[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]




 
                      AFTER THE FINANCIAL CRISIS:
                       ONGOING CHALLENGES FACING
                           DELPHI RETIREES

=======================================================================

                             FIELD HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                      OVERSIGHT AND INVESTIGATIONS

                                 OF THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             SECOND SESSION

                               __________

                             JULY 13, 2010

                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 111-143



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                 HOUSE COMMITTEE ON FINANCIAL SERVICES

                 BARNEY FRANK, Massachusetts, Chairman

PAUL E. KANJORSKI, Pennsylvania      SPENCER BACHUS, Alabama
MAXINE WATERS, California            MICHAEL N. CASTLE, Delaware
CAROLYN B. MALONEY, New York         PETER T. KING, New York
LUIS V. GUTIERREZ, Illinois          EDWARD R. ROYCE, California
NYDIA M. VELAZQUEZ, New York         FRANK D. LUCAS, Oklahoma
MELVIN L. WATT, North Carolina       RON PAUL, Texas
GARY L. ACKERMAN, New York           DONALD A. MANZULLO, Illinois
BRAD SHERMAN, California             WALTER B. JONES, Jr., North 
GREGORY W. MEEKS, New York               Carolina
DENNIS MOORE, Kansas                 JUDY BIGGERT, Illinois
MICHAEL E. CAPUANO, Massachusetts    GARY G. MILLER, California
RUBEN HINOJOSA, Texas                SHELLEY MOORE CAPITO, West 
WM. LACY CLAY, Missouri                  Virginia
CAROLYN McCARTHY, New York           JEB HENSARLING, Texas
JOE BACA, California                 SCOTT GARRETT, New Jersey
STEPHEN F. LYNCH, Massachusetts      J. GRESHAM BARRETT, South Carolina
BRAD MILLER, North Carolina          JIM GERLACH, Pennsylvania
DAVID SCOTT, Georgia                 RANDY NEUGEBAUER, Texas
AL GREEN, Texas                      TOM PRICE, Georgia
EMANUEL CLEAVER, Missouri            PATRICK T. McHENRY, North Carolina
MELISSA L. BEAN, Illinois            JOHN CAMPBELL, California
GWEN MOORE, Wisconsin                ADAM PUTNAM, Florida
PAUL W. HODES, New Hampshire         MICHELE BACHMANN, Minnesota
KEITH ELLISON, Minnesota             KENNY MARCHANT, Texas
RON KLEIN, Florida                   THADDEUS G. McCOTTER, Michigan
CHARLES WILSON, Ohio                 KEVIN McCARTHY, California
ED PERLMUTTER, Colorado              BILL POSEY, Florida
JOE DONNELLY, Indiana                LYNN JENKINS, Kansas
BILL FOSTER, Illinois                CHRISTOPHER LEE, New York
ANDRE CARSON, Indiana                ERIK PAULSEN, Minnesota
JACKIE SPEIER, California            LEONARD LANCE, New Jersey
TRAVIS CHILDERS, Mississippi
WALT MINNICK, Idaho
JOHN ADLER, New Jersey
MARY JO KILROY, Ohio
STEVE DRIEHAUS, Ohio
SUZANNE KOSMAS, Florida
ALAN GRAYSON, Florida
JIM HIMES, Connecticut
GARY PETERS, Michigan
DAN MAFFEI, New York

        Jeanne M. Roslanowick, Staff Director and Chief Counsel
              Subcommittee on Oversight and Investigations

                     DENNIS MOORE, Kansas, Chairman

STEPHEN F. LYNCH, Massachusetts      JUDY BIGGERT, Illinois
RON KLEIN, Florida                   PATRICK T. McHENRY, North Carolina
JACKIE SPEIER, California            RON PAUL, Texas
GWEN MOORE, Wisconsin                MICHELE BACHMANN, Minnesota
JOHN ADLER, New Jersey               CHRISTOPHER LEE, New York
MARY JO KILROY, Ohio                 ERIK PAULSEN, Minnesota
STEVE DRIEHAUS, Ohio
ALAN GRAYSON, Florida


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on:
    July 13, 2010................................................     1
Appendix:
    July 13, 2010................................................    33

                               WITNESSES
                        Thursday, July 13, 2010

Akpadock, Frank, Ph.D, Senior Research Associate and Regional 
  Scientist, Youngstown State University's Center for Urban and 
  Regional Studies...............................................    24
Dragojevic, Milan (Nick) Jr., Delphi hourly retiree..............    20
Fisher, Hon. Lee, Lieutenant Governor of Ohio....................     8
Frost, James, Vice Chair, Delphi Salaried Retiree Association 
  (DSRA).........................................................    16
Gump, Bruce, Director, Warren Legislative Council, and Board 
  Member, Delphi Salaried Retiree Association (DSRA).............    14
Hudzik, Mary Ann, Delphi salaried retiree........................    18
Wernet, Norman, State Director, Ohio Alliance for Retired 
  Americans......................................................    22

                                APPENDIX

Prepared statements:
    Brown, Senator Sherrod.......................................    34
    Donnelly, Hon. Joe...........................................    40
    Turner, Hon. Michael R.......................................    41
    Wilson, Hon. Charlie.........................................    44
    Akpadock, Frank..............................................    46
    Dragojevic, Milan (Nick) Jr..................................    64
    Fisher, Hon. Lee.............................................    68
    Frost, James.................................................    72
    Gump, Bruce..................................................    74
    Hudzik, Mary Ann.............................................    77
    Wernet, Norman...............................................    79

              Additional Material Submitted for the Record

Moore, Hon. Dennis:
    Issue brief of the Alliance for Retired Americans, entitled, 
      ``Retiring Into Work,'' dated July 2005....................    85
    Issue brief of the Alliance for Retired Americans, entitled, 
      ``Vanishing: Pensions and Savings,'' dated September 2005..    93
    Institute for Women's Policy Research Fact Sheet entitled, 
      ``The Economic Security of Older Women and Men in Ohio,'' 
      dated January 2007.........................................   101
    Michigan Democratic Party, ``Resolution in Support of Delphi 
      Salaried Retirees,'' adopted May 5, 2010...................   105
    Ohio AFL-CIO, ``Senate Concurrent Resolution 23''............   107
    Letter from Armond Budish, Speaker, Ohio House of 
      Representatives, to President Barack Obama, dated January 
      27, 2010...................................................   111
    ``Resolution 2010-9''........................................   113
    Letter from Ted Strickland, Governor, State of Ohio, to 
      President Barack Obama, dated September 14, 2009...........   114
    Letter from Ted Strickland, Governor, State of Ohio, to 
      Chairman Moore, Ranking Member Biggert, and members of the 
      subcommittee, dated July 12, 2010..........................   116
Lee, Hon. Christopher:
    Series of letters to various parties regarding the Delphi 
      situation..................................................   117
Wilson, Hon. Charlie:
    Written responses to questions submitted to Bruce Gump.......   153
    List of Delphi retirees who submitted testimonials 
      (testimonials are contained in committee files)............   158


