this work was 

completed is beyond dispute. Just last week, a Bloomberg article on 

the resurgence of the American auto industry stated, ‘‘Detroit has 

come full circle, from bankruptcy to boom.’’ Those fatter profits 

come from trimmer companies that radically restructured operations, shed debts, and overhauled their lineups. 

SIGTARP also argues that Treasury inadvertently created a negotiating leverage for the UAW due to its aggressive time line for 

the restructuring process. Nothing could be further from the truth. 

The UAW had enormous leverage because they represented nearly 

100 percent of the GM hourly workers with the skills to manufacture cars, and they are prepared to use that clout to press certain 

key issues. Nothing else in the restructuring process provided them 

any additional leverage, nor did they need more. 

Furthermore, the SIGTARP report is silent on what viable alternatives, if any, there might have been for the path GM pursued. 

Like all choices in the real world, all the difficult decisions that 

were made during the auto rescues were about a series of tradeoffs of bad and less bad options. For example, SIGTARP implies the 

auto team should not have established such an aggressive restructuring time line; however, all industry commentators, GM management and the auto team itself, in fact, not a single contrary voice 

that I’m aware of were convinced that GM could not survive a prolonged bankruptcy. As a result, there was no viable procedure or 

alternative to a very rapid Section 363 sale. Moreover, Section 363 

sales like this have been done at times in the past for exactly these 

reasons. So in reality, neither GM management nor Treasury had 

a practical alternative, unfortunately, to the course that was followed. This is not to say that these choices were at all satisfactory. 

Sadly, the costs inherent in a restructuring as difficult as General 

Motors’ are massive and tragic. In a better world, none of these difficult and painful actions would have been necessary; however, it 

is equally clear that for General Motors, there was not a viable alternative path available to it, and far greater costs and tragedies 

were avoided as a result of the work that was done by both companies, their many advisers, and the Bush and Obama administrations. 

I look forward to discussing these issues with you today. Thank 

you. 

Mr. MICA. Thank you. 

[Prepared statement of Mr. Wilson follows:] 

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Mr. MICA. And we will now turn to our last witness, Mr. Miller. 

And Mr. Miller is a senior member of an international law firm. 

And welcome, and you’re recognized. 

STATEMENT OF HARVEY R. MILLER 

Mr. MILLER. Thank you, Mr. Chairman, Mr. Connolly, and members of the committee for the opportunity to participate in this 

hearing. 

I acted as the lead attorney for General Motors in connection 

with its restructuring under Chapter 11 of the Bankruptcy Code 

via a sale pursuant to Section 363 to an entity sponsored and financed by the U.S. Treasury and the governments of Canada and 

Ontario through its Export Development Canada. 

During the period preceding the commencement of the Chapter 

11 case, General Motors was subjected to substantial adverse circumstances, beginning in 2007, as the subprime mortgage crisis 

began to surface and affect auto and truck sales. That was compounded by a surge in oil prices in the summer of 2008 and further 

diminished—that further diminished consumer demand and caused 

sales to erode. As a result, GM’s liquidity began to dry up. Conditions worsened with the financial crisis ignited by the 

conservatorships for Fannie Mae and Freddie Mac and ultimately 

the bankruptcy of Lehman Brothers. The future of the automotive 

industry looked bleak and the parts supplier industry had supplies 

which were beginning to fail. 

President Bush recognized the potential calamity, and directed 

the U.S. Treasury to enter into a financing agreement with General 

Motors that resulted in the secured loan agreement to avoid the 

consequences to the American automotive industry and the loss of 

hundreds of thousands of jobs then at stake. 

Unfortunately in 2009, conditions continued to erode. The Obama 

administration inherited the administration of the secured loan 

agreement, and GM needed additional financing. The auto team 

was appointed and got involved in the negotiations as to additional 

financing. 

Central to those negotiations was the protection of taxpayer monies, and therefore the requirement that GM submit a feasible business plan that provided the prospect of restored viability and recovery of monies advanced. 

The auto team conducted intensive due diligence in discharging 

its functions. The important point is that the auto team and the 

government at all times acted in the same manner as a private secured lender attempting to protect its loan, but also complicated by 

the desire to retain an American automotive industry. 

In that context and in the face of the deepening global economic 

crisis, it became obvious that without radical surgery, restructuring 

its finances and operations, GM would fail, and that would cause 

a chain reaction throughout the automotive industry. 

That led to the exploration of alternative issues and possible solutions. That led to the direction of conducting a Section 363 sale 

under the Bankruptcy Code, a process which was not at least at 

that point totally novel, and had been used in many other similar 

situations. 

115 

As it became evident that there was no access to credit for General Motors and the large amount of debt outstanding to the 

United States, the only source of financing and investment was the 

U.S. Treasury and the Export Development of Canada. 

Integral to the process, as amply described in my written testimony, was that the end result would be an operating efficient company capable to compete in its own marketplaces with a prospect 

of returning to the purchase of all or a good portion of its loans and 

investments. Incidentally, that is the same objective that ultimately was the objective of the Unsecured Creditors Committee 

that was appointed in the Chapter 11 cases to recover some return 

on claims of unsecured creditors, which I might say included salaried employees of both GM and ultimately through Delphi’s own 

Chapter 11 case. 

This is the normal process in Chapter 11 cases involving Section 

363 sales, private lenders and investors, and a process that was 

used basically in the Bethlehem Steel case. In Section 363 situations, the purchaser is an active participant in the structuring of 

the sale and often selects the assets which are to be purchased and 

the executory contracts which should be assumed and leases and 

along those avenues. 

In connection with a 363 sale that anticipates a operating—an 

ongoing operations, labor unions have a level of leverage that other 

participants don’t have. A sale is not going to be successful if you 

cannot operate the plant, and to operate the plant, you have to 

have workers and labor piece, and that was what—one of the main 

objectives in connection with the Section 363 sale and the restructuring of General Motors. 

As I set forth in the written testimony, the relationship with Delphi Corporation was very complex. Delphi was a major supplier to 

GM, and without those supplies, it would have been impossible for 

GM to continue to operate its plant. 60 percent of steering parts 

came from Delphi. 

The two Chapter 11 cases in some respects were joined at the 

hip. It turned out to be a very successful operation. GM is successful, Delphi is successful, and I think the government and the GM 

management did a great job in coming up with a feasible plan. 

Thank you for this opportunity. 

Mr. MICA. Thank you. 

[Prepared statement of Mr. Miller follows:] 

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Mr. MICA. And I thank all of our witnesses for their testimony, 

and we will turn to questions now. 

First I want to talk to the Special Inspector General, Ms. Romero. I just about fell out of my chair when you cited the number 

of convictions and also the people charged with stealing from 

TARP. Could you repeat that again for the record? 

Ms. ROMERO. Absolutely. I really appreciate you raising this. So 

SIGTARP’s a law enforcement agency, so we conduct criminal investigations. As a result of our investigations so far, 151 people 

have been charged with crimes and 111 of them have been convicted so far. The others are waiting trial or—— 

Mr. MICA. 111 convicted. 

Ms. ROMERO. Yep. 58 of those—— 

Mr. MICA. Let me just say, good work. I don’t think any of the 

American people—I mean, TARP is always touted as such a success 

and everything, but it looks like when you open the cupboard, the 

rats find their way to the cheese and steal a lot of it. 

When we talk about this whole topping-up of pensions, this 

isn’t—this wasn’t a normal bankruptcy. It would have been handled quite differently, wouldn’t it, Ms. Bovbjerg, if this was a regular bankruptcy? 

Ms. BOVBJERG. Normally in bankruptcy when plans are being 

terminated—and just to be clear, usually PBGC is terminating 

plans because there is no viable sponsor and they’re underfunded. 

Mr. MICA. But the whole bankruptcy was—it wasn’t handled like 

a normal bankruptcy, right? 

Ms. BOVBJERG. From a PBGC perspective—— 

Mr. MICA. What’s the difference—what was the difference in this, 

in how this was handled? 

Ms. BOVBJERG. What made these terminations unique was the 

presence of GM. 

Mr. MICA. Yeah. But, again, the whole difference in what was 

done here is the topping-up, and, again, what took place was that 

they were using what? That’s the question. Can you answer that? 

Anyone know? Taxpayer money? Is that the truth? 

Ms. BOVBJERG. It’s a little unclear, because it’s all fungible. I 

mean, we were not—we were not looking to track that, but—— 

Mr. MICA. I know, but where the hell did the money come from? 

Excuse the expression. It came from the taxpayers. Even Mr. Miller, the minority witness, just said that it was—it was taxpayer 

money, and most of it’s deficit money, $0.40 on the dollar, but 

that’s the difference. I have been in business, and you file bankruptcy and you go through a court proceedings. And there may be 

some protection of pensions through a Pension Guarantee Fund if 

you’re a participant, et cetera, but the difference here is that taxpayer money was making up the difference. 

Now, some of you all participated in a—it was the presidential— 

President’s Auto Task Force. Raise your hand if you participated. 

Okay. Three here. Okay. Did you all participate in the Poughkeepsie meeting? Did you participate in the Poughkeepsie meeting, 

Feldman? No? 

Mr. FELDMAN. Not familiar. 

Mr. MICA. You weren’t there. Were you there, Rattner. 

Mr. RATTNER. I—— 

156 

Mr. MICA. Were you there, Wilson. 

Mr. WILSON. Do you mean the Poughkeepsie Delphi mediation? 

Mr. MICA. Yeah. 

Mr. WILSON. Yes. 

Mr. MICA. But the other two were not. So you’re the only one at 

the table that was there, right? 

Mr. WILSON. I think that’s correct. 

Mr. MICA. Okay. And I understand there were union representatives at that meeting, and that was the basis of a lot of discussion 

that was taken prior to making a final decision as to how this was 

going to all play out, but there was no one—not—no one from the 

non-salaried side of the equation, was there? 

Mr. WILSON. Sir, I don’t recall that. The primary participants 

were representatives of GM and Delphi. 

Mr. MICA. But were there union representatives? I was told there 

was a union representative. Does anyone know? 

Mr. WILSON. There were dozens of people there. I don’t know for 

sure. 

Mr. MICA. Do you know, Ms. Romero, if there were. 

There were dozens of union representatives. 

Mr. WILSON. No. There were dozens of people. I can’t tell you for 

sure—— 

Mr. MICA. Well, I’m told there was no one representing the nonsalaried where a lot of the decisions were made, which seems a little bit unfair. And, again, I think—— 

Mr. WILSON. Can I ask you who—who you think was representing the unions, because I don’t recall anyone there who did. 

Mr. MICA. I was told that there was representation. 

