    [House Hearing, 112 Congress]
    [From the U.S. Government Publishing Office]

     DELPHI PENSION FALLOUT: FEDERAL GOVERNMENT PICKED WINNERS AND LOSERS,
                            SO WHO WON AND WHO LOST?

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

                                    HEARING

                                   before the

                             COMMITTEE ON OVERSIGHT

                             AND GOVERNMENT REFORM

                            HOUSE OF REPRESENTATIVES

                          ONE HUNDRED TWELFTH CONGRESS

                                 FIRST SESSION

                                   __________

                               NOVEMBER 14, 2011

                                   __________

                               Serial No. 112-106

                                   __________

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

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

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    73-164                    WASHINGTON : 2012
    -----------------------------------------------------------------------
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                  COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

                     DARRELL E. ISSA, California, Chairman
    DAN BURTON, Indiana                  ELIJAH E. CUMMINGS, Maryland,
    JOHN L. MICA, Florida                    Ranking Minority Member
    TODD RUSSELL PLATTS, Pennsylvania    EDOLPHUS TOWNS, New York
    MICHAEL R. TURNER, Ohio              CAROLYN B. MALONEY, New York
    PATRICK T. McHENRY, North Carolina   ELEANOR HOLMES NORTON, District of
    JIM JORDAN, Ohio                         Columbia
    JASON CHAFFETZ, Utah                 DENNIS J. KUCINICH, Ohio
    CONNIE MACK, Florida                 JOHN F. TIERNEY, Massachusetts
    TIM WALBERG, Michigan                WM. LACY CLAY, Missouri
    JAMES LANKFORD, Oklahoma             STEPHEN F. LYNCH, Massachusetts
    JUSTIN AMASH, Michigan               JIM COOPER, Tennessee
    ANN MARIE BUERKLE, New York          GERALD E. CONNOLLY, Virginia
    PAUL A. GOSAR, Arizona               MIKE QUIGLEY, Illinois
    RAUL R. LABRADOR, Idaho              DANNY K. DAVIS, Illinois
    PATRICK MEEHAN, Pennsylvania         BRUCE L. BRALEY, Iowa
    SCOTT DesJARLAIS, Tennessee          PETER WELCH, Vermont
    JOE WALSH, Illinois                  JOHN A. YARMUTH, Kentucky
    TREY GOWDY, South Carolina           CHRISTOPHER S. MURPHY, Connecticut
    DENNIS A. ROSS, Florida              JACKIE SPEIER, California
    FRANK C. GUINTA, New Hampshire
    BLAKE FARENTHOLD, Texas
    MIKE KELLY, Pennsylvania

                       Lawrence J. Brady, Staff Director
                    John D. Cuaderes, Deputy Staff Director
                         Robert Borden, General Counsel
                           Linda A. Good, Chief Clerk
                     David Rapallo, Minority Staff Director

                                C O N T E N T S

                                  ----------
                                                                       Page
    Hearing held on November 14, 2011................................     1
    Statement of:
        Black, Den, member of the Delphi Salaried Retirees
          Association; Bruce Gump, member of the Delphi Salaried
          Retirees Association; Mary Miller, member of the Delphi
          Salaried Retirees Association; and Tom Rose, member of the
          Delphi Salaried Retirees Association.......................    25
            Black, Den...............................................    25
            Gump, Bruce..............................................    31
            Miller, Mary.............................................    38
            Rose, Tom................................................    43
        Bovbjerg, Barbara, Managing Director, Education, Workforce,
          and Income Security Issues, Government Accountability
          Office; and Vincent K. Snowbarger, Deputy Director for
          Operations, Pension Benefit Guaranty Corp..................    58
            Bovbjerg, Barbara........................................    58
            Snowbarger, Vincent K....................................    78
        Cunningham, Chuck, former executive at Delphi Corp.; and
          Steve Gebbia, former executive at Delphi Corp..............     8
            Cunningham, Chuck........................................     8
            Gebbia, Steve............................................    14
    Letters, statements, etc., submitted for the record by:
        Black, Den, member of the Delphi Salaried Retirees
          Association, prepared statement of.........................    28
        Bovbjerg, Barbara, Managing Director, Education, Workforce,
          and Income Security Issues, Government Accountability
          Office, prepared statement of..............................    60
        Burton, Hon. Dan, a Representative in Congress from the State
          of Indiana, prepared statement of..........................   107
        Cunningham, Chuck, former executive at Delphi Corp., prepared
          statement of...............................................    10
        Gebbia, Steve, former executive at Delphi Corp., prepared
          statement of...............................................    16
        Gump, Bruce, member of the Delphi Salaried Retirees
          Association, prepared statement of.........................    34
        Issa, Hon. Darrell E., a Representative in Congress from the
          State of California:
            Prepared statement of Senator Rob Portman................     3
            Various prepared statements..............................    55
        Miller, Mary, member of the Delphi Salaried Retirees
          Association, prepared statement of.........................    40
        Rose, Tom, member of the Delphi Salaried Retirees
          Association, prepared statement of.........................    45
        Snowbarger, Vincent K., Deputy Director for Operations,
          Pension Benefit Guaranty Corp., prepared statement of......    80

     DELPHI PENSION FALLOUT: FEDERAL GOVERNMENT PICKED WINNERS AND LOSERS,
                            SO WHO WON AND WHO LOST?