                      AFTER THE FINANCIAL CRISIS:
                       ONGOING CHALLENGES FACING
                            DELPHI RETIREES

                              ----------                              


                        Thursday, July 13, 2010

             U.S. House of Representatives,
                          Subcommittee on Oversight
                                and Investigations,
                           Committee on Financial Services,
                                                   Washington, D.C.
    The subcommittee met, pursuant to notice, in the Canfield 
High School Auditorium, 100 Cardinal Drive, Canfield, Ohio, 
Hon. Dennis Moore [chairman of the subcommittee] presiding.
    Members present: Representatives Moore and Lee.
    Also present: Representatives Wilson and Ryan.
    Chairman Moore of Kansas. This field hearing of the 
Subcommittee on Oversight and Investigations of the House 
Financial Services Committee will come to order. Our hearing 
today is entitled, ``After the Financial Crisis: Ongoing 
Challenges Facing Delphi Retires.'' This is our 15th Oversight 
and Investigations hearing this Congress, and our 4th field 
hearing.
    Before we begin with today's hearing, I want to take a 
moment of personal privilege to first thank Representative 
Charles Wilson for asking that we come to Ohio and focus on 
this important issue of Delphi workers and retirees and how 
they are doing following the recent financial crisis. Congress 
can learn much more about particular issues or challenges when 
we get out of Washington and hear directly from the people we 
represent, as we will today.
    I also want to thank the other Members who have traveled to 
be with us today: Representative Chris Lee of New York; and 
Representative Tim Ryan of Ohio. Finally, I want to thank the 
City of Canfield for welcoming us to Ohio, as well as 
Representative Wilson's staff and others who made today's field 
hearing possible.
    We'll begin this hearing with Members' opening statements 
up to 10 minutes per side, and then we will hear testimony from 
our witnesses. For each witness panel, Members will each have 
up to 5 minutes to question our witnesses. The Chair advises 
our witnesses to please keep your opening statements to 5 
minutes to keep things moving so we can get to Members' 
questions. Also, any unanswered questions can be followed up in 
writing for the record.
    Without objection, all Members' opening statements will be 
made a part of the record. I now recognize myself for 2 minutes 
for an opening statement.
    I don't need to remind anyone that our country has been 
through the worst economic recession and financial crisis since 
the Great Depression and everyone knows, whether you're a 
Democrat or Republican, that lax oversight and poor regulation 
of our financial system for too many years sowed the seeds of a 
near collapse of our entire economy.
    Who paid the price for these mistakes? Unfortunately, it 
was not Wall Street but our constituents on Main Street and the 
people from places like right here in Canfield, Ohio, who paid 
the price. American households lost about $14 trillion in net 
worth over the course of 2 years. Retirement accounts saw an 
over 20 percent decline in value, forcing many Americans to 
delay their retirement.
    Millions of Americans lost their homes through foreclosure. 
Bernie Madoff's Ponzi scheme defrauded $65 million from 
investors. In response to all of this, the House responded by 
approving the Dodd-Frank Wall Street Reform Act which will end 
``too-big-to-fail,'' end taxpayer bailouts, and put tough cops 
on the beat watching out for consumers and investors. I hope 
the Senate will act soon so these needed reforms become law.
    But this is not the end of the story. As if the financial 
crisis was not bad enough, the auto industry in our country has 
struggled in a major way this past decade, and as a result we 
have seen far too many bankruptcies, layoffs, and plants being 
closed. Representative Charlie Wilson invited our subcommittee 
to visit Ohio as he told me about the Delphi retirees we will 
hear from today and the challenges they have faced before, 
during, and after the financial crisis.
    I look forward to hearing from them, how the financial 
crisis has impacted them and their communities, and what 
particular issues with respect to pension plans and other 
challenges they continue to face.
    I now recognize my colleague, Representative Chris Lee, for 
as much time as he may consume, up to 10 minutes. Mr. Lee is a 
valued member of our Oversight Subcommittee who, like other 
Members present, has been very active on this Delphi issue we 
are discussing today. Mr. Lee?
    Mr. Lee. Thank you, Mr. Chairman, for convening this 
hearing today, and thank you, Congressman Wilson and 
Congressman Ryan, for requesting this field hearing and for 
your hard work on this issue which truly is near and dear to 
all of our hearts. This is something that early on in this 
Congress when this--we heard the plight of the Delphi workers. 
I think all of us around this table have gravitated towards, 
because it's truly--it's an issue of fairness, and the part 
that I have respected the most out of all of the retirees I 
have met since coming to this Congress is the fact that 
nobody's looking for anything special. They're looking for 
fairness, to be treated like all others have during the 
difficult economic time, and that's really what has separated 
you and that's really gravitated me to try to be a champion for 
this issue.
    The treatment of retirees is one of the less discussed 
aspects of the restructuring of the auto industry but one that 
needs our attention. We're talking about close to 20,000 
families who ultimately will be affected by this issue. Through 
no fault of their own, those who assumed that after working 
side-by-side with their fellow workers for 20, 25, 30 years and 
working hard, that they would have something left at the end of 
the day, to have their life insurance, their health care, and 
now potentially their pensions cut drastically surely is not 
right.
    And the fact is after they have seen their pensions 
defaulted to the Pension Benefit Guaranty Corp, this is a 
direct result of the negotiation discussions between Delphi, 
GM, and the Treasury Department's Task Force. Unfortunately, 
these discussions raised far more questions than answers about 
how and why these pensions were terminated, which is now having 
a lasting impact on, I assume, almost everybody in this room's 
financial security.
    I welcome the committee's willingness to conduct its 
congressional oversight and investigate this issue. I agree 
with the thousands of people around this country and those in 
this auditorium, retirees and their families who demand real 
action, not just talk, but real action. Delphi retirees and 
their families need help. They deserve action and an 
investigation into why this unfair and unjust decision was 
made.
    However, there's little this committee can investigate 
without a witness here from the Treasury Department. That, to 
me, is the most unnerving situation to have people come here, 
we want to have an open discussion, and for the Treasury not to 
show up, to me, is incredibly frustrating and the fact that 
Delphi retirees deserve answers, all taxpayers deserve an 
answer. Dozens of Members of Congress have tried over the year 
to seek answers from the Treasury Department on behalf of 
Delphi workers, retirees, as well as the American taxpayers 
since they now own 60 percent of General Motors. However, we 
have received very little. On April 21, 2010, I received a 
response from Ron Bloom, who was one of the acting chairs of 
the Auto Task Force. He sent the letter to me on April 21; it 
was a response to the letter I had sent to him on June 5, 2009, 
nearly 10 months after the letter had been sent out. 
Unfortunately, this is not an isolated issue and, Mr. Chairman, 
I ask unanimous consent to have these letters submitted into 
the record.
    Chairman Moore of Kansas. Without objection, they will be 
made a part of the record.
    Mr. Lee. Literally, here, I have over a dozen letters that 
were sent in the last year to the Administration, to the 
Treasury Department, to the Auto Task Force, to General Motors. 
How many responses did I get back? Very few, and I think that 
is wrong when we are here representing the American people and 
not to have sufficient answers on what truly is going on.
    Outside of that frustration, since a December 2009 
Education and Labor Subcommittee hearing, new information has 
emerged that should focus the attention of this committee and 
indeed the entire Congress. One critical piece of evidence, 
according to a report prepared by the consulting firm of Watson 
Wyatt at the request of Delphi on September 30, 2009, the 
salaried pension plan was 85.62 percent funded, yet the average 
funded status of the 100 largest pension plans in America was 
only 81.7 percent in 2009. This truly calls into question 
exactly why the Delphi salaried plan was considered severely 
underfunded and necessitating termination.
    Were there other motivations involved in the termination? 
It's the answers to these questions that Democrats and 
Republicans alike in Congress have been seeking for more than a 
year. On behalf of Delphi's workers and retirees, and the 
American taxpayers who are financing General Motors recovery, 
I'm here today to seek the support of this committee to demand 
action and to urge the Treasury to correct this injustice and 
treat all Delphi workers and retirees fairly.
    This is not a Republican issue; it's not a Democrat issue. 
This is not a union versus non-union; this is a fairness issue. 
Delphi workers deserve to be treated fairly. I would like to 
leave the committee with one thought expressed by the UAW 
president, Ron Gettlefinger. In January, he wrote, ``We are 
advocating for the salaried retirees whose pensions have been 
eroded, though their dedication to the company and their years 
of service remain steady. No one should sit silently by and say 
nothing about the unfair and inequitable treatment these people 
are receiving. Such silence goes against the founding 
principles of our Union.''
    Mr. Gettlefinger is absolutely right, and for those reasons 
I, again, commend this committee for holding this hearing to 
try to reach the goals of fairness, transparency, and equity. 
Simply put, we want, and we deserve, answers. With that, I 
yield back.
    Chairman Moore of Kansas. My thanks to Congressman Lee for 
his statement. I now ask unanimous consent that our colleagues, 
Representatives Charlie Wilson and Tim Ryan, participate in 
this subcommittee field hearing. Without objection, it is so 
ordered. I recognize Representative Charlie Wilson for 3 
minutes for your opening statement.
    Mr. Wilson. Thank you, Mr. Chairman, and let me thank you 
formally for coming here to host this meeting for us today and 
welcome and thank you, Lieutenant Governor Fisher, for being 
here with us today and have testimony for all of us. I thank 
the Delphi retirees for being here and please know that we're 
trying to help in any way we can. I would like to thank Dr. 
Akpadock for coming before our panel today to talk about how 
the situation has affected our community financially and I am 
pleased to have other Members of Congress, Congressman Tim Ryan 
and Congressman Chris Lee, both here with us today. Thank you 
for all your efforts on behalf of Delphi retirees.
    While I am pleased to have great panelists before us today, 
I am also submitting testimony for over 100 Delphi retirees who 
wanted to make sure that their official statements are placed 
in the record. And though they can't be here with us today, I 
would like to thank Governor Strickland and Senator Brown for 
their continuous efforts and support on behalf of Delphi 
retirees. I'll also be submitting statements from both of them 
for the record.
    First and foremost, we are here today to listen. My office 
has worked for many months to ensure that the Delphi retirees 
are listened to and that your plight is understood. I'm so 
pleased that we're able to hold the Financial Services 
Committee field hearing right here in our own backyard and you 
can hear firsthand from the people who have been affected by 
what has happened. I believe this hearing will provide the 
necessary platform for Congress to examine more closely the 
benefits reductions the Delphi retirees have suffered.
    We all know the histories of Delphi and General Motors are 
closely intertwined. GM made certain promises regarding 
pensions when Delphi was spun off into its own entity, and GM 
was there for Delphi when it filed for bankruptcy in 2005, 
assuming additional responsibility Delphi worker pensions and 
benefits, but when GM was forced into bankruptcy in 2009, times 
got tough for both companies.
    Promises made to some Delphi retirees were broken entirely, 
while benefits promised to others were reduced in order to 
remain afloat. GM asked for help from the Federal Government, 
and eventually they took TARP funds which were originally 
offered by the U.S. Treasury to banks that were in trouble, and 
that's where the Financial Services Committee comes in.
    Our committee has oversight over all TARP funds, and since 
GM has received TARP funds we have a responsibility to look 
into how these funds were used. In this case, we are looking 
into why Delphi retirees were left out of the equation as GM 
tried to return to its financial solvency.
    What GM ultimately decided to do was to turn over Delphi 
pensions to the Pensions Benefit Guarantee Corporation, the 
PBGC. On July 31, 2009, just a year ago, the PBGC assumed 
responsibility for these pension plans resulting in sizeable 
cuts of up to 80 percent of some members for thousands of hard-
working Delphi retirees.
    All of these retirees, all of you here today worked hard 
and put in your time counting on what you had been promised in 
retirement. You worked hard for benefits that you saw crumble 
before your eyes. Having these promises broken is just 
unacceptable. Unfortunately, this is not the first time we have 
seen this in our Mahoning Valley nor is it in my district at 
large. The steel industry is a good example of the same type of 
horror story.
    Ladies and gentlemen, hard-working men and women across the 
valley and across the country have made their long-term 
retirement plans based on what they were promised by their 
companies. It is simple as that. They don't make contingency 
plans for their company filing bankruptcy and they certainly 
don't expect to be victimized because of poorly managed pension 
plans. They just go to work every day and expect to be 
compensated fairly and earn the retirement benefits that they 
were promised, and I think when those promises are broken, it's 
up to Congress to make sure companies honor commitments to 
their employees.
    That is why I'm the co-sponsor of a new bill called the 
Protecting Employees and Retirees in Business Bankruptcies Act. 
This legislation reforms the Bankruptcy Code by making sure 
that employees and retirees are treated fairly in corporate 
reorganizations. It would also modify existing limits on the 
termination of curtailment of employee and retirement benefits.
    While this pending legislation could help some in the 
future, it does not solve our problem today. I look forward to 
hearing from each of you. I hope that today can be a 
constructive step towards resolving the unfair treatment of 
Delphi retirees.
    Thank you, and I yield back the balance of my time, Mr. 
Chairman.
    Chairman Moore of Kansas. Time has expired. Next, 
Representative Tim Ryan is recognized for 3 minutes.
    Mr. Ryan. Thank you, Mr. Chairman. I appreciate you coming 
to Ohio to help us make the case and continue to make the case 
for this important issue for many of our constituents. I would 
also like to thank Congressman Lee for getting up early and 
making the drive down. We appreciate that as well. Also 
Governor Strickland, Lieutenant Governor Fisher, Senator Brown, 
and Mike Turner from Dayton, as well, have been great advocates 
for this.
    Before I do my formal remarks, Mr. Chairman, I ask 
unanimous consent to submit some testimony for the record from 
someone who the committee was not able to accommodate--
Elizabeth Knauff is the president of the IUE-CWA Local 717 
retirees organization, wants to encourage us to take some 
action for the record.
    Chairman Moore of Kansas. Without objection, it is so 
ordered.
    Mr. Ryan. Mr. Chairman, the outpouring of support you see 
here today is a true reflection of a terrible impact of the 
loss of pension and benefits caused by this bankruptcy.
    During the time the company was in bankruptcy, the various 
pension funds fell further and further behind on the balance 
required to meet their obligation. This was compounded by an 
aggressive push for early retirement by Delphi's management to 
trim the workforce, and when Delphi terminated the pension 
plans and sent their obligations to the PBGC, they covered 
approximately 700,000 workers and were underfunded. While the 
PBGC will pay retirees a percentage of their promised benefits, 
many retirees, many here today, will see substantial losses. 
The younger retirees were promised the largest early retirement 
benefits as a part of the buyout Delphi forced on them, and 
will see the largest cuts as many of those payments are not 
insured by the PBGC.
    Many retirees from Delphi see substantial reductions in or 
outright elimination of health care coverage. Without the 
stimulus bill, the situation would be even worse, as many 
retirees are eligible for an 80 percent health care tax credit.
    Mr. Chairman, the direct impact is enormous. I have spoken 
with many retirees about how they will be able to afford their 
mortgages, their health care costs, their children's education 
bills. These retirees and their families, quite frankly, have 
been devastated. They worked for years to earn these benefits 
and now they are gone. These are our brothers, our sisters, our 
baseball coaches, pillars of our community.
    But the impact does not stop with the direct losses. There 
are many retirees in my congressional district that the losses 
will flow to everyone in the region, and one of our families 
will testify to that today. So the people least responsible for 
the bankruptcy of a company like Delphi are, in the end, the 
ones who lose their jobs and pensions over it. The bankruptcy 
system must be reformed to give a higher creditor status to 
retirees, not the banks.
    Many of the creditors currently above retirees are in a 
position to make informed decision about the creditworthiness 
of borrowers and set rates accordingly. Retirees are in no 
position to make those kinds of decisions. Furthermore, we need 
to tighten ERISA and other pension protection laws to preserve 
promised benefits. H.R. 1322, introduced by Congressman John 
Tierney, is a great example of exactly what needs to be done to 
prevent more situations like Delphi's, and what my region saw 
in the steel industry.
    An employee cannot possibly plan for unexpected cuts and 
promised benefits after the game has already been played. They 
cannot go back 25 years and invest more to cover the investment 
losses and mismanagement of their employer. Once again, we see 
systematic misalignment of who pays for other people's risks, 
other people's recklessness, and other people's mistakes.
    But unfortunately, even if these steps are taken, it's too 
late to help many of my constituents. While many GM workers and 
retirees will receive their full pension and assistance with 
their health care through the GM bankruptcy, I am extremely 
disappointed that the Obama Administration has not directly 
addressed the many Delphi retirees who need assistance for 
their pension and benefits. My disappointment was compounded 
when the Administration recently announced recess appointment 
of a director of the PBGC who has recused himself from Delphi 
decisions because of his previous involvement in the 
bankruptcy. This simply does not make sense to me to appoint 
someone to a position who is unable to address a major concern 
for the American citizens.
    I have urged the Administration on numerous occasions to 
provide assistance at every opportunity and have yet to see any 
accommodations. Mr. Chairman, I appreciate the committee 
allowing me to participate in today's hearing. I look forward 
to the testimony of today's witnesses. It is a problem when 
anyone in this country loses their pension no matter how, and 
today, we have a chance to better understand and hopefully, in 
the short term, address this problem.
    Chairman Moore of Kansas. Thank you, Mr. Ryan. I'm pleased 
to introduce our first witness, Lieutenant Governor for the 
State of Ohio, the Honorable Lee Fisher. Lieutenant Governor 
Fisher's career has spanned the private, public, and nonprofit 
sectors. In fact, Lieutenant Governor Fisher has more than 17 
years of public service, serving as Ohio Attorney General, 
State Senator, and State Representative. He has also worked as 
a private attorney, public company board director, and as a law 
clerk for the U.S. 6th Circuit Court of Appeals.
    While Lieutenant Governor Fisher led the State's economic 
development efforts as Director of the Department of 
Development in 2007 and 2008, Site Selection Magazine awarded 
its prestigious Governor's Cup to Ohio for both of those years. 
In 2008, the magazine recognized the Ohio Department of 
Development, under Fisher's leadership, as the top economic 
development agency in the country for business expansion.
    I know Governor Strickland's official duties prevented him 
from joining us this morning, but we're glad to have you, sir, 
to represent the State of Ohio in today's hearing.
    Without objection, Lieutenant Governor Fisher, your written 
statement will be made a part of the record. You have 5 minutes 
to provide an opening statement.