Mr. WILSON. Was it by a source that was there as—— 

Mr. MICA. No. By my staff, and they’re usually fairly reliable. Today’s only Wednesday. Okay. 

Mr. Rattner, to you. You talked about this being a success and 

GM and Chrysler wouldn’t make it without it, but others made it 

without it, Ford and a whole host of others. Isn’t that correct, too? 

Mr. RATTNER. That’s correct. 

Mr. MICA. Yeah. And they made good decisions. I mean, I was 

in business. I would have loved to have somebody fund me when 

I had losses or wasn’t making money or was on the verge of bankruptcy, but here again, I think the principal difference is that we 

used taxpayer money for the bailout. 

Does anyone have any idea, Ms. Bovbjerg, of how much money 

was used for—I heard there was some resolution of liability for 

healthcare debt. 

Ms. BOVBJERG. We did not look at the VEBA, is I think what 

you’re asking about, the retiree health. 

Mr. MICA. Yeah. 

Ms. BOVBJERG. I know that there had been some provision, perhaps in the settlement. 

Mr. MICA. But I was told that that was—that was also part of 

the bailout. 

Ms. BOVBJERG. It—we did not look at that. 

Mr. MICA. You don’t know. Do you know, Ms. Romero? 

Ms. ROMERO. I don’t know the exact amount. 

Mr. MICA. But what I’m trying to do is figure—— 

157 

Ms. ROMERO. It’s clearly part of the bailout. 

Mr. MICA. —figure out how much of the pension top-up cost and 

the healthcare, any of the money that probably will not be paid 

back to the taxpayers. It won’t be paid back as opposed to some of 

the other money. Is that correct? 

Ms. ROMERO. The estimated amount—this is what GM and 

Treasury were working with at the time for the top-up of the union 

employees, this would be all the unions, was $1 billion to $1.5 billion. 

Mr. MICA. And that won’t be paid back. There’s no mechanism 

for that. 

Ms. ROMERO. No. It’s not a—it’s not separate than the TARP 

funds that have to be paid back anyway where Treasury expects 

a loss. 

Mr. MICA. All right. And, again, we only have one person that 

was at the Poughkeepsie meeting, so we will try to find out exactly 

who was there. 

My last question is, I’ve only chaired this with—and Mr. 

Connolly as my ranking member since the beginning of the year, 

however, the inquiry into this matter has gone on for at least 2 

years previous. You’ve been involved for how long, Ms. Romero? 

Ms. ROMERO. 3 years. 

Mr. MICA. And how would you describe the folks from TARP and 

Treasury, all the government folks that were involved, Pension 

Guarantee, as their cooperation as your investigation has gone forward? 

Ms. ROMERO. Well, this audit was very much delayed by the refusal of four auto team members to be interviewed, yes. 

Mr. MICA. Well, I made one pledge when I became chairman to 

Mr. Turner that all hell would break loose if we did not get a response. I did think at the beginning that they’d finally become responsive, but I will not tolerate, as chair of a subcommittee or participating in this committee, with non-responsiveness from any of 

the agencies. And there will be—and I think Mr. Connolly shares 

this, too. We expect and demand the information. I know that’s 

been turned over, it’s been late, and I know that they did everything to delay to keep information from you. And I think that’s a 

sad commentary, because the story does need to be told and I think 

that it’s our responsibility to look into how this unfolded and how 

taxpayer money was used and if people were treated fairly with 

taxpayer money. 

So, again, I thank you for your perseverance and the good job 

you did, and I wish you good luck on the conviction of the balance 

of those folks that stole out of the cookie jar. 

Comment. 

Ms. ROMERO. Thank you. We’ll get them. 

Mr. MICA. All right. Thank you. 

Mr. CONNOLLY. You go get them. 

Thank you, Mr. Chairman. 

By the way, just to clear up something, Mr. Wilson, you’re under 

oath, your testimony is you do not recall any union reps at that 

Poughkeepsie meeting. Is that correct. 

Mr. WILSON. That’s correct. 

Mr. CONNOLLY. Thank you. 

158 

Mr. WILSON. I don’t recall that. 

Mr. CONNOLLY. Just want to make—get it in the record, since 

you were the only one at the table who was there. 

Ms. Bovbjerg, you—I think I heard you characterize the bankruptcy as unusual. Is that correct? 

Ms. BOVBJERG. From the perspective of plan termination and the 

PBGC, it was unusual. PBG’s—PBGC’s role in it was as it has been 

with other terminations. We were asked to look at the perspective 

of PBGC and we looked at the 10 largest terminations. And, you 

know, every one, of course, has it’s different twists and turns, but 

they were all pretty much the same. PBGC is mainly governed by 

ERISA, so most of what they do is in statute. 

What was different here were the top-ups and the presence of 

GM. If Delphi had emerged from bankruptcy and tried to top-up 

the plans, PBGC would have given the plans back. 

Mr. CONNOLLY. Gotcha. 

Ms. BOVBJERG. Because if they can do that—— 

Mr. CONNOLLY. Right. 

Ms. BOVBJERG. —any employer can do that. 

Mr. CONNOLLY. If I may, because I want to explore the narrative 

here that some are trying to establish, let’s go back. The top-off GM 

negotiated at the time of the spin-off of Delphi was with the 

unions. Is that correct. 

Ms. BOVBJERG. Yes. 

Mr. CONNOLLY. At the time, the union workers being represented, their pensions weren’t fully funded. Is that correct? 

Ms. BOVBJERG. Correct. 

Mr. CONNOLLY. The salaried workers who now are complaining 

about the fact that they didn’t get topped off, unlike the union 

workers, in fact they were fully funded at the time of the spin-off. 

Is that correct? 

Ms. BOVBJERG. Yes. Their plan was overfunded. 

Mr. CONNOLLY. Subsequently something happened, so they— 

okay. So they were fully funded, the union folks weren’t. The union 

folks negotiated a contract to try to correct that and get a top-off, 

salaried workers didn’t. No taxpayer dollars yet. And, of course, no 

one thinks Delphi goes under, but it does. 

Mr. TURNER. [Presiding.] Mr. Connolly. 

Mr. CONNOLLY. And—— 

Mr. TURNER. Can I interrupt for just a moment. 

Mr. CONNOLLY. I’m sorry? 

Mr. TURNER. I’m sorry, Mr. Connolly. If I could—if I could interrupt for just a moment, and I’ll give you additional time. 

As you’re having this discussion, that’s not necessarily the—a 

complete characterization of what the issue is. As Ms. Bovbjerg 

knows, the issue also is on the termination and on the funding 

itself—— 

Mr. CONNOLLY. Right. 

Mr. TURNER. —and on the dispute of the assets. So we’re on the 

top-up, and I just want to make certain that her answers are understood to be limited to just this—— 

Mr. CONNOLLY. Yes. 

Mr. TURNER. —issue of the top-up. 

Mr. CONNOLLY. Thank you. 

159 

Mr. TURNER. There are multiple other issues leading up to termination—— 

Mr. CONNOLLY. Yeah. 

Mr. TURNER. —that are at risk. 

Mr. CONNOLLY. I thank the chair. Yeah. I’m just trying to key 

off on the narrative here to make sure I understand what happened and when, but you’re—obviously there were other issues that 

we have to—you’re quite correct in addressing. 

So subsequently, subsequent to the spin-off, things went south. 

Ms. BOVBJERG. Yes. 

Mr. CONNOLLY. And the salaried workers who had not negotiated 

a top-off, so there was no contractual obligation to give them one, 

sued to try to get one. Is that correct? 

Ms. BOVBJERG. Yes. 

Mr. CONNOLLY. And what happened to that lawsuit? 

Ms. BOVBJERG. They’re still in court. 

Mr. CONNOLLY. I’m sorry? 

Ms. BOVBJERG. They’re still in court. 

Mr. CONNOLLY. Are you sure about that? They’re still in court? 

Suit’s still pending. 

Ms. BOVBJERG. Yes. 

Mr. CONNOLLY. Okay. So they can pursue the route of litigation. 

But if you’re suing GM to get a top-off from a new—I mean, from 

a court point of view if you’re in bankruptcy, why would a court— 

I’m just—I’m talking about, you know, in theory. Why would a 

court approve a new obligation. 

Mr. TURNER. Would you mind if I hop in for a moment again? 

Mr. CONNOLLY. Yeah. 

Mr. TURNER. I’ll give you additional time. I just want to take 

time out of my time to clear that up. 

That’s an isolated case. The issue is not a suit for top-up. The 

issue is one of valuing asset, the termination of the pension plan 

to begin with. The issue of going south, that actually is in dispute 

as to whether or not there were sufficient assets within the plan 

prior to termination and whether or not these gentlemen exerted 

influence on the termination, and so it’s not really just an issue of 

we’re going to court to get a top-up. 

The process of the top-ups was really the discussion of determining, post Treasury’s denial, that they were not involved or were 

they involved. And here from the report we have, they were. 

Mr. CONNOLLY. I want to be clear, Ms. Bovbjerg. There were 

multiple lawsuits, and the one against GM was thrown out. It’s not 

pending. Is that correct? 

Ms. BOVBJERG. That’s correct. 

Mr. CONNOLLY. All right. Just because it’s a little misleading to 

say it’s still pending. The GM suit is not. And that’s what I’m getting at. Is there, was there any kind of implied commitment, certainly there was no contractual commitment, but was there some 

implied commitment to keep these folks whole by GM 9 years after 

the separation from Delphi? 

Ms. BOVBJERG. I’m sorry. I didn’t understand your question completely. Can you—that there was an implied commitment? 

Mr. CONNOLLY. Well, that—in some of the conversation, there 

seems to be some idea that either GM or the taxpayers have an obVerDate Aug 31 2005 09:41 Nov 04, 2013 Jkt 000000 PO 00000 Frm 00163 Fmt 6633 Sfmt 6633 C:\DOCS\85115.TXT APRIL
160 

ligation to folks who found themselves not whole in their pensions, 

but that population is a population that was not covered under the 

contractual agreement with the unions, it’s 9 years later, GM is in 

bankruptcy. They pursued, you know, their legal route against GM, 

and that was thrown out. 

And what I was going to get at is what court in the land, bankruptcy court would look at this situation and say even though this 

is, you know, one of the largest bankruptcies ever, it’s the largest 

automotive manufacturer in the world, 900,000 jobs are at stake, 

and we’re looking at is there a plan we can salvage the company 

with or do we liquidate—thank God we didn’t go to the route of liquidation, but it was an option—while we’re doing all that, let’s take 

on a new obligation, that is to say one that you are not contractually obligated to it right now, topping-off or making whole 

these—this category of pensioners. 

Mr. TURNER. Mr. Connolly—— 

Ms. BOVBJERG. No. I can’t really speak to the intent of the bankruptcy court. 

Mr. TURNER. And if I could hop in for just one moment again. 

Mr. CONNOLLY. Yeah. 

Mr. TURNER. Because I know—and you’ve been, you know, incredibly kind and diligent, I know, in the manner of looking at this. 

This is one where there are unfortunately members who’ve been 

working on it for 4 years, so the distinctions I know that you’re 

struggling with, perhaps you can help with. 

The issue of contractual obligations, there are no contractual obligations post bankruptcy. There was a labor agreement, and, of 

course, salaried retirees—salaried employees don’t have a labor 

agreement, so they have no contractual obligation. So it’s the distinction in how they sit as to whether or not there was a prior 

agreement, but entering into bankruptcy, they all sit equally, because bankruptcy voids all the agreements, they have to be redone, 

it’s—they have to be renegotiated. So it’s not fair to say they didn’t 

have one and they did. It’s how are they treated as they go through 

the bankruptcy process. And then—and that is in her report for the 

GAO. 

Mr. CONNOLLY. Yeah. Well, whether it’s fair or not is a different 

issue. That’s a subjective judgment, but your distinction is fair. 

There is a distinction. But I do note for the record one had a contractual—a contract, one did not. One was whole at the time of separation, one was not. And there’s no evidence, but correct me if I’m 

wrong, that somebody from Treasury or the administration politically decided help this group, not that group, or is there, Ms. 

Bovbjerg? 

Ms. BOVBJERG. We reviewed public documents. We in fact separated a bit, and I guess I would ask Nicki to talk about—— 

Mr. CONNOLLY. Yeah. I—— 

Ms. BOVBJERG. —the methodology. 

Mr. CONNOLLY. Fair enough. I’ll turn to Ms. Romero. I’m just 

asking whether you—if GAO encountered—encountered anything. 

Ms. Romero. 

Ms. ROMERO. I’m a little bit lost. What was the question? 

Mr. CONNOLLY. Well, I’m trying to lead us up through this narrative, with the help of my good friend—— 

161 

Mr. TURNER. Can I reask your question. 

Mr. CONNOLLY. Sure. 

Ms. BOVBJERG. Excuse me, Mr.—— 

Mr. TURNER. His question was with respect to the top-up. Is 

there evidence that you uncovered that established that it was solely politically motivated. 

Mr. CONNOLLY. Or at all politically motivated. 

Ms. ROMERO. Well, just so you know, all of our audits we look 

at everything, so what we were interested in is what were all the 

reasons, all the factors and considerations that went in to the decision that GM and Treasury made on the top-up. So we didn’t exclude one factor or focus on one factor, and we did not find evidence 

that political clout of the UAW was a factor in GM and Treasury’s 

decision. 

Mr. CONNOLLY. Thank you. Mr. Chairman, I think fairly my time 

is probably up, and I thank you for your guidance. 

Mr. MICA. [Presiding.] Thank the gentleman, and recognize now 

Mr. Turner. 

Mr. TURNER. Thank you, Mr. Chairman. 

First off, thank all of you for your participation in this, because 

what we’re doing is recreating what occurred so we can find out 

whether or not what occurred was proper and how to address it. 

Ms. Romero, there were a number of people who threw political 

accusations when this first started, and I wanted to ask you a 

question I think should help us in dissolving the political tension, 

and that is, you are a President Obama appointee, are you not? 

Ms. ROMERO. I am. 

Mr. TURNER. Thank you. 

Mr. Rattner, according to the SEC website, November 18th, 

2012, the Securities and Exchange Commission charged you— 

charged former Quadrangle Group principal, Steven Rattner, yourself, with participating in a widespread kickback scheme to obtain 

investments from New York’s largest pension fund. 

I’m going to ask consent that the portions of the SEC website 

concerning those charges be entered into the record and the full 

text of the complaint on the kickback scheme in the pension fund. 

Mr. MICA. Without objection, so ordered. 

Mr. TURNER. Mr. Rattner, did you pay a settlement in that matter? 

Mr. RATTNER. Yes. 

Mr. TURNER. What was the amount of that settlement. 

Mr. RATTNER. It was about a little over $6 million. 

Mr. TURNER. I think it’s, according to the website, $6.2 million 

that you paid to settle that claim of a kickback scheme with respect 

to a pension fund. 

Mr. Rattner, you indicated that the decisions that were applied 

with respect to the pensions were those of commercially reasonable. 

Could you define commercially reasonable for me? 

Mr. RATTNER. Commercially reasonable, in our minds, would be 

decisions that you would—that a private actor would make in order 

to ensure in this particular case that money that was being invested was being invested wisely. 

Mr. TURNER. When you considered that private actor, would you 

consider a private actor that was involved in a kickback scheme for 

162 

pension funds or those that had not been? You don’t have to answer that, Mr. Rattner. 

Mr. RATTNER. Thank you. 

Mr. TURNER. Ms. Bovbjerg, you were in Dayton and you did an 

excellent job describing the GAO report, and I greatly appreciate 

your distinction that your report is not, as Ms. Romero’s is, a detailed analysis of documents and records requested from the government and the Treasury Department and reviewed. 

You did in your report specifically dedicate a section to, I believe 

it is on page 9, the issue of Treasury’s multiple roles. When I did 

my opening, I indicated that part of the concern in all this is that 

Treasury through TARP became multiple people. I mean, that 

Treasury’s on the board of the PBGC, Treasury became new GM, 

Treasury became the bond holders and, you know, some of the equity holders. 

And you indicated this: You said in previous reports, we also 

have examined the challenges posed to Treasury due to its multiple 

roles as a private pension regulator and a GM shareholder as well 

as having its secretary serve on the PBGC board. 

Now, you testified earlier, which is why I want to clarify this, 

you said, well, PBGC viewed this normally. Now, you have not reviewed all the emails that we have and that Ms. Romero has, so 

the word ‘‘normally’’ I’m a little concerned about. So let’s just go 

back to what I recall you having said in Dayton and end it with 

this. In Dayton, you said those Treasury’s multiple roles did have 

the appearance of a conflict of interest, from which you were concerned and noted in your report. 

Is that still accurate today? 

Ms. BOVBJERG. Yes. And I’d like to ask Ms. Clowers to jump in, 

because she leads our auto work at GAO and was—probably in her 

report was the first place that—— 

Mr. TURNER. Okay. We’ll get to that in a minute, because I only 

have 5 minutes and I have to get back to Ms. Romero, but we’ll 

take your answer for the record. 

Ms. Romero, in the GAO report they state this sentence when— 

their testimony today, they say, as we reported in 2011, Treasury 

officials said, which is why the distinction of GAO looked at public 

documents, that while Treasury did not explicitly approve or disapprove of GM’s agreeing to honor previously negotiated top-up 

agreements with some unions, it agreed that GM had solid commercial reasons, which is that distinction that Mr. Rattner tried to 

explain to us of what the definition of commercially reasonable is. 

In your written testimony today, I believe on page 44, you state 

that the auto team made it clear—no. That was another provision—that they specifically did approve them and played a role. 

And could you talk about those two roles? In your report you talk 

about two things: one, that as the purchaser, they had a construct 

in the agreement that required that issues that were over $100 

million and that related to pensions must be approved by them; 

and secondly, from the dialogue that you reviewed, that you understand that they were involved. 

So could you explain those two issues to me as to how that statement that GAO looked at the public reports is not accurate. 

163 

Ms. ROMERO. So, yeah, let me talk about what we found. This is 

what I opened with in my opening statement. There was no way 

for Treasury’s role to be advisory. The TARP loan agreement from 

2008 sets up basically two roles for Treasury. For the big things, 

like things over $100 million or big decisions like the collective bargaining agreement, Treasury has the approval rights. They are the 

decider. There’s other things where Treasury would just give advice 

to GM. 

The top-up only appears in the collective bargaining agreement. 

It’s not some separate agreement. And the discussion of the top-up 

has been confusing so far, because it’s been as if the top-up was 

somehow a separate agreement that was separately negotiated and 

GM made a decision on it and came to the auto team and said, 

we’d like to do this. None of those facts are what we found to have 

actually happened. It appears in the collective bargaining agreement. 

The other part of this, not just the collective—not just Treasury’s 

rights to approve the collective bargaining agreement, Treasury became the purchaser in bankruptcy, and that changed everything as 

well. Mr. Miller in his written testimony, and he was GM’s bankruptcy lawyer, says that the U.S. Treasury acted in the same manner as other secured creditors would act in selecting the assets it 

would purchase and liabilities it would assume. And that’s what 

Mr. Wilson told us and that’s what GM officials told us. GM officials told us we weren’t in control. We could make recommendations, but it’s ultimately up to the purchaser. An obligation that 

would be assumed would be the collective bargaining agreement 

and all of the obligations that were in it; therefore, it was Treasury’s role, direct role, to make that decision as the purchaser, just 

like they did with any other obligation that the purchaser took on. 

Mr. TURNER. Thank you for the additional time. I see my time 

has expired. I look forward to the second round. 

Mr. MICA. I recognize now Mr. Ryan. Mr. Ryan. 

Mr. RYAN. Thank you, Mr. Chairman. Thank you for holding this 

hearing, and I appreciate everyone’s participation here. 

This is obviously for me, representing Ohio, northeast Ohio, is a 

bittersweet moment, which is why I’m thankful to be able to sit 

here and be able to be on this committee, which I don’t normally 

sit, because Ohio has benefited greatly from what has happened in 

the auto industry in the past couple years. One in every eight jobs 

in Ohio is related to the auto industry, and that makes its way 

down through the supply chain, as you all know. 

On the other end of this is a group of people who live in my congressional district primarily, and Mr. Turner’s as well and some in 

Columbus that are Delphi salaried, who have been devastated, 

families devastated. And I think Mr. Feldman mentioned, you go 

through this a lot. We go through it a lot too for those of us who 

represent older industrial areas. And I hope as we talk about bankruptcy—this is one or two bankruptcies that we’re talking about, 

and I hope I get as much enthusiasm from my friends on the other 

side about reforming bankruptcy laws for all Americans, because 

for me and my congressional district, this has been going on for a 

long, long time. That’s not what this hearing is about, but these are 

people who have been not made whole and who have been harmed, 

164 

and we’re here to try to figure out how to help those people, but 

there’s a broader issue that I’ll set on the side about bankruptcy 

laws, and I’ll be looking forward to support from the other side of 

the aisle to reform those laws, like the Delphi salary folks who sat 

in my office the other day said they would be willing to help us 

make those changes. 