 STATEMENT OF THE HONORABLE LEE FISHER, LIEUTENANT GOVERNOR OF 
                              OHIO

    Mr. Fisher. Good morning, Chairman Moore and Congressman 
Lee. Thank you very much for traveling here today and a special 
thanks to my two friends who have been tireless advocates for 
the men and women here today; Congressman Charlie Wilson and 
Congressman Tim Ryan have been two of the leading advocates of 
this issue and, in fact, along with Senator Brown, were the 
ones who brought this issue to the attention immediately of 
Governor Strickland and me, and both of you deserve very 
special credit for the fact that you have continued to make 
this a top priority for you and for the valley.
    As Chairman Moore said, Governor Strickland wanted very 
much to be here. This is an extremely high priority for him, 
but unfortunately he has a very sensitive situation he is 
dealing with today that prevents him from being here, but I'm 
pleased to be here as well. I think it's fair to say that if we 
look out on the audience today, the men and women who are here, 
in many ways they represent the great recession that has been 
brought to our doorstep. In many ways this is ground zero for 
the effects of a recession, and if we were to write a book 
about it, I think the title would be, ``Through No Fault of 
Their Own.''
    These are people, as all four of you have already pointed 
out, who have worked hard. They played by the rules, they paid 
their bills on time. They have saved for their children's 
education and now, without notice, I think it's fair to say 
they have been evicted from the American dream. We owe it to 
them. We owe it not just to the men and women here today but to 
other men and women throughout the valley and even throughout 
this State who have been hurt through no fault of their own by 
this recession.
    So I'm here today to testify on behalf of more than 20,000 
non-union Delphi retirees and 100 workers represented by the 
International Union of Operating Engineers and the 
International Brotherhood of Electrical Workers. These 
employees, many from Northeast Ohio, have worked as 
secretaries, engineers, technicians, and salespeople, devoting 
in many cases as much as 4 decades to their company, General 
Motors. And now, the very people who helped build General 
Motors through their labor are losing the retirement that they 
earned over a lifetime of service.
    I also want to point out something that Congressman Lee 
mentioned. I think it is important to note that although many 
of the men and women who have been affected here today are not 
necessarily members of unions, the UAW and other unions, to 
their credit, have stood up for their brothers and sisters. 
That's a story that ought to be told as well. You mentioned Ron 
Gettlefinger, and I would also mention Jim Graham and Dave 
Green, who have been tireless advocates as well for these men 
and women. Even though many would suggest that people look out 
for their own, that's not the case. Certainly not in the 
valley. People look out for each other and not just for 
themselves.
    When Delphi spun off from General Motors, most had no 
choice but to go to work for this new company and to continue 
their careers, and now they're being denied the full pension 
benefits that their colleagues at General Motors receive, and I 
agree with the four of you that this is, in the end, an issue 
of fairness.
    This is forcing many families near to the poverty level. 
People who have been in the middle class and always felt that 
they had a chance to reach higher, and now, through no fault of 
their own, are wondering if they really are still in the middle 
class. These retirees will lose over $300,000 in pension 
payments, on average, and let's make it clear, pension payments 
are not handouts. They are earned through years of hard work.
    Men and women like Louis Liguore, who was forced to leave 
GM/Delphi after over 25 years of service during those years, 
Louis was even inducted into the General Motors Hall of Fame. 
He has been looking for work and has applied for well over 300 
jobs but unfortunately, at 60 years old, it's nearly impossible 
for him to find work, so now he and his wife are facing a 
monthly income close to the poverty level and faces what he 
calls a shattered future.
    Mary Ann Hudzik who is going to be sharing her story with 
you on the second panel, worked for 30\1/2\ years, 22 of those 
years at GM; and she and her husband counted on the pension and 
the health benefits and the life insurance that they earned 
through years of hard work in accounting and in customer 
service. The loss in her benefits was something she could not, 
as you pointed out, Congressman Ryan, plan for or anticipate. 
She's happy that her friends from General Motors are receiving 
the benefits. She's not angry at them, but she can't understand 
why she is not being treated fairly.
    I think it's fair to say that we owe it to them and to all 
the retirees to take all possible steps to secure their 
pensions. So that's why I join the four of you and Governor 
Strickland and Senator Brown and the UAW in encouraging the 
Administration to, in turn, encourage General Motors to do the 
right thing and to meet its obligations to the Delphi retirees.
    I would be remiss if I also didn't say that the legislation 
introduced by Congressman Tim Ryan and Senator Sherrod Brown 
that would restore benefits to these retirees through available 
funds in the Troubled Asset Relief Program, I think, is a giant 
step forward, and I know that Congressman Wilson is a strong 
advocate of that.
    We should use these dollars that were available to the 
companies on Wall Street that were responsible, in large part, 
for this economic crisis, to help out the families here today 
on Main Street who have shouldered the burden through no fault 
of their own.
    Thank you, Mr. Chairman.
    [The prepared statement of Lieutenant Governor Fisher can 
be found on page 68 of the appendix.]
    Chairman Moore of Kansas. Thank you, sir, for your 
testimony, and for joining us for this important hearing. I 
recognize myself for up to 5 minutes for questions. Lieutenant 
Governor Fisher, it seems that the financial crisis and 
economic recession that followed has made matters worse, not 
only for the auto industry, which was already struggling, but 
particularly for these Delphi retirees. You did address this, 
but do you have anything to add? To what degree do you believe 
the financial crisis has made matters worse for these Delphi 
retirees and others here in Ohio?
    Mr. Fisher. I don't think there's any question that even if 
this had not occurred the men and women here today were 
already, in many cases, suffering and been hit hard by this 
recession. So this is one of those cases where we're adding 
insult to injury. I think it's also fair to point out that 
there is an economic loss to the valley, and you're going to 
hear that very specifically this afternoon, so I won't go into 
those statistics. But this is--every person in the valley, 
whether they know these men and women or not, they're going to 
be adversely affected because this is going to affect the 
economy of Mahoning Valley. What happens to the Mahoning Valley 
affects Northeast Ohio. What happens to Northeast Ohio affects 
the entire State of Ohio. I don't think it's an exaggeration to 
say that 11\1/2\ million people in this State, our population, 
can be affected by what has happened here today.
    Chairman Moore of Kansas. Thank you. What is your response, 
sir, to the people who say that the auto industry made their 
own mistakes for a number of years, and so if they go bankrupt, 
and their workers lose their jobs and pensions, they're only 
reaping what they sowed years ago? Is there something unique 
about this issue with Delphi retirees and their pension plan 
that warrants a closer look?
    Mr. Fisher. Mr. Chairman, first let me say that no one 
wants the government to own a company or own a large share of 
the company, but I believe that 20 years from now, one of the 
stories that will be written is that because this 
Administration decided to save General Motors, in many cases 
they saved manufacturing, and they have also, I believe, said 
that we're not going to turn our backs on the men and women who 
with their brains and their backs and their hands have 
literally built the middle class; and now they're facing the 
prospect of losing that middle-class retirement.
    I also think it's fair to say that if there's any State in 
the country, Mr. Chairman, that is an example of reinvention, 
it is here, and because of the work of Congressman Ryan and 
Congressman Wilson, Governor Strickland, Senator Brown, and 
others, we're seeing the hopeful side right here at Lordstown, 
with the Chevy Cruze.
    We all live in two worlds. We live in the world of 
Mansfield and Twinsburg and Lorain where people feel like they 
have been evicted from the American dream, but we also live on 
the other side that seeing that when we don't turn our back on 
the men and women who have worked for us, we can see great 
things like we're seeing at Lordstown. So I would argue that 
this is the time to double down and invest in the auto workers 
and the auto industry, not to turn our backs.
    Chairman Moore of Kansas. Thank you, sir. Would you please 
compare the actions the State of Ohio and the Federal 
Government have taken with respect to these Delphi workers; 
they have both taken actions. What further appropriate actions 
should Congress take, in your estimation?
    Mr. Fisher. Chairman Moore, I mentioned Congressman Ryan 
and Senator Brown's bill. I also would, of course, mention 
Congressman Wilson's bill, which I think, in a sense, is the 
fence at the top of the cliff. I had a law professor who once 
said to me, ``It's better to have a fence at the top of the 
cliff than to have an ambulance below.'' Today, we're at the 
bottom of the cliff and we're taking the ambulance to help 
these men and women, but Congressman Wilson's legislation will 
be the fence at the top of the cliff so this doesn't happen 
again.
    So if you take Congressman Ryan and Senator Brown's 
legislation to help these men and women who have already fallen 
off the cliff and then you pass Congressman Wilson's 
legislation to build a fence at the top so it never happens 
again, we have the ideal solution.
    Chairman Moore of Kansas. Thank you, sir. My time has 
nearly expired. I'm going to recognize Representative Charlie 
Wilson at this time for 5 minutes, for questions.
    Mr. Wilson. Thank you, Mr. Chairman. One point that I 
really would like to get in, Lieutenant Governor Fisher, is 
that the effect, the catastrophic effect, that it would have 
had on Ohio had we not moved forward with the work with General 
Motors and Chrysler; and I have heard that it's up to 100,000 
jobs would have been affected in this State and would have just 
been catastrophic for our economy. Can you comment on that?
    Mr. Fisher. Yes, Congressman Wilson. Ohio is the third 
largest manufacturing State in the country. And one of the 
pillars of that manufacturing piece of our economy are those 
who worked directly and indirectly in the automobile industry, 
and that includes suppliers. Ohio is second in the Nation in 
the production of motor vehicles, second in the Nation. And 
we're also the second largest State that has tier one suppliers 
in all of North America.
    So if you take all that, our current workforce in Ohio with 
regard to motor vehicle and automotive parts is well over 
75,000 men and women. And so I think it's fair to say that if 
we had not stepped in, or I should say, more importantly, if 
you had not stepped in, you and your colleagues, then the story 
we're hearing today, it would have been multiplied by 75,000, 
and you wouldn't have been able to have this hearing today at 
this high school. You would have had to do it at the stadium 
because you would have had 75,000 people here today had you not 
and Congressman Ryan and others stepped forward to save General 
Motors.
    Mr. Wilson. Thank you, Lieutenant Governor. I'll yield back 
the balance of my time so that others may ask questions.
    Chairman Moore of Kansas. Next, I would like to recognize 
Representative Chris Lee for 5 minutes.
    Mr. Lee. Thank you, Mr. Chairman. And thank you, Lieutenant 
Governor, for lending your support here today on behalf of the 
primarily salaried retirees who, as you know and you pointed 
out, and we both mentioned the fact that UAW President 
Gettlefinger has been supportive, and I think that is key 
because he also recognizes the fact that the Treasury and the 
Auto Task Force had negotiated to ensure that UAW retirees did, 
in fact, get topped off on their pensions; and that's why it 
boils down to fairness, and I think the frustration we all 
share for these retirees and the fact that they have been 
stonewalled in terms of getting answers or trying to find 
relief, and that's why I do think it's important that we do 
keep the heat up and this--because this is yet--this is a 
bipartisan issue. This affects all Americans, all hard-working 
Americans and these retirees surely need it. From your 
perspective, is there anything that can be done from Ohio from 
a State level or from your office to help us apply the heat?
    Mr. Fisher. Yes. I don't think there's any doubt that, of 
course, many voices are always more effective than one voice, 
and so Governor Strickland and I have already joined the list 
that includes, of course, Congressman Wilson, Congressman Ryan, 
Senator Brown, the UAW, and so many others. And I think it's 
fair to say that although we have been disappointed and 
frustrated, as you heard from Congressman Ryan, I think it's 
also fair to say that hearings like this, I think, are a giant 
step forward in making sure that those people who can make the 
decisions here, especially when I think it's fair to say it is 
bipartisan.
    Let's be very frank here. I believe that this 
Administration has done great things to pull us back from the 
edge of the cliff. One of the best examples is what has 
happened with General Motors. But this isn't a Democratic 
issue, and this isn't a Republican issue, certainly not to the 
men and women here, and frankly not to any of us here either. 
So that when the Administration that I support makes mistakes, 
we have an obligation to point those mistakes out and to do 
everything we can to say to them that while we agree with your 
policies, in some cases, you need to do better.
    Mr. Lee. Thank you, Mr. Chairman. I yield back.
    Chairman Moore of Kansas. Thank you, sir. Next, the Chair 
will recognize Congressman Ryan for 5 minutes.
    Mr. Ryan. Thank you, Mr. Chairman. I know, Lieutenant 
Governor, that you have been involved in the past 3 or 4 years 
in economic development and we have benefited from that and 
testimony coming after you will completely outline, in detail, 
as to what the economic impact is going to be, but I think it's 
important for the Administration to hear this and others to 
hear this on the ground--$57 million of economic impact 
annually. Given your background in economic development, the 
department here in Ohio, how difficult is it to find any 
company to come into any community in Ohio and distribute $57 
million every single year that you can, we thought, take to the 
bank with a consistent development within that community to buy 
cars, to buy homes, to buy--how difficult is it, you on the 
front lines in Ohio in the recession to get that kind of 
business to come to Ohio?
    Mr. Fisher. Congressman Ryan, the Governor and I, I 
believe, are the only Governor and Lieutenant Governor in the 
country who travel to Detroit 4 times a year to meet with the 
executives of all the big three major auto makers. We do that 
because we don't think that just writing letters or making 
phone calls is enough. So over the last several years, both of 
us have been in Detroit many times, and when we're meeting with 
GM or meeting with Ford, or meeting with Chrysler, we hear the 
same thing, and that is the competition is intense. We have won 
some battles and we have lost some.
    I believe, however, that because we have developed 
relationships and we have made it clear to them that this is 
our priority, good things have happened as well; and there is 
no better example, no better example not just in Ohio, there's 
no better example in the United States of America than 
Lordstown, because of your work, Congressman Ryan, because of 
the work of Congressman Wilson because of the work of Senator 
Brown, Governor Strickland, the UAW, the Mayor, team effort, 
bipartisan team effort, Lordstown in many ways has become the 
crown jewel for General Motors, and I have to tell you that 
almost every day we get calls from companies who tell us the 
following: We can pick up and move anywhere and we have States 
who want us all the time.
    Make no mistake about it that in this recession, saving a 
job is the same thing as creating a job, because the 
competition is so intense. And so when you not only save jobs 
but you add jobs, what you have done is something that the 
history books will say is remarkable and no one person deserves 
the credit. Everybody in this room, everybody in this valley 
but especially, of course, those of you who are elected to 
represent the valley do deserve the credit.
    And I can tell you that because of what we have done with 
Lordstown, now we not only have to protect it, but we also have 
to make sure the legacy is not besmirched and that there's not 
a smudge on that legacy because of what happened here. Let's 
make it a proud legacy that said we not only brought the Cruze 
and added a third shift, but that we looked at the men and 
women who were the backbone of the auto industry and we helped 
them as well.
    Mr. Ryan. Just to make the comment, here we have an 
opportunity, how difficult it is to go out to compete. Ohio is 
not competing with Pennsylvania anymore. Ohio is competing with 
India and China for this work, and to have on the table $57 
million a year that can be kicked into this local economy here 
I think is absolutely significant, so we spent, all of us here, 
a lot of time, lot of resources going out, trying to get more 
companies here or expand the companies we have.
    That's why I feel so strongly about this issue. We have an 
opportunity here, something that's laying on the table. There 
are personal stories here, but there's also an economic impact 
here, and I think we can focus on what would have a great 
stimulating effect on our local economy. With that, I thank 
you, Lieutenant Governor.
    Chairman Moore of Kansas. Thank you, gentlemen, and thank 
you, Lieutenant Governor Fisher, for your public service and 
for your testimony. You, sir, are now excused. I'll invite the 
second panel of witnesses to please take their seats. Thank 
you.
    Mr. Fisher. Thank you very much.
    [recess]
    Chairman Moore of Kansas. I'm pleased to introduce our 
second witness panel, and the hearing will reconvene: Mr. Bruce 
Gump, director of Warren Legislative Council and board member, 
Delphi Salaried Retiree Association; Mr. James Frost, vice 
chair of DSRA and a constituent of Representative Lee; Ms. Mary 
Ann Hudzik, Delphi salaried retiree; Mr. Milan Dragojevic, 
Delphi hourly retiree; Mr. Norman Wernet, Ohio director, 
Alliance for Retired Americans; and Mr. Frank Akpadock, Ph.D., 
senior research associate and regional scientist for Youngstown 
State University.
    I welcome our witnesses who are testifying today. Without 
objection, your written statements will be made a part of the 
record. You will each have up to 5 minutes to summarize your 
statements and touch on the key messages you would like to 
share. Mr. Gump, sir, you are recognized for 5 minutes.

STATEMENT OF BRUCE GUMP, DIRECTOR, WARREN LEGISLATIVE COUNCIL, 
  AND BOARD MEMBER, DELPHI SALARIED RETIREE ASSOCIATION (DSRA)

    Mr. Gump. Good morning, Chairman Moore, and members of the 
subcommittee. We greatly appreciate the concern this 
subcommittee has expressed concerning this issue and hope we 
can offer some insight and ideas on ways to correct--
    Chairman Moore of Kansas. Move your microphone a little 
closer, if you would, please. Thank you.
    Mr. Gump. Can you hear me now? I'll speak as clearly as I 
can. We greatly appreciate the concern this subcommittee has 
expressed concerning this issue and we hope we can offer 
insight and ideas on ways to correct what the Ohio Senate, the 
Speaker of the Ohio House of Representatives, the Ohio and 
Michigan Democratic Party Executive Committees, and numerous 
others have called unfair and inequitable.
    My name is Bruce Gump, as you recognize, and I worked for 
General Motors for 23 years and then Delphi for 10 more years 
as senior engineer before being involuntarily terminated and 
pension eligible. I'll try to describe how the misconceptions 
and misunderstandings about our pension plan and other benefits 
and our connection to the economy of the United States led to 
decisions that have hurt not only the group I represent, but 
also other groups, and indeed the entire country.
    As we have stated in previous testimony offered in other 
committees in both the House and the Senate, we were assured by 
the company and the PBGC that our pension plans were being well 
cared for. The more than 20,000 salaried workers made up of 
secretaries, clerks, technicians, customer service 
representatives, accountants, cost estimators, engineers, and 
dozens of other classifications believed that we would receive 
appropriate protection for the promise deferred compensation 
that makes up a pension.
    However, as we have learned since the bankruptcy of Delphi 
and then General Motors, to executives of the company, and to 
the United States Treasury Auto Task Force, we were nothing but 
a commodity to be thrown out like yesterday's trash. And so our 
government determined we did not have enough commercial value 
work or maybe political power to deserve any protection during 
the Treasury-orchestrated bankruptcy.
    The effect of this decision on our community was calculated 
by the Youngstown State University Department of Urban and 
Regional Studies. When the study is extended to include the 
other lost benefits for all the affected groups, both hourly 
and salary, the overall cost to the economy of the United 
States is about $1.6 billion per year every year for the next 
20 or 30 years. In addition, because the economic activity is 
reduced so significantly, nearly 85,000 American citizens who 
had nothing to do with the automotive industry will see their 
employment simply evaporate.
    When the Emergency Economic Stabilization Act of 2008 that 
created the Troubled Asset Relief Program, called TARP, was 
written, Congress wrote in Section 113, titled ``Minimizing 
Negative Impact,'' ``The Secretary shall use the authority 
under this Act in a manner that will minimize any potential 
long-term negative impact on the taxpayer taking into account 
the overall economic benefits of the program, including 
economic benefits due to improvements in economic activity and 
the availability of credit, the impact on savings and pensions 
of individuals, and reductions in losses to the Federal 
Government.''
    We respectfully submit that the Secretary of the Treasury 
did not do everything possible to meet this obligation. 
Consider that in just a short 10-year time horizon, $16 billion 
of economic activity will have been lost because the Delphi 
retirees did not receive the same benefit protection and 
support that other groups in the auto industry did. Each of 
those transactions represents income for somebody, and if taxed 
at 15 percent, the average tax that the IRS claims for people 
who owe tax liability, then the United States Government will 
not collect $2.4 billion and local governments will not collect 
another $960 million in sales taxes calculated using an average 
6 percent rate.
    This does not include the increased cost to the United 
States Government for programs such as unemployment 
compensation, retraining, and numerous other programs. Nor does 
it include the devastating long-term costs of personal 
bankruptcies and home foreclosures, many of which have already 
happened, along with family breakups, and even suicides.
    The Delphi retirees number around 70,000 people. In 
general, each will have spouse, children, brothers, sisters, 
perhaps grandchildren plus friends and neighbors. The old 
marketing saw about each dissatisfied customer affecting 
several other potential purchasing decisions implies that three 
quarters of a million to maybe even a million purchasing 
decisions will be affected by the Delphi retirees.
    If the goal of the Treasury and their unprecedented 
involvement in the GM bankruptcy was to rescue that company and 
make them able to survive well into the future, it would seem 
appropriate to try to hold onto loyal customers like the 
Delphi/GM retirees. Instead, they incorrectly determined that 
our group had no commercial value to General Motors and so 
deserves no support or protection from the United States 
Government.
    And so as a result of the discriminatory decision by the 
United States Treasury to fully fund pensions and benefits for 
one group while leaving other groups out, economic activity has 
been significantly reduced. There is a strong negative impact 
on savings and pensions of thousands of individuals, and the 
Federal Government will see significantly more losses than they 
would otherwise.
    To me, that's obviously not living up to the requirements 
of the TARP, and it's a policy error that simply must be 
corrected. Furthermore, and maybe even more importantly, there 
are the intangible effects of the decision on the country. This 
decision was immoral because it was unfair and inequitable. 
Just imagine what would happen if the United States Government 
was allowed to determine the fate of citizens or citizen groups 
based on perceived commercial necessity. Think of anything else 
government does like Social Security, military, and now even 
health care. That certainly goes against the very foundational 
principles of our country like equal protection.
    The decision is also unethical because it affects so many 
downstream of us in the economy, people who had nothing to do 
with the industry or the decision and had no way to protect 
themselves. We believe it may even be illegal, and we're 
pursuing that issue in the Eastern District of Michigan. It 
certainly destroys the credibility of the Administration when 
the President himself said it was necessary to protect the auto 
workers, and his party published a platform saying they would 
protect pension plans. It causes commercial value and political 
influence to reign supreme over the United States Constitution. 
Only those with enough political power and enough commercial 
necessity will receive any benefit from the involvement of the 
United States Government. In the written testimony, we provide 
thoughts on best ways to resolve and correct the situation. 
Numerous pathways are open, but only one needs to be followed.
    The bottom line is that we believe the United States 
Government has a responsibility to follow both the letter and 
the spirit of the United States Constitution to determine how 
they will interface with the citizens of this country, not 
commercial necessity.
    That concept is simply abhorrent in American political 
history. The Secretary of the Treasury must be held accountable 
to requirements of TARP and not allowed to discriminate between 
citizen groups. Thank you.
    [The prepared statement of Mr. Gump can be found on page 74 
of the appendix.]
    Chairman Moore of Kansas. Thank you, sir. Mr. Frost, you 
are recognized for up to 5 minutes.