To sit in a meeting with these folks, who didn’t do anything 

wrong, paid money in, had a pension, were ready to go, worked 

hard their whole lives, and sit here and hear the stories as I heard 

the other day, I walk into a room, you know, two or three of the 

eight people sitting there, I call coach, because they were a former 

coach or a coach in our community. These aren’t people who make, 

you know, a kagillion dollars just because they happen to be white 

collar; these are hardworking people who, in my estimation, got a 

raw deal, and we’re trying to figure out how to make this whole. 

I want to make one other point as well. There’s a lot of splinter 

unions that were involved here. We talk a lot about Delphi salaried, but there is a list of splinter unions: the machinists, electrical 

workers, Michigan Regional Council of Carpenters, Local 687 and 

Interior Systems, International Brotherhoods of Painters and Allied 

Trade, Sign and Display Union, Teamsters, boilermakers, operating 

engineers, catering, restaurant, bar and hotel workers. Lots of 

other splinter unions are in the same position, so I don’t want us 

to forget anybody as we go through this process. 

I also would like to say that the people responsible for the bankruptcy of a company like Delphi that’s having a ripple effect 

throughout our community are the ones losing their pension over 

this whole thing, and clearly something is terribly wrong with the 

bankruptcy system, but let me just say these guys can’t go back. 

These men and women can’t go back 25 years and say, okay, this 

is what our portfolio’s going to look like because of the bankruptcy. 

They can’t go back and do that. 

And I want to say very clearly that I do not believe that Congress or the retirees still have a complete picture of what happened 

in this situation. And if it’s determined by—through the evidence 

produced here or in the court in the lawsuit that Delphi salaried 

retirees and the splinter unions were unjustly harmed due to politics or favoritism, that they must be made whole. And I will continue to pursue that. 

So let me get to some questions here. First a question is going 

to go to Ms. Bovbjerg, who testified a little bit about the GAO report in 2011. Do you feel that the PBGC was forthcoming with the 

documents for the GAO report in 2011? 

Ms. BOVBJERG. I did. We had no reason to believe they were not. 

Mr. RYAN. So recently the court has ordered PBGC to turn over 

additional documents as well, and communications. And is it of 

your opinion that those new documents or that new communication 

would somehow influence the 2011 report? 

Ms. BOVBJERG. No, because when we approached that report, we 

were very clear that there were a number of questions that the requesters asked, and we took the ones that we could deal with in 

public documents. And, you know, we might talk to PBGC, people 

at Treasury, people for clarification of a public document. We did 

not interview the auto team. We did not look at emails. That was 

165 

a question that was about whether Treasury had exerted political 

pressure in this process, and GAO did not feel that we could do 

that work, that that was more appropriate for an IG office, hence 

the split between our methodologies. 

Mr. RYAN. If I could take an extra minute here, Mr. Chairman. 

Mr. MICA. Go right ahead. 

Mr. RYAN. One of the things I want to ask you is about the range 

of recovery ratios with regard to the terminated plans. And did you 

feel that the PBGC in any way left monies on the table with the— 

with those plans that maybe could have bumped the value of the 

plan assets? There’s some discrepancy between the Delphi salary 

folks. Maybe, Nicole, if you’d like to touch upon this as well, whoever can answer it best. There’s some discrepancy where our folks, 

salaried folks are saying, well, we think we could have gotten a lot 

more revenue for the plan. 

Do you believe, in your participation in this case, that there were 

monies left on—possibly left on the table? 

Ms. BOVBJERG. We did not see that. We saw that out of $7 billion 

owed on these plans, PBGC got $700 million in recoveries. That’s 

not really outside the range of what they’ve gotten in the 10 largest 

terminations. They did better with airlines. They got up to 38 percent. But on some they got nothing. They tried to do what they can. 

So we did not—we didn’t evaluate a particular, you know, foreign 

lien or something like that, but we did look at the process and 

whether they followed it, and what we saw was that they followed 

the process as they have with other terminations. And most of it 

is required by ERISA, by the pension law. 

Mr. RYAN. I know I’m way, way over my time, so I yield back, 

Mr. Chairman. 

Mr. TURNER. Mr. Chairman, could I have just—— 

Mr. MICA. Yes. In fact, I’ll—— 

Mr. TURNER. Ms.—— 

Mr. MICA. —my time for—— 

Mr. TURNER. Ms. Bovbjerg, I’m just going to take this and pass 

it back, because I think what Mr. Ryan is asking is incredibly important. 

I think the reason why several people are struggling with your 

answers today as opposed to the answers that you gave in Dayton 

is that they’re—you’re not giving answers that are in the context 

of what you did. I mean, you’re—you looked at public documents, 

and you were not given the issue of the influence and how it occurred, but yet your statements today appear to be a little stronger, 

and I just want to assist you in the confines of what I know your 

report says. 

You did not find that PBGC did everything according to their 

rules and regulations. You—you don’t—you had no information of 

that, you had no emails, you had public documents, you did not 

interview those who were involved in the GM bankruptcy. So to 

state that conclusion, which actually is the subject matter of ongoing litigation, is far more expansive than I think you intend, and 

I think that’s how the panel’s hearing it. So I want to give you a 

chance to confine your answer back to, I did not find anything that 

would indicate those in the things that we—in the documents that 

166 

we reviewed. It’s not that you can conclusively say that everything 

was hunky dory, correct? 

Ms. BOVBJERG. We did not do a compliance review. 

Mr. TURNER. Thank you. 

Ms. BOVBJERG. You are correct. What we did look at was how 

might this termination have been different from others, and we—— 

Mr. TURNER. And you found nothing that told you different in 

the public domain, but you—— 

Ms. BOVBJERG. Right. 

Mr. TURNER. —had no access to the others, and that’s why you 

were helpful to us, but you can’t give a conclusion beyond that, and 

I think that’s what we’ve kind of struggled with. 

Ms. BOVBJERG. And we can’t talk about motivations—— 

Mr. TURNER. Right. 

Ms. BOVBJERG. —of people. 

Mr. TURNER. Right. 

Ms. BOVBJERG. That’s what we don’t know. 

Mr. TURNER. So I appreciated your work, I appreciate your dedication through your statements. I just want to make clear its limitations for today for today’s purposes. 

Thank you, Mr. Chairman. 

Mr. MICA. Mr. Turner, if you want to take an additional 3 minutes, you can just continue and then I’ll take—— 

Mr. TURNER. Thank you. 

Mr. MICA. I’ll yield to Mr.—back to this side and then myself, so 

we will do a second round. 

Mr. TURNER. Mr. Feldman, I believe—and let’s hold for a moment. I believe that—you know, you’re under oath and we have 

met before in this format. 

Mr. FELDMAN. Yes. 

Mr. TURNER. And I struggle on the issue of the Auto Task Force 

involvement. As you know, GAO does a report that says Treasury 

says that they weren’t involved in the top-up. Ms. Romero’s report 

says conclusively that obviously Treasury was involved in it extensively, because of one, by the terms of TARP, you were required to 

be at Treasury, and two, you actually were, because she looked at 

the documents and the like. 

I have previously asked you, and I—I’m not saying that you have 

misrepresented anything to us, but I have previously asked you 

and struggled with an understanding of your role in the discussion 

of your role on the termination of pension plans, because I believe 

that it’s been unclear to people trying to determine what occurred 

that you were involved in discussions with respect to the termination or non-termination of pension plans of old GM as they went 

through the bankruptcy process. 

Now, you don’t deny that, right? You don’t deny that you were 

involved in discussions with respect to the termination or non-termination of pension plans from old GM as they went through the 

bankruptcy process; is that correct? 

Mr. FELDMAN. Congressman, just to be clear, of old GM? Old—— 

Mr. TURNER. Well, of GM that’s going through the bankruptcy, 

of the existing plans as it went—as it went through with respect 

to going forward with the bankruptcy and the new GM. 

Mr. FELDMAN. In contrast to—— 

167 

Mr. TURNER. Let me shorten it. 

Mr. FELDMAN. Sure. 

Mr. TURNER. Were you involved in discussions with respect to 

termination or non-termination of pension plans in the GM bankruptcy. 

Mr. FELDMAN. Of General Motors as opposed to Delphi? That 

was the distinction I was asking you. 

Mr. TURNER. I see. Give me the distinction if there is one, then. 

Mr. FELDMAN. Sure. I don’t recall being involved in discussions 

of termination of pension plans of General Motors. I don’t recall 

being part of those discussions, to the extent that there were discussions about that. 

With respect to Delphi, certainly I spoke with Joe House from 

the PBGC, who communicated to me what the PBGC’s thinking 

was with respect to the Delphi pension plans both on the hourly 

side and the salary side. 

Mr. TURNER. Okay. Let’s stop there. And, yeah. I said mine was 

broad pension plans, because I wanted you to give me the—to walk 

me here. 

So in that speaking with Joe House of PBGC with respect to termination or non-termination, did you ever advocate or have a position? 

Mr. FELDMAN. Not that I recall, no. 

Mr. TURNER. Okay. Well, I’m going to hand you your June 18th 

email to Joe House, and maybe it’ll help you recall. I’ll give you a 

moment to read it. 

Because the question I asked you is specifically structured with 

respect to your own email. 

Let me reask you the question. 

Mr. Feldman, did you advocate with respect to the issue of termination or non-termination with respect to issues relating to Delphi 

pension plans? 

Mr. FELDMAN. I recognize what the email says. I still would—— 

Mr. TURNER. Okay. Pause—— 

Mr. FELDMAN. —disagree with the—— 

Mr. TURNER. —because if you’re not going to answer yes, I will 

just read it for the record. This is Matt Feldman on June 18th in 

response to Joe House. He says, Thanks. I’ll call you later today 

or tomorrow. We’ll enter this into the record. 

Mr. TURNER. We are having a sit-down in the de-hourly plan in 

the a.m. There is a split as to what should happen. There are some 

wanting to see it terminate. I’ve—that’s you—been advocating, the 

next word is ‘‘hard’’—I have been advocating hard for our deal, emphasis on our deal, because that would include you, and I believe 

that will be the conclusion, meaning I’ve been advocating hard for 

our deal and I believe that I’m going to win, I believe that will be 

the conclusion, but wanted to give you a heads-up. 

Mr. Feldman, you didn’t say you didn’t do this. You said you 

didn’t recall it. The email speaks for itself. I’m going to ask you the 

question again. Did you advocate with respect to the termination 

or non-termination of a Delphi pension plan? Were—— 

Mr. FELDMAN. As part of our broader understanding with the 

PBGC, obviously I did. That’s what the email says, but it’s very 

168 

narrow and, frankly, misleading to just say, did you advocate for 

a position on the pension plan, which is—— 

Mr. TURNER. I had terminate. I said terminate. 