 STATEMENT OF JAMES FROST, VICE CHAIR, DELPHI SALARIED RETIREE 
                       ASSOCIATION (DSRA)

    Mr. Frost. Chairman Moore, and distinguished members of the 
subcommittee, thank you for the invitation to testify at 
today's hearing. I'm representing 20,000 current and future 
Delphi salaried retiree employees and 70,000 union salaried 
retirees across this great country.
    As a salaried retiree who worked for Delphi and its 
predecessor General Motors for 31 years, events of the last 18 
months have been devastating to me, my family, my community, 
and many other Delphi retirees. It has forced large numbers of 
us into an unsustainable economic situation at a time in our 
lives when recovery is difficult or, in some cases, impossible. 
What is even more disturbing is that as we dig into the details 
of how this all happened, as we have taken the PBGC to court, 
we see the hand of the Federal Government deciding the fate of 
our pensions for the benefit of others. Uniqueness of the GM 
bankruptcy and the Treasury's role in determination of the 
Delphi Salary Pension Plan, coupled with the loss of all health 
and life insurance, is a reason Delphi salaried retirees are 
urging Congress to take a close look at this blatant disregard 
for law.
    Intervention in the fate of Delphi pensions by the U.S. 
Treasury, GM, and the presidentially-appointed Auto Task Force 
ventured well outside the bankruptcy and labor law to the great 
detriment of Delphi retirees. Public and non-public documents 
clearly show that the salaried Delphi pension plan was 
terminated by the PBGC upon the urging of the members of the 
Auto Task Force working to expedite the GM bankruptcy.
    Time was of the essence, and they could not take a chance 
that the matter would languish in a contested court termination 
proceeding. In sworn depositions, key members of the Auto Task 
Force freely admitted that the route taken to terminate the 
Delphi pension plans was crafted to avoid due process afforded 
to holders of vested benefits under Sections 1113 and 1114 of 
the Bankruptcy Code.
    I had the opportunity to chair the 1114 committee as we 
were trying to get money from Delphi for health care, and we 
were successful, but I know what that process is all about and 
we were helpless.
    Now that our pension plan has been terminated, many 
retirees have seen pension reductions in excess of 40 percent 
less than what they had earned. In my case, personally, I lost 
in excess of 30 percent of my already modest pension. I have a 
son who's still in college, and with the added cost of 
replacing health care and life insurance, my net disposable 
income has been cut to about half of what it was 18 months ago.
    While the PBGC has given various and sometimes 
contradictory reasons for rapidly terminating Delphi's salaried 
pension plan, the most often stated reason is inability to pay 
benefits due to severe underfunding. The PBGC has stated that 
they consider the plan to be funded at just below 50 percent of 
outstanding liabilities; however, actuarial experts disagree 
with that assessment. An independent actuarial report by Watson 
Wyatt, as Representative Chris Lee mentioned, after determining 
4 weeks before the action to terminate pension plans showed 
planned funding at at least 86 percent of its liabilities, 
based on generally accepted accounting methods prescribed by 
ERISA. A second actuary confirmed the accuracy of the Watson 
Wyatt estimates and further observed that the funding status of 
the Delphi salaried plan was at or above the largest 100 viable 
pension plans in this country. In other words, there was no 
funding crisis as the PBGC claimed as their reason for swift 
termination.
    Since time is extremely limited in today's hearing, I can't 
walk you through volumes of testimony and evidence that we have 
pored through that verifies the abuses of bankruptcy and labor 
laws that allowed the PBGC and the U.S. Treasury to get away 
with this government taking of our pension, but I would like to 
briefly paraphrase testimony of Harry Wilson and Matthew 
Feldman of the Auto Task Force as they discussed how they 
crafted and executed the termination and subsequent disparate 
treatment of the various Delphi pension plans.
    When questioned about the disparate treatment of different 
groups, Mr. Wilson admitted that certain groups of retirees 
were more politically sensitive than others, leading to the 
decision of whether or not they would be compensated by 
payments from GM and funded by the U.S. Treasury. The salaried 
retirees and non-UAW represented hourly retirees were obviously 
not considered politically worthy. UAW President Ron 
Gettlefinger wrote a letter on our behalf, saying that this was 
morally wrong, and asked the Federal Government to make it 
right.
    When asked about the termination of the Delphi pension 
plan, Matthew Feldman confirmed that one of his primary tasks 
was to resolve the Delphi pension plan disposition so that GM 
could exit bankruptcy rapidly. He made it no secret that he 
never considered any other scenario than termination of the 
salaried plan and moving the hourly plan intact to GM. When 
that scenario failed, Plan B was to terminate all plans but 
then have GM make up the loss for UAW-represented retirees in a 
separate payment. This was a clever work-around for the 
prohibition against successor plans established after a pension 
plan has been terminated and trusteed to the PBGC.
    In closing, I would like to leave you with a few thoughts. 
First of all, the men and women in this audience today have 
donated whatever money they have left to helping us continue to 
push the PBGC and the Treasury in the court of law, so I give 
credit to these people here who are continuing to try to do 
whatever they can to fight this. There is irrefutable evidence 
that the Delphi salaried pension plan was a viable plan that 
was terminated by political appointees for the benefit of 
General Motors and the Treasury.
    In the process, evidence shows that significant violations 
of constitutional and statutory law occurred as the Federal 
Government picked winners and losers. These violations of the 
law have imposed serious economic and personal harm upon 
innocent Americans whose only sin was being in the wrong group 
at the wrong time. In the words of Edmund Burke, ``All that is 
required for evil to prevail is for good men to do nothing.'' I 
refuse to do that. That is why I continue to fight this 
injustice and I ask you to join me in that fight. Thank you for 
caring. Thank you for listening. We need your help and, as 
Chris Lee mentioned, we need action now.
    [The prepared statement of Mr. Frost can be found on page 
72 of the appendix.]
    Chairman Moore of Kansas. Thank you, sir. Ms. Hudzik, you 
are recognized now for up to 5 minutes.

     STATEMENT OF MARY ANN HUDZIK, DELPHI SALARIED RETIREE

    Ms. Hudzik. Good morning, Chairman Moore, and other members 
of the subcommittee. Thank you for inviting me here today to 
testify about the Delphi salaried pension loss impact. My name 
is Mary Ann Hudzik. I retired from Delphi in 2008 after 30\1/2\ 
years of service; 22 of those as a GM employee being 
involuntarily terminated and pension eligible. I worked 11 
years in accounting, 19 years in sales, and a short time in 
customer service.
    I retired believing that I would have health care, life 
insurance, and a pension for the rest of my life, which were 
part of my overall compensation package, and because even in 
bankruptcy, we were assured our pensions were securely funded.
    Not long before I retired, I was presented with an 
excellence in action award for, ``Providing valuable leadership 
and increasing Delphi's overall cash flow by being instrumental 
in reducing the unbilled sales by approximately $3 million.'' 
Shortly after retiring, it was decided that I, and those like 
me, had no commercial value, so I lost all earned post-
employment benefits including my pension, which, after the PBGC 
takeover was reduced by 40 percent. So my dedication and years 
of loyal service to both GM and Delphi were irrelevant to those 
companies, but worse, irrelevant to our own government who 
agreed that I had no commercial value and therefore was not 
entitled to my full pension, while friends who were in the 
union working for the same company were entitled to theirs 
utilizing TARP funds.
    I'm not unhappy for my friends; I'm only perplexed at why 
we were treated so differently, and what will be done about it. 
I will tell you how this injustice has affected me personally. 
My husband is self-employed and therefore on my benefits. He is 
a chronic pain patient. Often, he cannot sleep due to the pain, 
and he sits up all night, leaving for work having never even 
gone to bed or sometimes not even being able to go to work.
    As anyone who is self-employed knows, no work equals no 
pay. He has endured many nerve blocks as well as surgery and 
still he suffers. Additionally, due to multiple chemical 
allergies, I myself must seek out specialists for things like 
dental treatments because anything that's used on me must be 
custom designed and appropriately applied. The cost associated 
for these things are 3 times higher and not always covered by 
insurance.
    My pension reduction, along with the added cost of our lost 
health care and life insurance, were not something we 
anticipated. Our hope was that at least one of us would have a 
livable pension and other needed benefits. There are far worse 
situations within our retiree ranks and Delphi is not the only 
story of pension and benefit loss in this Mahoning Valley and 
throughout this country.
    My father and grandfather were steel workers. I know the 
heartache that came with the doors to those plants closing. It 
is inhumane, in my opinion, to rip away pensions when people 
are least able to replace the income. Work a Senior Fair and 
you will hear one story after another of widows living on $50 a 
month pensions. The story here, though, is that the U.S. 
Government stepped into a private sector bankruptcy and 
decided, with taxpayer dollars, who should be hurt and who 
should not.
    If you were politically strong and powerful, as one 
committee director actually told me, you were taken care of. I 
am personally outraged by this treatment, that we have to fund 
an expensive lawsuit on reduced income in the hopes of justice, 
an expensive process, while our opponents have deep pockets 
thanks to taxpayer dollars. How demoralizing to essentially be 
used to help line the pockets of CEOs and then to be, in 
effect, discriminated against by our own government--$8 million 
awarded for a health care VEBA which retirees had to fight for 
in court at their own expense which amounts to roughly $300 per 
retiree over their lifetime, while a handful of GM execs will 
get millions in stock and compensation packages while shedding 
selected baggage. How shameful, really. We have plenty of pent-
up demand for GM cars within our retiree ranks, but loyalty 
works both ways. Our treatment should be a wakeup call to all 
salaried workers in this country, including those at GM.
    I agree with the President when he says, ``We face a 
deficit of trust. We need to do our work openly. People have 
lost faith in their government.'' Almost 100 Congressmen and 
Senators have repeatedly voiced their concern about and support 
for us. We have had House and Senate H.E.L.P. committee 
hearings, support from governors, attorneys general, State 
representatives, and union and community leaders for over a 
year now and still no response from this Administration.
    Dr. Ed Montgomery, the President's former Auto Czar visited 
with us and was presented with the Youngstown State University 
(YSU) economic impact study, which incidentally YSU did gratus, 
and I thank you, Doctor, for that. We presented it to Dr. 
Montgomery, and he assured us he himself would take it back to 
the President. That was a year ago. Thousands of letters 
written, e-mails, phone calls, volunteers devoting hundreds of 
thousands of hours to this pursuit of justice when many of us 
now need to be working instead to make up for the losses, 
pleading for someone to listen to our voices and yet silence 
from those who can right this wrong.
    We are present today for our 3rd hearing in 9 months. My 
hope is that enough has been heard to move towards a resolution 
or to quote the President, ``I'm not interested in words; I'm 
interested in action.'' The 2008 Democratic National Platform, 
page 13 says, ``We will make it a priority to secure for hard-
working families the part of the American dream that includes a 
secure and healthy retirement. We will adopt measures to 
preserve and protect existing public and private pension 
plans.''
    Once this government, my government, stepped into the GM/
Delphi bankruptcy, all impacted retirees should have been dealt 
with fairly and equitably. We did nothing to deserve to be 
robbed of our dreams, our hopes, and our plans for a secure 
future, and to be sent into a downward spiral of existence 
while protecting the favored. Mr. Chairman, I sincerely request 
that this be the hearing to end all hearings, and that you move 
quickly to facilitate a resolution discussion between Treasury, 
PBGC, GM, and DSRA. It is well past time for all affected 
parties, hourly and salaried, to be treated fairly, and I thank 
you, sir.
    [The prepared statement of Ms. Hudzik can be found on page 
77 of the appendix.]
    Chairman Moore of Kansas. Thank you. Mr. Dragojevic, you 
are recognized, sir, for 5 minutes.

STATEMENT OF MILAN (NICK) DRAGOJEVIC Jr., DELPHI HOURLY RETIREE

    Mr. Dragojevic. Good morning, Chairman Moore, Congressman 
Lee, and members of the subcommittee. Welcome to the Mahoning 
Valley, what we consider the real heartbeat of America. Thank 
you for this opportunity that allows me a chance to voice my 
concerns regarding the issues facing IUE, CWA, and GM Delphi 
retirees. My name is my Milan Dragojevic, Jr. I retired as an 
IUE-CWA hourly retiree after 34-plus years of service, of that, 
27 years as a GM employee.
    Many of us were enticed into retirement at an early age 
because of assurances given to us by GM to maintain our earned 
and promised benefits. Many people are not aware of the fact 
that not all GM Delphi IUE-CWA retirees were treated the same. 
Let me explain those differences.
    Those employees who retired prior to spin-off in 1999 are 
what we refer to as ``GM retirees,'' due to the simple fact 
that they never worked a day of their lives for Delphi, 
strictly General Motors. So when the dust cleared after the 
bankruptcy, although this group's pensions remain intact, their 
health care had changed dramatically. They were now to receive 
what is referred to as a catastrophic health care plan, and 
since their pensions were not reduced, they had few, if any, 
other health care options.
    The next group of retirees are Medicare eligible, people 65 
and over. This group was now required to purchase a 
supplemental plan to suit their individual needs, where 
previously these additional costs were assumed through their 
health care plans. For many of these folks who never had to 
look for or select a plan, this was difficult and traumatic, to 
say the least.
    And the last group, which I am part of and I know 
firsthand, are the post-spin-off employees. Our pensions were 
turned over to the PBGC. My pension, if I live on just the PBGC 
supplement, will be reduced by 50 percent. But since PBGC had 
taken control of my pension, we were able to qualify for the 
health care tax credit known as the HCTC subsidy to help pay 
for our health care costs and some of us were able to search 
and find an additional plan.
    Let me give you an example of the changing coverage I 
experienced if I remained with the catastrophic plan. In 2006, 
I received an ICD, an implanted cardiac defibrillator. When it 
was originally placed into my chest, there was no copay for me, 
and no out-of-pocket expenses. Today, just to replace the 
battery, it will cost me $8,000 out-of-pocket. This is just one 
example. All retirees simply want is their earned and promised 
benefits, nothing more. For some retirees, decisions must be 
made whether to take medication or use those funds to pay 
utility bills or other homeowner expenses.
    Others allow medical problems to go untreated as they 
simply cannot afford to get sick. As one retiree stated, we 
used to be afraid of dying, now we're afraid to live. The 
changes to our health care plan have tremendously increased the 
amount of disposable income used simply for health-related 
expenses. I have been able to return to the workforce to offset 
some of these increases while others have not. The increases we 
must sustain are the premium out-of-pocket expenses and copay.
    Lastly, retirees would simply like to know, how did this 
happen? Are there not ERISA laws in place to prevent this very 
thing? Who was involved in negotiations and what were their 
roles in determining what was fair? H.R. 3455, introduced by 
Congressman Ryan, and legislation introduced by Senator Brown, 
will help pay health care premiums for all GM/Delphi retirees, 
and H.R. 1322, proposed by Congressman Tierney, will protect 
future retirees' earned and promised benefits.
    As Chairman Andrews stated at the House subcommittee 
hearing this past December in Washington, D.C., workers need to 
have secured creditor status and move to the head of the line 
in all bankruptcy legislation. And lastly, the HCTC subsidy 
that is due to default to a higher rate at year's end needs to 
be continued at the present rate.
    Retirees simply want their earned and promised benefits and 
ask your help in making them whole, as anything short of this 
should be considered unacceptable.
    Thank you for this opportunity to speak. I would welcome 
any and all questions either later today or in the future. I am 
willing to return to Washington, D.C., to discuss these issues, 
if needed.
    I would also like to thank Chairman Frank for allowing this 
hearing to take place here in our valley. Also, I would like to 
thank Congressman Wilson and the rest of the Ohio congressional 
delegation for working so diligently on these issues and making 
this hearing here in this valley a reality. Thank you.
    [The prepared statement of Mr. Dragojevic can be found on 
page 64 of the appendix.]
    Chairman Moore of Kansas. Thank you. Mr. Wernet, you are 
recognized for 5 minutes.

 STATEMENT OF NORMAN WERNET, STATE DIRECTOR, OHIO ALLIANCE FOR 
                       RETIRED AMERICANS

    Mr. Wernet. Thank you, Chairman Moore, Representative Lee, 
Representative Wilson, and Representative Ryan for allowing us 
to appear. My name is Norman Wernet, and I'm here before you as 
the State director and field organizer for the Alliance for 
Retired Americans, and on behalf of our Community Advocacy 
Network in this area, the Alliance for Senior Action here in 
the valley. The Alliance has more than 250,000 members, 
consisting of union retirees and other activists here in Ohio 
dedicated to improving the quality of life for older Americans.
    I appreciate the opportunity to testify about retirement 
income security in Ohio. My purpose for appearing is as a 
showing of solidarity with retirees of Delphi in their fight 
for fairness and equitable treatment and to highlight the 
ongoing pervasive weakening of retirement income security.
    The auto industry's employment in Ohio has been cut by half 
since 2001. Ten percent unemployment has forced many to retire 
and tap their pensions to have a source of income. The 
workforce retiring now has been through the decade of 1970's 
stagflation, wage price freezes, income restructuring, 
downsizing, and periods of unemployment to control inflation. 
It's also this generation who spent enough to bring us out of 
the last couple of recessions.
    These workers limited pay demands and gave concessions and 
found ways to work and assist their employers to stay in 
business. The payoff is in essence, to have that life of work 
devalued in retirement.
    The Delphi workers fighting for full pension or at least 
top off of the reduced pension from PBGC are asking for some 
measure of economic justice for the compensation they have 
earned through a life of work. To allow those who managed this 
company into bankruptcy to walk away with millions of dollars 
at the expense of retirees; it's not just an injustice. It's a 
weakening of economic structure, as some folks have already 
testified to today.
    The Youngstown State University study shows $58 million a 
year in economic losses are suffered right here in this valley. 
That structural weakening has played out across all of the Ohio 
economy and has been continued time and again over the last 30-
plus years. The fiscal crisis caused by the manipulation of 
financial markets has diminished savings of retirees of Delphi 
and all Ohio retirees and workers.
    The situation argues for strengthening the financial 
regulations which you have been starting to do in Congress, and 
we appreciate that. But citizens' personal savings, pensions, 
and Social Security need to be strengthened. Over the last 3 
decades, we have seen a continued weakening of those three legs 
of retirement income.
    Those at greatest risk of outliving their retirement are 
women. A study by the Institute for Women's Policy Research 
showed median personal income for women in Ohio over 65 years 
of age was $12,321. I had a call this past week from a woman 
who is 82. She's a retiree from this valley, and worked for GE. 
She was asking, are there more supplements, is there a way that 
I can help find--is there something I have missed in my 
retirement so that I can make up the difference. I need to pay 
for my supplemental Medicare insurance. She wants to do the 
right thing. She wants to do the American thing and pay for it 
herself but her income is so low she cannot pay for the 
currently available supplemental insurance because her pension 
was reduced by a bankruptcy.
    Retirees have been left frustrated, and we have heard a lot 
of that frustration today. Let me give you a couple of 
headlines from the weekend: ``Many sectors sustain while Wall 
Street is hiring.'' ``Repairing Social Security may cause 
fiscal pain.''
    What can Congress do? Immediately, Congress can support the 
mechanisms that would make Delphi retirees whole. Topoffs might 
be a way to do that. Congress can pass H.R. 4677 and its 
companion S. 3033, the Protecting Employees and Retirees Act, 
and we thank you, Congressman Wilson and Ryan, for supporting 
that legislation and cosponsoring it. Immediately, Congress can 
support Social Security by raising the payroll tax cap on the 
wealthiest Americans. Freezing the estate tax at 2009 levels so 
that those revenues will go to Social Security and putting 
Americans back to work in American jobs, good-paying jobs.
    Immediately, Congress could enact S. 2927 or H.R. 4191, a 
modest tax on speculative investments by Wall Street, a .25 
percent tax that would raise $75 billion a year.
    Congress could allow shareholders a greater voice in 
corporate governance to reign in some of the executive excesses 
and engage a better conversation and dialogue about American 
business practices. Building trust might actually build 
investment.
    Congress, in the long term, could adopt into law the 
principles of the retirement income security of the Retirement 
USA Conference: universal coverage; secure retirement; and 
adequate income and principles and specifics as adopted by the 
AFL-CIO.
    To you, Chairman Moore, Congressman Lee, Congressman 
Wilson, and Congressman Ryan, we appreciate the time that we 
have had here on behalf of the 250,000 members of the Ohio 
Alliance and Delphi workers. I want to thank you for the 
opportunity today to testify. Americans who played by the rules 
during their working lives should be able to live out their 
retirement with security and dignity. Thank you.
    [The prepared statement of Mr. Wernet can be found on page 
79 of the appendix.]
    Chairman Moore of Kansas. Thank you, sir, for your 
testimony. Next, the Chair will recognize Dr. Akpadock for 5 
minutes, sir.