Mr. FELDMAN. I’d like to put it into a broader context. 

Mr. TURNER. Mr. Feldman, I’m only using your word, which is 

‘‘terminate.’’ I’m putting nothing else behind it. So for the record 

your answer is, yes, this is your email, and, yes, you did advocate, 

as this says, ‘‘hard’’ with respect to the issue of termination or nontermination. I’ll yield my time and come back to Ms. Romero. 

Mr. MICA. And to be fair, I yielded you the balance of the time, 

so you had the full 5 minutes, and then I had given Mr. Connolly 

some extra time. So the other side has about 30, 45 seconds extra 

coming. 

Let me yield to the ranking member, who has arrived. So you 

have 6 minutes Mr. Ranking Member. 

Mr. CUMMINGS. Can you hold on for a second? Just real quick, 

I’ve been watching this clock. Can you explain that timing again 

to me, because I have seen—— 

Mr. MICA. Well—— 

Mr. CUMMINGS. I have counted about almost 10 minutes just 

since I’ve been sitting here, and I came in when you gave him 3 

minutes. 

Mr. MICA. I gave him my—— 

Mr. CUMMINGS. An additional 3 minutes. Oh, I see. 

Mr. MICA. I gave him my time. 

Mr. CUMMINGS. Okay. Okay. 

Mr. MICA. We are in the second round and I gave him my time. 

Mr. CUMMINGS. I see. Okay. All right. 

Mr. MICA. Then he took some of it, and I said, well, go ahead and 

take the balance of your time. 

Mr. CUMMINGS. Okay. I got you. 

Mr. MICA. And then he went over. I keep this pretty good, Mr. 

Cummings. 

Mr. CUMMINGS. I just want to make sure that—— 

Mr. MICA. So right now you have 6 minutes. 

Mr. CUMMINGS. Thank you. 

Mr. MICA. And if you want 10—— 

Mr. CUMMINGS. Very well. 

Mr. MICA. —then I will give him more time. 

Mr. CUMMINGS. Very well. Thank you, Mr. Chairman. I know you 

to be a fair man. That’s why I have always admired you. And I 

really mean that. 

Ms. Romero, I want to thank you for your thorough audit. I, for 

one, I do sympathize with the Delphi salaried workers whose pensions will not be what they thought and planned on. That is a very 

sad situation, a very unfortunate situation. I was surprised to learn 

from your report that the Delphi salaried workers’ pensions had 

been fully funded at the time Delphi spun off from GM in 1999. Is 

that right? Is that correct? 

Ms. ROMERO. Yes. 

Mr. CUMMINGS. Those pensions were fully funded when Delphi 

started as an independent company. Is that right? 

Ms. ROMERO. Yes. 

169 

Mr. CUMMINGS. All right. Now, Ms. Bovbjerg and Ms. Clowers, 

it is my understanding that the salaried pensions actually overfunded at the time of the spinoff, they were overfunded at the time 

of the spinoff. Do you know the exact figure? 

Ms. BOVBJERG. It was close to 120 percent. 

Mr. CUMMINGS. So they were overfunded. 

Hello? Are you talking? Are you saying something? 

Ms. BOVBJERG. Yes. 

Mr. CUMMINGS. Okay. 

Ms. BOVBJERG. Yes. Overfunded. 

Mr. CUMMINGS. So something happened between 1999 and 2009 

that caused the fully funded pensions of Delphi salaried workers to 

become underfunded by 2009. 

Ms. Romero, what happened and who is responsible? 

Ms. ROMERO. Who is responsible for the plan being—— 

Mr. CUMMINGS. Yeah. 

Ms. ROMERO. —fully funded? That would be Delphi. 

Mr. CUMMINGS. Yeah. And so it was Delphi management who did 

not continue to make pension payments, and their failure to make 

payments resulted in Delphi’s salaried workers with underfunded 

pensions. Is that a fair statement? 

Ms. ROMERO. That is correct. 

Mr. CUMMINGS. All right. Now, Ms. Romero, your audit probed 

the decision about what to do about those underfunded pensions. 

The question came up in the context of GM’s bankruptcy in 2009 

during which the United States Government provided a loan and 

then a debtor in possession financing to enable GM to survive as 

a domestic automaker. Is that correct? 

Ms. ROMERO. That is correct. 

Mr. CUMMINGS. Now, the SIGTARP report identifies the reasons 

GM officials did not want to top-up the pensions of the Delphi salaried employees in 2009. Let me read from your report, Ms. Romero. 

It says, ‘‘GM’s CEO told SIGTARP that Mr. Borst’’—that’s GM’s 

treasurer—‘‘had explained that if GM found a way to fund the topup during GM’s bankruptcy, it would be as if GM had funded the 

plan twice. As CEO Henderson explained, GM had already fully 

funded Delphi’s salaried pensions at the time of Delphi’s spinoff, 

and there was no basis to do so again.’’ 

That is part of your report. Is that right? 

Ms. ROMERO. That is correct. That is what GM’s CEO told us. 

Mr. CUMMINGS. Well, do you stand by that finding? 

Ms. ROMERO. Well, it is not a finding, it is just what a witness 

told us in our audit. 

Mr. CUMMINGS. Okay. So according to this, had GM commercial 

business reasons not to top-up the Delphi salaried pensions—well, 

let me go back. Did you find anything that contradicted the statement that I just read? 

Ms. ROMERO. No, I did not find anything that contradicted it. 

There is a bigger context, which is included in the report. 

Mr. CUMMINGS. All right. So GM had commercial business reasons not to top-up the Delphi salaried pensions in 2009. Those were 

not the Treasury Department’s reasons, those were not the Obama 

administration’s reasons, those were GM’s reasons. Is that right? 

170 

Ms. ROMERO. Well, this is where I need to add a little context. 

So the earlier page of my report right before the statement talks 

about had GM taken the position that it was prohibited under the 

TARP loan agreement from increasing the—giving the top-up to 

the salaried workers without Treasury’s consent. So GM alone took 

the position that they alone could not do the top-up, and GM’s CEO 

Mr. Henderson at the time told us that Treasury’s consent would 

have been necessary, that Treasury ultimately had to agree under 

the TARP loan agreement. 

So what happened was that Mr. Henderson went to Mr. Rattner. 

And according to both of them, according to Mr. Rattner, he says 

that GM came to them because: ‘‘GM wanted to do something for 

the salaried retirees. Mr. Rattner discussed it with the CEO, and 

although he didn’t remember the specifics of the conversation, he 

told SIGTARP there was nothing defensible from a commercial 

standpoint. He says, this is from Mr. Rattner: ‘‘We didn’t think 

there was anything defensible. We felt bad, but we didn’t think it 

was justifiable.’’ 

What happened then is Mr. Rattner sends an email to the rest 

of the auto team saying that he had spoken to Mr. Henderson and 

he wrote in his email with respect to the Delphi retirees, Walter 

Borst, who was the treasurer, is apparently preparing some kind 

of proposal for how to do something for them that is defensible. 

Mr. CUMMINGS. Well, let me ask you this. 

Ms. ROMERO. Right. 

Mr. CUMMINGS. Now, the quote I gave you a little earlier, Borst 

had said that it would be like funding it twice. Is that right? 

Ms. ROMERO. Right. So I’m putting it in context. So Mr. Henderson talks to Mr. Rattner, goes to him and says, we’d like to do 

something for the salaried retirees. Mr. Rattner says something to 

Mr. Henderson, we don’t know the exact specifics, but says basically we don’t think there is anything commercially defensible. 

Then Mr. Borst, who is the treasurer for GM, goes to look to see 

if there is something defensible. He is trying to see if there is something defensible. And he and Mr. Henderson—because that is the 

standard that Treasury, the auto team had given them. It is not 

necessarily GM’s standard. The commercially reasonable standard 

is the standard that the auto team had given, and remember GM 

took the position that Treasury had to make the decision on the 

salaried, that they did not have authority. So then Mr. Borst goes 

to try to prepare something that would fit into Treasury’s standard, 

the commercially defensible standard, and comes back, and he and 

Mr. Henderson can’t come up with anything. 

Mr. CUMMINGS. Now, explain that commercially, the standard 

that you just talked about. Explain that to me. 

Ms. ROMERO. Sure. The commercially reasonable standard 

doesn’t exist other than through the auto team and through TARP. 

It’s the marching orders that the auto task force, through Mr. Summers and Mr. Geithner, give to the auto team as to how they 

should be making decisions. And so there is no definition of it or 

standard, it is just interpreted, and it is interpreted by the auto 

team that that means to act like a private investor, is essentially 

how they take it. 

171 

They tried to do that every time. What we found in our audit was 

they made some decisions that were not what a private investor 

would make. So, for example, deciding not to move the headquarters of GM through Detroit, which would save money. These 

are other governmental concerns that come into play that a private 

investor wouldn’t have. And so that commercially reasonable standard, commercially defensible, is the auto team standard. It’s not 

necessarily GM’s standard, it is the auto team’s standard. And so 

that’s what they were looking for. 

Mr. CUMMINGS. Right. Let me just—I see I’m running out of 

time—let me just get to Mr. Miller. GM’s treasurer and CEO made 

an assessment, GM had already fully funded the salary of the retiree pensions 10 years earlier when Delphi was spun off from GM. 

They got the money, but they had no contractual agreement that 

obligated GM to further top-up those pensions, as I understand it. 

Mr. Miller, isn’t that how you read the report? Is that how you 

read it. 

Mr. MILLER. Yes, sir. 

Mr. CUMMINGS. I can’t hear you I’m sorry. 

Mr. MILLER. Yes, sir. 

Mr. CUMMINGS. Mr. Rattner Mr. Feldman, and Mr. Wilson, is 

that finding by the SIGTARP about GM’s actions and reasons for 

not giving Delphi’s salaried retirees a top-up consistent with your 

memory? Mr. Rattner first. 

Mr. RATTNER. The reason being that it was not commercially reasonable? 

Mr. CUMMINGS. Right. 

Mr. RATTNER. Yes, that is my memory. 

Mr. CUMMINGS. Mr. Feldman? 

Mr. FELDMAN. My memory as well, sir. 

Mr. CUMMINGS. Mr. Wilson? 

Mr. WILSON. Yes, sir. 

Mr. MICA. Okay. I calculate I have approximately 2 minutes left 

in this round. I’ve not asked any questions. I gave my 5 to him. 