 STATEMENT OF FRANK AKPADOCK, PH.D, SENIOR RESEARCH ASSOCIATE 
 AND REGIONAL SCIENTIST, YOUNGSTOWN STATE UNIVERSITY'S CENTER 
                 FOR URBAN AND REGIONAL STUDIES

    Mr. Akpadock. Chairman Moore, and Representatives Wilson, 
Ryan, and Lee, thank you for inviting me to share with you how 
the impending pension and health care reductions by Delphi 
Packard Electric Systems will impact the social and economic 
lives of its retirees from the Mahoning Valley, Ohio, in 
particular, and the Mahoning Valley's economy in general. My 
name is Frank Akpadock, Ph.D., and I am a senior research 
associate and regional scientist at the center for Urban and 
Regional Studies. I have been there for over 18 years, mainly 
conducting pure and applied economic development research, not 
only here in the valley, but also in Northeast Ohio, in the 
Midwest, and in the Nation.
    When I was asked to testify, I was asked to make a few 
statements regarding the Mahoning Valley economy. I will start 
with population. Population in 2000 in Mahoning County was 
257,560. In Trumbull County, it was 225,114, for a combined 
total of 482,674 people. And in 2009, the estimate for both 
counties came out to 446,892 people, giving us a loss of 35,782 
or 7.4 percent. The household income in 2008 the median for 
Mahoning and Trumbull Counties, was $40,508 and $41,409 
respectively, compared to the State of Ohio median household 
income of $48,011. Poverty in 2008 in the valley in Mahoning 
and Trumbull Counties was respectively 17 percent and 16 
percent compared to the State's percentage of 13 percent.
    The shipments in 2002, manufacturer's shipments in Mahoning 
Valley total $11.1 million. And for the same period, wholesale 
trade sales was $3.3 billion and $4.5 billion.
    The house foreclosures in 2008 were 1,489 in Mahoning 
County and 936 in Trumbull County.
    Unemployment: In May 2010, Mahoning County had a labor 
force of 116,300, out of which 103,000 were employed, for an 
unemployment rate of about 11.4 percent; while the City of 
Youngstown recorded an unemployment rate of 13.3 percent. Also, 
Trumbull County had a total unemployment rate of 11.9 percent. 
Unemployment rates from these counties exceeded the national 
rate of nearly 10 percent.
    Now, when I was asked to come--I just want to give you--of 
my conducting this so I really was not a fly by night. You do 
this economic regarding the retirees, salary retirees, I have 
had a ton of experience conducting this, so I could refer you 
to my resume or my vitae 1999 when I conducted a study I did at 
the request of the Congressman. The Youngstown Municipal 
Airport was about to be shut down because they felt it was not 
giving any financial impact, so I went and found that annually 
brought in about $11 million, and so it brought about the 
unification of the Mahoning County and Trumbull County initial 
to call, and if you will, that the impact study that I 
conducted we would not be having all these other people coming.
    I did set economic about Youngstown for familiar 
references. And it was at that time that wanted to close 
airports initial one so wanted to find out if air reserve 
Vienna was viable initial to the airport. So I did that report 
and it was found out it was very viable and that base is still 
doing very well today, and I been doing a lot of jobs for the 
Nation.
    A study I did at Youngstown State level where the initial 
in Columbus wanted to trip down the public financial support 
for public investors to show that not only does public 
university have admission in the State contribute to 
development.
    And last is the one I did for President Sweet, when they 
asked me to conduct economic impact for Mahoning and Trumbull 
County about the $50 million earmarked for the construction of 
the school of business. So I did that, in other words, trying 
to prove that when I--the result I can see the study is not 
something (inaudible) even though I'm a part of it, I 
understand, but I am just an outsider looking in.
    I have no part to play. So what comes out is true 
(inaudible) what I would like.
    Chairman Moore of Kansas. Your testimony--
    Mr. Akpadock. What I did two sections pre and post that pre 
what the retirees would obtain in terms of salary retirements 
and after the PBGC before the retirement they were head to 
$43.2 million and after retirement--I mean, after the takeover, 
it's only entrance $6.1 million. That was and that was put into 
a model that is called Reams 2. (Inaudible) use in doing 
economic process. Hearing about this testimony so far and the 
result--$58 million was found to be lost, not only to the 
retirees but to Mahoning Valley.
    Where does this loss come from and how much it come from 
because some saving produced not only here in the valley but 
surrounding. So that will be cut off. As I said and also 
because of downstream economic development when these people, 
and it would bring about the development of smaller industries 
downstream it would amount to losing a 1,740 not only that are 
working now but down the road. So--
    Chairman Moore of Kansas. Time has expired. I remind each 
of the witnesses that your testimony will be received in the 
record, and I do appreciate the gentleman's testimony. We have 
to keep going so we can have questions by the panel, and I 
thank you for your testimony.
    Mr. Akpadock. Let me continue.
    [The prepared statement of Dr. Akpadock can be found on 
page 46 of the appendix.]
    Chairman Moore of Kansas. Last point, sir. I want to thank 
all of the witnesses for their testimony. As I said, all of the 
witnesses' testimony, written testimony, will be received in 
the record and be considered by the committee and passed onto 
our fellow Members of Congress when we return. I recognize 
myself for up to 5 minutes for questions.
    First, Mr. Frost, and Mr. Gump, I would like to start with 
you. We are all aware of the struggles the auto industry has 
had, especially in the past decade. What would you say sets 
Delphi retirees apart from the larger auto industry or even 
other businesses with respect to how their pension plans have 
been handled?
    Mr. Gump. I didn't understand your question.
    Chairman Moore of Kansas. Okay. The auto industry obviously 
is going through a terrible struggle right now and in the past 
decade. What would you say sets Delphi retirees apart from the 
rest of the auto industry or the businesses with respect to how 
their pension plans have been handled. Is there any difference 
or have they been treated the same?
    Mr. Gump. Actually, the Delphi retirees, because of the 
bankruptcy situation, obviously have been treated very 
differently.
    Chairman Moore of Kansas. Right.
    Mr. Gump. The issue, I think, that we're fighting is the 
fact that some groups received preferential treatment in that 
bankruptcy while other groups were ignored or determined to be 
not worthy of that preferential treatment. The effect of that, 
as Dr. Akpadock was explaining, is devastating, quite honestly, 
to individuals and to communities in where we live. We're all 
aware that no man's an island. We all affect many people. We go 
to restaurants and laundromats and buy gas and groceries and 
whatnot. If we don't have the money to do that, then the people 
downstream of that suffer from that also.
    So how have we been treated differently--I'm having trouble 
understanding the question. That's why. The fact is that 
because of the disparate treatment and we claim potentially 
even illegal treatment that we have received, it's very 
possible that thousands downstream, the last point Dr. Akpadock 
was making, right here in this community 1,700 people will lose 
their jobs just because we can't go out anymore to restaurants 
and buy as many groceries, etc. They didn't do anything, so why 
is it right for them?
    As Mary Ann said, we are overjoyed that the folks at 
General Motors have received their pensions. They earned it, 
they should get it; but so did we. We should get it, too.
    Chairman Moore of Kansas. Do any other panelists have 
comments?
    Mr. Dragojevic. Yes, I guess I would like to make a 
statement regarding that myself. When this bankruptcy first 
occurred, we attempted to find out the amount of funding in the 
pension plans at the time of the 1999 spin-off. I personally 
was unable to do that. I had to utilize the Freedom of 
Information Act to go to the Department of Labor to try and 
ascertain that information because neither GM nor anyone 
locally would give us that information.
    At the health committee hearing in D.C., in December, there 
was a professor from Georgia who attempted to ascertain the 
same information for the committee and he ended up with the 
same results I did. He got stonewalled and we couldn't figure 
that out.
    As near as I can tell from the Department of Labor's 
information, the hourly pension plan was never fully funded. It 
shows us a funding rate of about 70 percent, a little higher 
and, in short, it also showed a shortfall to maintain that fund 
by 31.8 percent, so I guess the question would be if you can 
find out if this was ever fully funded, we could answer that 
question for you a lot better.
    Chairman Moore of Kansas. Do any other panelists have a 
comment to make in response?
    Mr. Frost. Yes.
    Chairman Moore of Kansas. Mr. Frost?
    Mr. Frost. First of all, most of the bailout, most people 
didn't lose their pensions. They stayed with the companies and 
there's one group that didn't get a topoff, so there is a 
difference in the bottom line for a certain small group of 
people.
    Chairman Moore of Kansas. Thank you, sir. Mr. Lee, you're 
recognized for 5 minutes for questions.
    Mr. Lee. Thank you, Mr. Chairman, and I appreciate the 
panel coming out here today and sharing your stories because, 
like you, I believe that all Americans should be protected by 
the Constitution of the United States and the Federal 
Government, their action really shouldn't be predicated solely 
by the ability of a group's ability to wield political power. 
In your case, you weren't united in that regard. At the end of 
the day, fairness is what should count above and beyond 
everything else.
    And that, again, is my frustration as well. And as Mr. 
Frost had mentioned in his testimony, there's truly a danger 
when the government is picking winners and losers. And I 
couldn't agree more with Mrs. Hudzik who illustrated this point 
perfectly. It's indeed shameful that our government showed 
favoritism to one group over another that resulted in financial 
devastation of thousands of retirees. The Treasury Department 
has said repeatedly that no commercial necessity existed to act 
on behalf of salaried retirees. Unbelievable. Unbelievable.
    I just--I would like any--if you can you please elaborate 
why the Treasury, here's your chance, is fundamentally wrong? 
Anyone want to take a shot? I would love to hear it.
    Mr. Gump. Let's start off with the foundational principles 
that we have in the United States Constitution. The reason that 
document exists is because we felt here in America that we were 
not being treated fairly. That's why our country exists. The 
principle of equal protection, while it's oftentimes identified 
with narrowly defined groups, is a foundational principal of 
the document itself.
    The people of the United States pride themselves on the 
fact that in America you don't have to be part of the gentry or 
the elite or in some specific group in order to receive 
benefits. The very fact that we're here today petitioning our 
government for redressing grievances demonstrates that.
    That's why we're here. We have been damaged by the 
discriminatory decision that the Administration made during the 
process of the bankruptcy. The only way to correct that is to 
treat people fairly.
    This committee can only do so much. I mean, it's not like 
you can write a check and make this all go away. You don't have 
a magic wand; we understand that. But you're a very powerful 
committee and what you can do is bring us together, start 
conversations. One thing we know for certain is that until the 
groups who are warring with each other, if you will, start to 
talk to each other, there can be no resolution.
    So we ask very clearly and directly, please, facilitate 
mediated conversations between the Treasury, the PBGC, and the 
Delphi retirees. Bring General Motors into it if you feel you 
must. At this point in time, General Motors is a government 
actor. They are majority-owned--General Motors is majority-
owned by the United States Government. Their CEO was appointed 
by this Administration who is directly involved in the day-to-
day decisions that corporation is making.
    If they need to come to the table, if that's the best way 
to propose it, fine, bring them to the table, but let's start 
talking instead of trying to battle this out in court.
    These people out here who are trying to get by on $1,500 a 
month are sending in $10 and $15 so that we can fund over a 
million dollars in our lawsuit so far. It's not right, not when 
our next door neighbors have their full pensions and the people 
down the street have their full pensions and their full health 
care just because they were in the group with the right 
initials, they have the political power to scare the United 
States Government into fully funding them. Unions do--they 
protect their people; that's their purpose. They succeeded in 
this case.
    That union succeeded in protecting all their people. The 