And then Mr. Ryan would be next. 

Do you want to go first, Mr. Ryan, and I’ll save my 2 minutes? 

Mr. RYAN. Thank you, Mr. Chairman. 

Mr. Rattner, there were some discussions about terminating the 

plan. Can you talk to us about how those discussions went? I mean, 

a lot of this stuff, there’s still a lawsuit and things going on with 

documents being released. But from your vantage point, can you 

enlighten us about what those discussions were when it came to we 

want to terminate the plan? 

Mr. RATTNER. When you say terminate, you’re referring to the 

salaried plan? 

Mr. RYAN. Yes. 

Mr. RATTNER. The discussions were very much I think along the 

lines of what you’ve heard the last few minutes, which is that we 

understood that the failure to provide any financial support to the 

salaried plan would leave those retirees with reduced benefits. We 

were not happy about that. We didn’t think it was obviously a very 

good outcome for them. We spent a considerable amount of time 

thinking about whether there was anything that we could recommend be done for them, and we concluded that it was not comVerDate Aug 31 2005 09:41 Nov 04, 2013 Jkt 000000 PO 00000 Frm 00175 Fmt 6633 Sfmt 6633 C:\DOCS\85115.TXT APRIL
172 

mercially reasonable or defensible as a matter of normal bankruptcy procedures. 

Mr. RYAN. You said to SIGTARP in my reading of it that GM officials had been too generous in the past and the auto team had 

to dial that back a little bit, that was in the SIGTARP report, and 

that you guys needed to press General Motors to be less generous 

in relation to the Delphi and the pensions. Now, to what extent did 

the auto team press that issue? And did that adversely affect even 

the possibility of the top-ups? 

Mr. RATTNER. Among the problems at General Motors was that 

they did not act in a way that one would call commercially reasonable at all times. In fact, they often didn’t act in a way that was 

commercially reasonable, which was a good part of why they were 

in bankruptcy or insolvent and Ford, for example, wasn’t. So there 

were any number of places and times when General Motors would 

recommend or suggest doing something that we did not feel was 

commercially reasonable, and this was one of them. 

Mr. RYAN. Ms. Romero, you mentioned that at times the commercially reasonable standard was used and then at times it was not 

used. You mentioned one example. Were there other examples 

where the auto team did not follow that standard? 

Ms. ROMERO. So let me be very clear here. I think what our report talks about, and this is what we found, they tried to use the 

commercially reasonable standard and act as a private investor. 

But in the end, they were still the government. So there were 

broader concerns that a private investor would not have. I will give 

you a few of them. One, to invest in GM in the first place when 

no private investor was investing in GM, according to what GM’s 

CFO told us. That was done out of concern about saving GM because of the impact a GM failure could have on the broader auto 

industry. A private investor wouldn’t necessarily have those same 

concerns. 

Two, deciding not to move GM’s headquarters out of Detroit for 

reasons about how it would impact the city of Detroit. Mr. Rattner 

talks about this in his book. Those are not considerations that a 

private investor would normally have. Another one was deciding 

when they made the additional TARP injection as a loan to fund 

the bankruptcy, rather than take it as debt, which is what it would 

be, they were worried about too much debt being on GM’s books, 

so they decided to convert that to an equity interest, an ownership 

interest in the new company. That has lower priority in bankruptcy. That had bigger concerns, broader concerns than a private 

investor. 

And finally on what they decided to pay for GM as the purchaser, there was information in the bankruptcy court, CEO Henderson, GM CEO Henderson talked to us about that, that Treasury 

ended up paying more than the enterprise value—I believe this is 

in Mr. Rattner’s book—more than GM’s enterprise value. 

All of these decisions are just some examples where the auto 

team had to consider other things, other than just dollars and 

cents, and not act as just a private investor would. And, frankly, 

they shouldn’t have, they’re the government, and that’s one of the 

lessons learned out of this. 

173 

Mr. RYAN. Well, I guess as my time is winding down I’m going 

to argue on behalf of my constituents and these Delphi salaried 

folks that they should have been included in some of these. If we 

are not following that standard all the way through, if that is not 

a hard line standard, and I understand this is a very, very unique 

situation, that that should be considered. We have $57 million a 

year getting pulled out of our local economy because of the pensions, and these Delphi salaried were concentrated in areas like 

mine, like Mr. Turner’s and others, that that should have been considered as the whole bankruptcy proceeding was going on, as the 

headquarters was, which I think is a good move. But there were 

other moves that could have been made, in my opinion, that could 

have topped these folks off, and in my estimation if you’re not 

going to follow that hard line rule when it comes to commercially 

reasonable, then there’s others who lose out because of that. And 

that’s ultimately why we’re here. 

And my time is out, and I just would like to make one final pitch 

to my colleagues on the other side, that this happens all the time. 

The distinction here is that the government was involved. But 

there are bankruptcies every single day in this country, and we 

need bankruptcy reform because these workers that we’re talking 

about are unique to this particular circumstance, and we’re going 

to advocate as hard as we can for them, but there are thousands 

and thousands and thousands of other workers across this country 

who end up on the short end of the stick, who are last in line when 

it comes to getting made whole, and they get screwed. In Youngstown, Ohio, in Akron, Ohio, in Cleveland, Ohio, in Pittsburgh, and 

all through the industrial Midwest we have seen this for 30 years. 

And so I hope that we get the enthusiasm from the other side when 

it comes to bankruptcy reform as well. 

Mr. Chairman, I’m very thankful for this hearing. 

Mr. Turner, thank you for your work and cooperation on this as 

well. And I hope this leads to some situation where these men and 

women could be made whole. 

Thank you very much. 

Mr. MICA. Thank you. I’ve got about 1 minute and a half, and 

my 2 minutes, it is about 3–1/2 minutes, I guess, left from this 

side, which I’ll take since I’ve asked no questions in the second 

round and yielded my 5. 

First of all, Ms. Romero, in the ’99 spinoff, you keep talking 

about topping-up employees. Was that just salaried employees or 

nonsalaried employees, one or both? 

Ms. ROMERO. The discussions in 1999 were an agreement to topup the hourly employees, not the salaried employees. The salaried 

employees weren’t represented at that time and their pension plan 

was fully funded. 

Mr. MICA. Okay. I just wasn’t clear as to what took place, which 

was some years previous. But the final decision, I mean, when you 

just cut to the chase, there may be problems in bankruptcy and we 

may need to do bankruptcy reform, this was not a typical bankruptcy in a civil proceeding, was it? 

Ms. ROMERO. No. And this wasn’t even typical for a TARP program. 

Mr. MICA. Yeah. 

174 

Ms. ROMERO. This is the only situation in TARP where you have 

members of Treasury, Treasury officials being so deeply and significantly involved in the company. 

Mr. MICA. Exactly. And again you said it was ultimately Treasury’s decision as the buyer to assume or reject the top-up liability. 

Treasury, last time I checked, was the United States of America 

public, using public money. I thought Mr. Ryan said, used the term 

I try not to use, ‘‘screwed,’’ because it gets my wife upset, but basically that’s what happened, some people got screwed here in this 

proceeding. And the unfairness is that those people had also paid 

their taxes, et cetera, into the Treasury of the United States and 

should have been treated fairly. 

Now, probably some of this would never have occurred if everyone would have cooperated. But before I became the chair, for 2 

years we couldn’t even get the documentation nor the cooperation. 

Mr. Turner turned to me when I became chair, we did the hearing 

in June, and I demanded the documentation, and you finished your 

report, and I think you did an admirable job. You’re just reporting 

the facts. And again this isn’t the typical situation. Mr. Rattner 

had talked about commercially acceptable or reasonable process, 

and I guess they were trying to cover their bases in all of this. 

But, Mr. Wilson, you testified last summer that unions did not 

receive special treatment. Is that correct? 

Mr. WILSON. I believe so, yes. 

Mr. MICA. You did? 

And, Ms. Romero, did you say and your report find that unions 

received special treatment in the GM bailout and the bankruptcy 

proceedings. 

Ms. ROMERO. Well, Treasury gave additional leverage to certain 

stakeholders and those were two, the UAW and the bondholders. 

Mr. MICA. But they gave, again, something special to the union 

folks, right? 

Ms. ROMERO. They established the hierarchy of who would get a 

deal cut prior to the bankruptcy, and those were the two groups 

that the auto team picked. 

Mr. MICA. Mr. Wilson, any change in light of their findings? 

Mr. WILSON. No, that is just not correct. The UAW and the bondholders had enormous leverage because they are critical components of a potential restructuring transaction. That’s why they had 

leverage and that’s why they were important to the deal. It wasn’t 

because of anything that Treasury did, as I described both in my 

written and verbal testimony. 

Mr. MICA. And what were the nonunion employees? Chopped 

liver? 

Mr. WILSON. Unfortunately, anyone who—— 

Mr. MICA. They were just dumped overboard. 

Mr. WILSON. No. That’s not—— 

Mr. MICA. But again, the union side, maybe they were entitled 

to this, the top-up, and I have no problem with that. But what I 

have a problem with is thousands of people left behind, and we’re 

using taxpayer money for the top-up. And we also had a testimony 

today of a billion dollars that won’t be returned to the Treasury. 

So I don’t view that as fair for all. 

175 

And Mr. Ryan, Mr. Turner have to go back and face these people. 

I faced some of them at the hearing we held in June. Mrs. Brooks 

isn’t here. She told me one person that she ran into this week is 

basically homeless, who was one of these employees that she talked 

to this past week. 

And we will leave the record open. Some of the Members weren’t 

able to return after the votes, and she’s one of them, to cite in the 

record what this is, how this has affected folks. 

So, again, we’re dealing with Federal taxpayer funds and how 

they were distributed, and some people were unfairly treated, according to the report. And Treasury did have the discretion to 

make a different decision, wouldn’t that be correct, Ms. Romero? 

Ms. ROMERO. Absolutely it was their decision. 

Mr. MICA. Okay. Let me—— 

Mr. RYAN. Mr. Chairman, if I could just—— 

Mr. MICA. Go right ahead. 

Mr. RYAN. I just want to make a point, that there were eight or 

nine other unions. I just don’t want to leave anybody out. So it was 

the salary, but that list of union members that I gave were also 

on, we can’t forget them as we’re advocating for this, that there 

were other, seven, eight, nine unions that were also included that 

had been left out. We talk about the Delphi salary, but it is also 

these splinter unions as well. 

Mr. MICA. And, Mr. Ryan, I think every one of them should have 

been treated fairly. 

Mr. RYAN. Yeah. Agreed. 

Mr. MICA. Again, it is taxpayer money. I’ve been involved in 

business and I have seen bankruptcies and I have seen how they’re 

settled and there is a lot of unfairness. There are things that we 

could do to correct that. This was not a civil or commercial bankruptcy in any sense of the normal way these things are conducted. 

Again—— 

Mr. RYAN. That’s why I’m sitting here with you, Mr. Chairman. 

Mr. MICA. That’s my beef. And if there were some way, in a bipartisan manner, to make people whole, I mean TARP is still not 

done. I don’t know if legislatively that can be done or however. But 

I think it is a great injustice to thousands of people. And our job 

is to, again, try to be fair to those folks. I’d be glad to work with 

you and others, both sides of the aisle, to see what we could do. 

Mr. RYAN. Well, Mr. Turner and I have been working on this for 

a long time and we welcome that opportunity, as well as the HCTC 

extension for the next year, because a lot of these folks are having 

huge, huge healthcare costs as well. So I appreciate that, Mr. 

Chairman, and let’s make something happen. 

Mr. MICA. Okay. Any additional questions? 

Mr. RYAN. No. Just thank you. 

Mr. MICA. Mr. Turner, additional questions? 

Mr. TURNER. Thank you. I have three. And I do want to acknowledge Mr. Ryan’s dedication and just hard work on this. This has 

been really a team ball project here and a bipartisan project. Rob 

Andrews is being another, of course on the other side of the aisle, 

and certainly in the Senate there are a couple others. And a followup to my congratulations to Mr. Ryan, thanks to Mr. Ryan, I unfortunately had to step out, and while I was gone Mr. Ryan asked a 

176 

question to Mr. Rattner. And so I’m going to paraphrase, not having been in the room, your answer, and I’m going to ask you to say 

it again and elaborate on it so that I could understand it. 

He was discussing with you the termination of the salaried pension plan, and you indicated that you had had considerable discussion on the termination of the salaried plan. Is that a correct characterization of what occurred when I was not in the room? 

Mr. RATTNER. I’m not sure with whom you are thinking we had 

discussions. 

Mr. TURNER. Well, first off, did you have any discussions with respect to the termination of the salaried pension plan? 

Mr. RATTNER. Yes. 

Mr. TURNER. And those discussions occurred prior to its termination? 

Mr. RATTNER. Correct. 

Mr. TURNER. Who did you have those discussions with? 

Mr. RATTNER. I had one or more discussions with Fritz Henderson, who was then the CEO of General Motors, and we had a number of discussions among the auto team members. 

Mr. TURNER. So you spoke to Mr. Feldman? 

Mr. RATTNER. I believe so. 

Mr. TURNER. So when I asked Mr. Feldman whether or not he’d 

had any discussions and he didn’t recall it, you do recall having 

had a conversation with Mr. Feldman with respect to terminating 

the salaried pension plan. 

Mr. RATTNER. I thought your question to Mr. Feldman was in the 

context of the PBGC. 

Mr. TURNER. Did you recall having discussions with PBGC with 

respect to termination of the plan? 

Mr. RATTNER. I don’t recall. 

Mr. TURNER. Would you deny that you did? 

Mr. RATTNER. I said I didn’t recall. 

Mr. TURNER. So you don’t recall whether or not you did or didn’t, 

right? You could have. 

Mr. RATTNER. I could have, but I don’t recall. 

Mr. TURNER. Well, luckily, with the subpoenas that have been 

issued, we’re going to get even more of the information because Mr. 

Feldman had no recollection of his discussion with respect to termination of the pension plans until I handed him his own email. And, 

Mr. Rattner, I look forward to addressing that issue with you again 

with perhaps your own emails. 

Mr. Wilson, one of the issues in the GAO report is this concept 

of the conflicts of interests, the multiple roles of Treasury, is I 

think the heading in the report. And we talk about Treasury having a—the Treasurer on the board of PBGC, we have Treasury as 

TARP, purchaser of GM, we have auto task force Treasury, we 

have many of those. You’ve left the auto task force, you’ve left any 

role at Treasury. But it’s my understanding you were subsequently 

appointed to the PBGC advisory committee. Is that correct? 

Mr. WILSON. I was recommended by Senator Mitch McConnell’s 

staff to the White House that ultimately decided to appoint me as 

a representative of the people at large. 

Mr. TURNER. So was that a yes? I didn’t understand it. 

Mr. WILSON. Yes. 

177 

Mr. TURNER. Are you still on the PBGC advisory committee? 

Mr. WILSON. Yes. 

Mr. TURNER. Okay. 

Ms. Romero, thank you for the clarity of your answers among 

what at times becomes a heated and an obtuse, I don’t know, 

where the answers here are not always the clearest. 

On your report, on page 29, you state that the audit—in the 

audit you state that after the decision was made to not make the 

salaried retirees whole, Dr. Summers prepared a briefing memo for 

President Obama in August of 2009. Can you tell us who Dr. Summers is? 

Ms. ROMERO. Larry Summers was one of the heads, with Secretary Geithner, of the auto task force. 

Mr. TURNER. I know it’s in the report. I just wanted for the clarity of the record for it to be stated. Was this memo provided to you 

or your staff? 

Ms. ROMERO. We were provided access, but we were not given 

the memo. 

Mr. TURNER. So you’ve seen the memo? 

Ms. ROMERO. No, I have not seen the memo. 

Mr. TURNER. Someone on your team did see the memo? 

Ms. ROMERO. I should say this. Someone on my team saw a draft 

of an email that contained the memo. 

Mr. TURNER. Do you know what was in the memo? 

Ms. ROMERO. Yes. 

Mr. TURNER. Could you tell us please? 

Ms. ROMERO. Sure. A Delphi salaried retiree had written a letter 

to the President to describe his personal situation. The President 

had asked his advisers for information about the situation. The 

memo discussed how this person would receive less benefits on 

their pension, it describes the 1999 agreement, the spinoff of Delphi. It describes discussions between the UAW and GM in 1999. It 

then discusses how, as part of GM’s bankruptcy, the top-up for the 

UAW retirees would be given, but not for the salaried employees. 

It discusses that the salaried retirees did not have leverage because 

they did not have current workers at GM. And it also discussed 

how the salaried plan was fully funded by GM in 1999. 

Mr. TURNER. Do you know who briefed the President from that 

memo? 

Ms. ROMERO. The memo came from Mr. Summers. I don’t know 

if there was any verbal briefing to the President. 

Mr. TURNER. And no action to reverse the decision came from the 

President or the White House that you are aware of after the 

memo informing the President that the salaried retirees lacked the 

leverage of UAW? 

Ms. ROMERO. That’s correct. We did not see any change or any 

action taken after the memo to the President. 

Mr. TURNER. Ms. Romero, I’m going to read something from your 

written statement that I would like you to elaborate on because I 

think it really goes to the issue of the power and authority that 

Treasury exerted here. You say, ‘‘An Auto Team official told 

SIGTARP that the Auto Team’s approach with GM was to ’push 

them’ and to ’question them.’ And another one said we pushed GM 

178 

toward making the changes necessary to becoming a viable company.’’ 

And when asked how is it that this was done, at the bottom of 

the paragraph on page 12, which is the third paragraph down, the 

auto team official said, ‘‘Well, they could, but then they couldn’t 

exist. I mean, as I said, as the lender, we had a fair amount of leverage.’’ 

Now, that’s a constant theme throughout your report. Could you 

elaborate on that just a moment? Because that is, I mean, that is 

fairly ‘‘but for’’ GM goes away if they don’t do what Treasury says. 

Ms. ROMERO. Well, I think this goes to the bigger issue and I 

think the best way to discuss this is to tell what you the auto team 

told us and tell you what GM told us. 

So Mr. Bloom told us, from the auto team, that Treasury did not 

want to start running the company but when dealing with taxpayer 

resources, we, the government, were ultimately holding the purse 

strings and we reserve the right to tell GM we would not back 

them. So when we asked Mr. Bloom how the auto team conveyed 

its preferences or nudged GM to see things the way the auto team 

did, given that ultimately GM could do its own thing, that’s when 

he said, ‘‘Well, they could, but then they couldn’t exist. I mean, as 

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

GM officials told us, there’s a just a couple statements, one, ultimately it is that GM is not in control and GM is totally dependent. 

The auto team replacing the CEO was an early indicator that 

Treasury as the main investor would have significant influence 

over GM’s decisions and operations. GM officials told us the auto 

team was pushing GM to be tougher and take more significant actions other than what we would have done on our own volition, 

that GM put forward recommendations, but ultimately the purchaser made decisions, which was Treasury. 

So there were a lot of situations that we found where the auto 

team can take the position that they did not intend to have significant influence on GM’s decisions and operations. But we have GM 

officials telling us that they felt that they were not in control and 

that the auto team did have significant influence on GM’s decisions 

and operations. 

So the auto team may not have intended to have significant influence, and they may not believe that they had it, but they did. 

And if I can just take 2 seconds I want to read one part in Mr. 

Rattner’s book, which is very much on point. This is quoting from 

Mr. Rattner’s book, ‘‘Larry’’—meaning Mr. Summers—‘‘Larry had 

pushed us from the start to play down team auto’s role and keep 

the emphasis on GM and Chrysler managing their own affairs. 

That ended up being partly true of GM in the sense that Harry’’— 

meaning Mr. Wilson—‘‘and his team tried to set parameters and 

assumptions for its executives in the hope that they then could 

produce the specifics of a restructuring plan.’’ 

And he goes on to say, ‘‘In reality the talent and determination 

of Harry’’—and then he named David and Sadiq, who were on the 

auto team—‘‘were what really drove the process. As we drafted 

press statements and fact sheets I would constantly force myself to 

write that GM had done such and such. Just once I would have 

liked to write ’we’ instead.’’ And that is what Mr. Rattner wrote, 

179 

that’s consistent with what we found, that the public statements 

Treasury made downplayed their influence, downplayed their role. 

Mr. TURNER. Thank you. 

Mr. MICA. Thank you. 

Mr. Connolly, I yield you 10 minutes. 

Mr. CONNOLLY. Thank you, Mr. Chairman. I want to come back 

to that in a minute. 

But, Mr. Wilson, you objected that Ms. Romero was inaccurate 

when she said Treasury gave leverage to the union and bondholders. You weren’t really allowed to explain your objection. 

Please do so now. 

Mr. WILSON. Sure. There is no doubt that UAW and the bondholders had a lot of leverage, but it was not in any part as a result 

of Treasury actions or anyone else’s actions. They had a lot of leverage because they were critical actors in the restructuring. We 

needed the UAW to manufacture cars and therefore they were critical for that, and they would always be critical. And the bondholders were critical because they were a large stakeholder. Even 

though they had no ongoing involvement, they were critical because they could object and hold up the proceedings and cost the 

taxpayers lots of—billions of dollars in a prolonged bankruptcy that 

would also imperil the potential viability of General Motors. 