UAW did an outstanding job of that; however, the fact that 
makes us different is the United States Government stepped into 
it.
    Mr. Lee. I want to jump in. I thank you.
    Mr. Gump. I can go on for hours.
    Mr. Lee. I think you hit the nail on the head. I do 
appreciate that. There's another point I do think is a conflict 
of interest. I do think it is worthy of this committee to 
continue to delve and move forward for fairness. I think that's 
the reason all four of us are here. And hopefully, people are 
aware of the fact that Treasury Secretary Timothy Geithner sits 
on the board of the PBGC, and he also is the co-chair of the 
Auto Task Force. Keeping that in mind, you think about it and 
we all know--these were difficult times when the auto industry 
was melting down, but I think we all agree that the PBGC 
terminated the Delphi pension to help expedite the GM 
bankruptcy period to get this thing done at the sacrifice of 
the salaried retirees. It's strictly a matter of fairness, and 
I can assure you I will do my part, I believe my committee 
members here are all in the same boat. We want to have 
fairness. We ask that you continue to push as well.
    Mr. Gump. We're not going to give up.
    Ms. Hudzik. I have a comment on what you said.
    Chairman Moore of Kansas. One brief comment. Time has 
expired.
    Ms. Hudzik. The comment I want to make is in meetings, we 
have had two pretty outrageous comments made to us. One of 
those was that we, the salaried workforce, are viewed as all 
Republicans, and therefore, that would be a reason to harm us, 
and that is really a very, very bad position to take because, 
first of all, it's not true because it's not across-the-board; 
but second, I don't understand what that has to do with this 
conversation whatsoever. Whatever you are, Republican Democrat, 
or Independent, it doesn't make any difference.
    And the second outrageous comment that has been made to us 
is that the salaried workforce was seen as well-compensated 
enough to weather this loss and that, again, I say that's an 
outrageous comment. I think and I hope I don't speak out of 
turn, but I think somewhere in the YSU economic impact study 
somewhere in there it was determined that the pension is within 
$200, hourly and the salary, within $200, so I think those are 
really comments that have been made to us in meetings which 
have just further outraged us and we just can't understand 
those being used, and we would like those two reasons taken off 
the table because they're an excuse; they're not a reason.
    Chairman Moore of Kansas. Thank you, Ms. Hudzik. 
Representative Wilson, you are recognized for 5 minutes.
    Mr. Wilson. Thank you, Mr. Chairman. My question will be to 
Mr. Gump. Mr. Gump, what's the status of the proceedings, the 
court proceedings with Delphi at this point?
    Mr. Gump. I'll try to make this very short. You want to 
do--
    Mr. Frost. We're currently waiting for the judge to decide 
to move on, so that we can get into discovery and maybe get a 
chance to actually find out what's really going on. Each of the 
parties has submitted their motions and have submitted all of 
the responses to the court, and so right now we're just waiting 
for the judge to decide that he wants to move forward.
    Mr. Wilson. Mr. Chairman, if I may, has there been any 
timeframe offered in that?
    Mr. Frost. No. We continue to ask questions and we don't 
get any timeframes, but we continue to move the motions and the 
responses along so that we don't hold up the court. One of the 
concerns we have is we don't have deep pockets and the people 
on the other side do, and so every once in a while a new 
roadblock jumps in. They went to bankruptcy court and did some 
things so we had to have our lawyers do some things in 
bankruptcy court. So this could go on for a couple of years, 
and we're pulling the money out of our pockets and all the 
donations that we have when on the other side we have the PBGC, 
the Treasury with our taxpayer money and deep pockets to keep 
this moving forward.
    Mr. Wilson. Let's assume for a moment the task force had 
not intervened, as you think may have happened here, what would 
have been the way that you predict General Motors would have 
handled this pension issue?
    Mr. Gump. General Motors would have probably gone 
eventually to a liquidation. Whether or not they should have 
entered into it really isn't the question. The fact is, they 
did enter into it. If those things had happened, the effect on 
this community, as we have all discussed, would have been far 
more devastating than what has happened already. I think that 
was a point made before.
    It was a good thing, if I could put it that way, that 
General Motors was put into a position of being able to 
continue, and I want to be very clear that we need General 
Motors to be a strong, viable company. We don't want to harm 
General Motors in any way. We just refuse to be made into 
sacrificial lambs so that Mark Reuss can collect a $7 million 
bonus that he just got this last quarter, right, the General 
Motors president--North American president. So, you know, we 
think that the right answer here is that while it would have 
been a bad thing to have allowed General Motors to simply fail, 
absolutely, it's a better thing that when General Motors is 
allowed to succeed that people are treated evenly, equally with 
fairness and equity, not one group favored over another group, 
and that's really the issue. When bad things happen in 
bankruptcies, things can become pretty evil, quite honestly. 
People are cut off and a lot of people get hurt. We're not just 
investors in a company. We're not speculators in a company. We 
put our lives in a company doing what we were told by the 
executives. So now we're put into a position that the 
executives are getting bonuses while we're trying to figure out 
how we're going to buy our next tank of gas.
    Mr. Wilson. I think it has been said certainly by 
Congressman Lee and all of us up here that we think fairness is 
one of the biggest things that we need to strive for. And so 
that being said, Mr. Chairman, I yield back the balance of my 
time.
    Chairman Moore of Kansas. Thank you, gentlemen. And next, 
the Chair recognizes Congressman Ryan.
    Mr. Ryan. Thank you, Mr. Chairman. Let me respond a little 
bit to what Mary Ann said. There are a lot of Democrats up here 
and we have not always pleased the Administration by continuing 
this fight. I will tell you that speaking on behalf of myself 
and I represent all my constituents in Washington and this is 
something that I recognize not only the personal stories you 
shared with us today but the economic impact that this is 
having to our region and to our State, and so I want to kind of 
build on what Bruce talked about a little bit earlier. One of 
the issues we have I think in this country is we stopped making 
things. We stopped manufacturing in the United States, part of 
the problem we have we get into this big financial scheme where 
people are moving money around and not bringing any real value, 
and the auto industry has always been an essential component to 
the manufacturing base of the United States, not just for auto, 
but for defense capabilities, should we need them. Losing the 
auto industry is something that we went through great lengths 
to prevent, and this is obviously a negative byproduct of that.
    We need to find a fix. One of my concerns, and I will ask 
questions I know you already know the answers to. I want to 
make the point here publicly is that this situation not being 
fixed is going to have economic consequences for the American 
car manufacturers, so if I could ask Bruce and at least the 
four of the workers from Delphi could answer this. I just want 
to ask, Bruce, what was your--what are you making now, if you 
don't mind saying, I think I heard you say it before with your 
pension and what would you have made if the bridge continued 
and you got your ``topoff?''
    Mr. Gump. My major high paid salary pension was $3,400 a 
month, and it's been reduced to about--my wife's sitting there. 
She knows better, I think $2,300 is about--
    Mr. Ryan. What's the allowance--she gives you an allowance?
    Mr. Gump. Actually, we tend to work things out pretty 
carefully, so--yes. I think I have $5 more in my wallet today 
than she does, so I'm buying lunch.
    Mr. Ryan. You were at $3,400.
    Mr. Gump. I was at $3,400, down to $2,300 now.
    Mr. Ryan. Mr. Frost?
    Mr. Frost. Almost the same exact numbers.
    Mr. Ryan. Mary Ann?
    Ms. Hudzik. I was at $3,050, roughly. Right now I'm at, I 
don't know, maybe $1,800. Maybe.
    Mr. Ryan. If you wanted to chime in here?
    Mr. Dragojevic. I will. Let's face it. Fair and equitable. 
I will speak to this issue. My pension originally was about 
$3,100, or thereabouts. The portion that I'm receiving from the 
PBGC is about $1,500 a month due to my surviving benefit, but 
General Motors has agreed to a topoff so I really haven't 
noticed a difference at all.
    Ms. Hudzik. I want to add something to that I forgot.
    Mr. Ryan. Really quick.
    Ms. Hudzik. What I forgot is many of us are kind of holding 
our breath because we know that the PBGC has told us in 2 to 3 
years, they're going to calculate these pensions again, so my 
fear--my true fear is that money will decrease substantially 
again.
    Mr. Ryan. I'll do this. So you have seen a substantial 
reduction. Mary Ann, how many, if you can just guesstimate, 
don't give me specifics, how many American cars have you 
purchased in your lifetime?
    Ms. Hudzik. I can't recall, but I have always purchased 
General Motors cars my entire life and so has my family. So--
    Mr. Ryan. Are you more inclined or less inclined to buy an 
American car?
    Ms. Hudzik. No, I will not be purchasing a GM car in the 
near future. Unless GM takes care of this, and then I would be 
ready and willing to come back into the GM family.
    Mr. Ryan. Mr. Frost? How many cars have you purchased in 
your lifetime?
    Mr. Frost. I would probably say 30, and that's only myself 
personally, and then there's all of my friends and families 
that we had under the GM program.
    Mr. Ryan. Would your friends and family be less inclined 
probably to buy General Motors cars?
    Mr. Frost. More than likely. One of my clients right now is 
a large Ford supplier so it will probably be a Ford so we can 
keep it American.
    Mr. Ryan. Mr. Gump?
    Mr. Gump. We're a little more frugal and made it last a 
little longer. Altogether we have had six or eight GM vehicles, 
always General Motors. I want to be clear because I'm here 
representing our organization that the DSRA takes a total and 
neutral stance on buyer decisions. We make no recommendations 
one way or the other. Me, personally, I am not anxious to buy 
another General Motors car until General Motors chooses to and 
the United States Government, and I want to be careful that 
we're not aimed at General Motors; we're aimed at the situation 
that was orchestrated by the Treasury.
    Mr. Ryan. I appreciate that.
    Mr. Gump. Until we're treated fairly.
    Mr. Ryan. I don't mean to be smart, but I think it's 
important for everyone to recognize this ripple effect of 
what's happening here. The economic impact obviously from the 
millions and millions of dollars that won't get circulated. The 
fact that you have thousands of American traditional GM buyers 
as we're trying to stand up General Motors, got the Cruze 
going, making good cars and doing a great job. We don't want 
that to be deleted. We want that to take off.
    We need to manufacture in the United States. I feel like 
things like this can harm those initiatives. I know some of us 
are working on in Washington. Thank you for that. I wanted to 
make it apparent to everybody; I wanted it to be on the record. 
I will ask you, you don't have to answer here, but I would love 
for DSRA to help us push Congressman that has been mentioned 
here. It's critical that we do not allow these situations to 
continue for others, that we're not back here if not the Delphi 
salary with some other organization that is deeply devastated, 
many catastrophes we're dealing with now, so I hope you can 
join us with that effort. I want to say thank you. I know how 
difficult it is for all of you to come up in front of public 
and TV cameras to share your story. It's quite courageous. 
Thank you for that as well, thank you, Mr. Chairman, for your 
generosity.
    Chairman Moore of Kansas. Thank you, sir. And I want to, 
again, thank all the witnesses for your testimony here today. I 
know my colleagues will take what we have learned back to 
Washington and share with our colleagues. The Chair notes that 
Members present may have additional questions for our witnesses 
which they may wish to submit in writing. Without objection, 
the hearing record will remain open for 30 days for Members to 
submit written questions to our witnesses and to place their 
responses in the record, as well as for other committee members 
of Ohio, council members not present to enter their own witness 
statements into the record; and, again, I thank all of you in 
the audience for coming. I thank our panelists and the people 
up here today for attending this hearing. This hearing is 
adjourned.
    [Whereupon, the hearing was adjourned.]


                            A P P E N D I X



                             July 13, 2010


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