Mr. CONNOLLY. So good point you’re making here, that the leverage they had was self-created by virtue of their power over many 

years, it wasn’t something conferred upon them by Larry Summers 

or Mr. Rattner? 

Mr. WILSON. That’s correct. 

Mr. CONNOLLY. Mr. Miller, Mr. Rattner, Mr. Wilson, Mr. Feldman, any and all of you, but here’s GM facing bankruptcy. Why 

would they choose to honor these union contracts? Could there be 

a good business reason to do that or is it just because somebody 

somewhere said take care of the unions? Is it at all conceivable 

there could be a business reason, if you want to save the industry 

and save GM through the bankruptcy process and have them come 

out whole, that you might want to honor that contract? 

Mr. MILLER. The issue is that without honoring the contracts, 

there wouldn’t be any workforce. And the last time that GM, I forget the year, allowed a strike to go on, it was exceedingly expensive 

and almost destroyed the company. 

To operate and become feasible, you must have the workers who 

produce the product. And that was a prevailing theme, even though 

the negotiations were very difficult with the union in trying to get 

concessions. But it’s a long history going back to Walter Reuther 

of a lot of adversity. But without a labor force, there is no feasibility. 

And as far as the GM management was concerned, if the United 

States of America wanted to pay everybody and GM not file a 

bankruptcy petition, that would have been perfectly fine. But from 

my observation what the auto team was concerned about is how do 

you protect taxpayer money? If you’re just going to open up the 

door and everybody is going to be paid, well, then you don’t need 

the bankruptcy. 

But bankruptcy is a zero-sum game. There’s only so much value, 

and the fight is who’s going to share in that value, and there are 

180 

priorities that are commanded by the bankruptcy code and there 

are business reasons why, unfortunately, from my perspective, 

unions have a lot of leverage. And the question is, how much 

money are you going to put in? From my perspective, again, United 

States and Canada operated as if they were secured lenders. They 

were trying to protect their investment. 

And after all, you’re talking about a company which, as people 

have described here, prior to bankruptcy was too lax, they took on 

too much credit, they gave out too much money. Well, what this 

task force was trying to do was to make sure that GM stayed within the line of what would be feasible to get to a viable company. 

Mr. CONNOLLY. And, in retrospect, and, again, I’d invite others, 

would it be fair to say looking back that actually that kind of 

worked out? 

Mr. MILLER. Yes. 

Mr. CONNOLLY. That it was a wise business decision not to vitiate the contract or ignore it? 

Mr. MILLER. From my perspective yes. 

Mr. CONNOLLY. Mr. Rattner, Ms. Romero quoted from your book 

a conversation you had with Larry Summers. Would you comment 

on her comment? 

Mr. RATTNER. Yes. Ms. Romero I don’t think fully understands 

the difference between being involved in day-to- day operations and 

being involved in a restructuring. And she has sort of tossed those 

back and forth without making the right distinction. 

We had no involvement in the day-to-day running of General Motors. We did not decide what kind of cars they were going to make. 

We did not decide which plants were going to function. We did not 

decide how much they were going to discount their new model, we 

didn’t pick new models, we didn’t pick executives. We didn’t do any 

of the things that one would associate with the: ‘‘day-to-day running of the company.’’ 

The section she read from my book pertains entirely to the efforts that we made to effect the restructuring of General Motors in 

which we were heavily involved. We were investing ultimately a 

total of $50 billion, I think $12 billion of it under the Bush administration, into the company, and we had a responsibility to the taxpayer to be sure that money was invested wisely. And if we had 

not been involved in those restructuring plans, if we had not 

pushed back on General Motors, if we had not insisted on a viable 

restructuring plan then I would be relatively confident in saying 

we would be sitting here in front of you having a different discussion, which is, why were you not watching over the taxpayer 

money? Why were you not involved in this restructuring? Why did 

you not insist that it was being done in commercially reasonable 

terms? 

Mr. CONNOLLY. Ms. Romero, you have heard Mr. Rattner’s explanation, and from his point of view you perhaps misread what the 

nature of that conversation was, namely it was focused on restructuring, not on day-to-day management and operational decisions. 

Ms. ROMERO. So earlier when I talked about the actions of what 

Treasury’s influence was, what I did was I read quotes from Mr. 

Bloom, who is not here, on the auto team, and I also read quotes 

from GM officials. And I think this is what’s important. This is 

181 

what I was saying earlier. It may be that the auto team went into 

their job not intending to get so involved or have such significant 

influence on the decisions and operations of the company. And it 

may be that as they sit there today and look back at what they did 

that they don’t think that they had that influence. But ultimately 

the only one who can say whether they felt that influence was the 

company itself. And what the company officials told us in interview 

after interview after interview after interview was that they were 

not in control, that the leverage was held by Treasury. 

And when they talk about we weren’t involved in the selection 

of executives, one of the first things they did was Mr. Rattner went 

to GM and asked the CEO to resign and then put in his own replacement, his own pick of the CEO. And that CEO told us that 

GM’s board was very upset by that and said that the auto team 

had usurped their authority. And he said to us that was an early 

indicator that Treasury as the investor would have a significant influence on our decisions and operations. Those are his words. 

So when Mr. Rattner talks about our interpretation is wrong, we 

aren’t interpreting, we are laying out for the public all of the things 

that the auto team told us and all the things that GM officials told 

us. 

Mr. CONNOLLY. All right, Ms. Romero, let me just posit a little 

devil’s advocate. 

Ms. ROMERO. Sure. 

Mr. CONNOLLY. The U.S. taxpayer is pumping tens of billions of 

dollars to save this company and try to make sure we don’t lose 

all those jobs and the whole industrial core of our economy. And 

it’s not entirely unexpected that the existing GM management 

team watching this thinks what a pain in the butt, who needs their 

interference, I’ll take your money, and keep your opinion to yourself, thank you very much, because we really have done nothing 

wrong, we actually know what we’re doing and you people don’t. 

And they’re going to resent any intrusion, any second guessing, any 

kind of new leadership change. That’s kind of human nature. And 

as a taxpayer and as somebody who oversees taxpayer investments, 

I’m not entirely unsympathetic to Mr. Rattner and his team trying 

to protect my interests. 

Now, maybe from someone’s point of view it went too far. But the 

fact that you’re relying on GM interviews, while I’m not entirely 

surprised having mucked it to up to a fare thee well and forced the 

taxpayer to bail them or let them go under, that they resent our 

exercising some oversight responsibilities. Couldn’t that be the 

case, Ms. Romero? 

Ms. ROMERO. I think it absolutely could be the case. I do want 

to point out it’s not just we are relying on interviews of GM. We 

interviewed 84 people. We are also relying on the interviews of the 

auto team officials who sat here today and another auto team official, Mr. Bloom, who did not, and the statements they’ve said. 

But I think you raise a really good point, Ranking Member 

Connolly, which is maybe that’s in the taxpayer’s best interest and 

we’re okay with that. Our point is just be transparent. Just say it 

and let the American people judge, like yourselves, and all of us 

who funded the bailout, do we agree or disagree. But the point is 

don’t hide behind roles or don’t try to downplay your involvement. 

182 

Just tell the truth. Because you know what? The American people 

are pretty smart. We know there was a crisis. We know something 

had to be done with GM. And we understand that their role was 

monumental and that they had to do something to restructure GM. 

If you’d just be transparent and tell the truth, then the American 

people will decide. And that’s what we’ve done. What we did in our 

report, as you’ll see, there is not a lot of judgments in our report 

on this. What there is, is we just told it like a story, a chronological 

story, put the facts out there, so that the American people and all 

of you can decide whether you agree or disagree. 

Mr. CONNOLLY. Thank you. It’s a fascinating story. I know we 

will return to it. 

And, Mr. Chairman, thank you so much for allowing me to—— 

Mr. MICA. You have 30 seconds. 

Mr. TURNER. Okay. Great. Mr. Connolly—— 

Mr. MICA. You went over your 30 seconds. 

Mr. TURNER. As usual. 

Mr. MICA. I’m going to give him the 30 seconds and then we’ll 

be exactly even. So reset the clock, give Mr. Turner 30 seconds. 

Mr. TURNER. Maybe it’s the Federal Express deliveryman here on 

the 30-second speaking. Could I start while you’re setting it? 

What I’m going to say, Mr. Connolly, Ms. Romero once again has 

been incredibly articulate about what her position is and what she 

has done. And you are absolutely right and you’re both right that 

she does not conflict with your conclusions or opinions. What she 

conflicts with is the public statements that have been made and 

the statements by Treasury, and that’s the part that is disturbing, 

I think, to all taxpayers, is that there’s one story being told and 

there’s one that’s being reality. And it’s not as if they relied on 

interviews. They had papers and emails. 

Mr. Rattner, I want to give you one opportunity because we all 

know that your statement about picking executives is not accurate. 

Do you want to amend that? Because you’re under oath. And we 

know when people are speaking sometimes they get a little carried 

away. If you’d like to recharacterize that, I think everybody here 

would be very pleased. 

Mr. RATTNER. I was referring to picking executives below the 

CEO level. We did, obviously, it’s public record, we did obviously 

make a decision that there needed to be a new CEO. It was in the 

context of a commercially reasonable investment decision. 

Mr. TURNER. Great, because I didn’t want you to be subject to 

perjury for saying something that was wasn’t accurate or truthful. 

Thank you. 

Mr. MICA. I think everyone’s had ample opportunity. I know we 

could go on. And there are additional questions. There are questions from members that are not here that will be submitted. And 

with concurrence of the minority, we’re going to leave the record 

open for a period of 2 weeks. And I will advise the witnesses, too, 

that they may submit questions to you to respond which will be 

part of the record, made part of the record. 

Mr. MICA. So we have completed this hearing. I thank the witnesses for their participation. I thank the members for their involvement. I think it is an important issue. I’m sorry that it was 

not resolved before Mr. Connolly and I took over the subcommittee, 

183 

but, again, we now have the report of the Special Inspector General, we have additional information. If we need additional hearings to resolve pending issues we’ll conduct that. But I promised 

a field hearing, which we conducted, and a Washington hearing as 

we completed and got the SIGTARP report. 

So I thank all of you for your participation. There being no further business before the Government Operations Subcommittee 

this hearing is adjourned. 

[Whereupon, at 4:47 p.m., the subcommittee was adjourned.] 

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