                                  ----------

                           MONDAY, NOVEMBER 14, 2011

                              House of Representatives,
                  Committee on Oversight and Government Reform,
                                                            Dayton, OH.
        The committee met, pursuant to notice, at 9 a.m., at
    Sinclair Community College, Smith Auditorium, 444 W. 3rd
    Street, Dayton, OH, Hon. Darrell E. Issa (chairman of the
    committee) presiding.
        Present: Representatives Issa, Burton, Turner, and Jordan.
        Also present: Representative Austria.
        Staff present: Michael R. Bebeau, assistant clerk; Adam P.
    Fromm, director of Member services and committee operations;
    Linda Good, chief clerk; Tyler Grimm, professional staff
    member; Christopher Hixon, deputy chief counsel, oversight;
    Rebecca Watkins, press secretary; and Jason Powell, minority
    counsel.
        Chairman Issa. First of all, this hearing is being streamed
    for anyone who logs in with the assumption that anything you
    say will end up on the record. [Laughter.]
        This congressional investigation and hearing was called by
    Congressman Turner--here and one of the most effective--last,
    do not try to do amateur video or too many pictures. It will be
    100 percent available to you and to everyone. We post and
    maintain, going back more than 5 years, all of our video of all
    committee hearings.
        So, with that, the full committee hearing on ``Delphi's
    Pension Fallout: Federal Government Picked Winners and Losers,
    So Who Won and Who Lost?'' will come to order.
        The Committee on Oversight exists for two fundamental
    principles. First, Americans have a right to know that the
    money Washington takes from them is well spent. And, second,
    Americans deserve an efficient, effective government that works
    for them. Our duty on the Oversight and Government Reform
    Committee is to protect these rights. Our solemn responsibility
    is to hold government accountable to taxpayers, because
    taxpayers have the right to know what they get from their
    government.
        It is our committee's responsibility to work tirelessly in
    partnership with citizen watch dogs to deliver the facts to the
    American people and bring genuine reform to the Federal
    bureaucracy.
        Today, I ask unanimous consent that our colleague, Mr.
    Steve Austria, who is present and represents Ohio's 7th
    District, be allowed to participate as a non-member of the
    committee in this hearing.
        Without objection, so ordered.
        Additionally, at this time I would ask unanimous consent
    that the statement of Senator Portman be placed in the record.
        Without objection, so ordered.
        [The information referred to follows:]
        [GRAPHIC] [TIFF OMITTED] 73164.001

        Chairman Issa. Today I want to begin by thanking the
    Sinclair Community College for allowing us to use this
    facility. We would have expected this facility to be far larger
    than an ordinary hearing, but we do have standing room only,
    and we appreciate a facility this size being made available,
    far beyond what would ordinarily be used in a field hearing.
        Additionally, I want to thank Mr. Turner again for
    tirelessly making sure that both in Washington and here these
    activities are happening. I might note that Jim Jordan and
    other Members of the Ohio delegation have held additional
    hearings and may hold more in Washington in days to come.
        All Members, both present and those who want to submit for
    the record, will have 5 days in which to put in statements and
    extraneous materials for the record.
        I will allow each Member who wants to make a short opening
    statement to make one if they choose to. And I think I will
    start with our hometown favorite, Mr. Turner, first.
        Mr. Turner. Mr. Chairman, thank you so much. Thank you for
    bringing this Washington committee hearing here to Dayton, OH.
    I appreciate you granting my request to hold it here. I think
    that----
        Chairman Issa. You did not give me a choice. [Laughter.]
        Mr. Turner. You are a very good friend, and I greatly
    appreciate your focus on this issue.
        This is not the first hearing that has been held by your
    full committee or by the subcommittees on this issue. It is the
    first that is focused solely on this issue. You have had
    witnesses testify, and I greatly appreciate the manner in which
    you have allowed the retirees and their issues to be addressed
    as we have looked to the auto bailout, the use of retired
    funds, the discrimination that has occurred in the funding of
    the payout of pensions.
        Representative Jordan as the chairman of the subcommittee
    has held hearings on this issue and has been very active I know
    not only just as a strong member of this committee, but also as
    an Ohioan. His father, like mine, retired from General Motors.
    My father retired from General Motors after 42 years as a
    result of the GM bankruptcy. His health insurance was impacted.
    We have stories like this throughout our community of people
    who have been impacted by General Motors and the Delphi
    bankruptcy.
        I think, Mr. Chairman, you and I had the conversation that
    Delphi began as Dayton Engineering Laboratories Co., so it is
    important being here is that we have the historical nexus of
    the beginning of the company and also the thousands of numbers
    of retirees that are here that have been impacted.
        In the wake of the General Motors' bailout, the
    administration clearly picked winners and losers without
    transparency, without justification, and, in my opinion,
    without respect for the men and women who dedicated years of
    service in earning their retirement benefits. Part of the
    hearing today is our ability to try to get some of that
    transparency. The administration has not been forthcoming. The
    negotiations, the decisions, have been largely in secret, and
    as the committee and the retirees have tried and attempted to
    get answers they have largely been thwarted, which is why it is
    so important to have the assistance of this hearing.
        The treatment of salaried retirees is particularly
    troubling in comparison to the benefits received by some in
    organized labor organizations. In fact, the UAW and the Ohio
    AFL-CIO have written letters in support of restoring benefits
    for the Delphi salaried retirees.
        I will work along with all the members of this panel to
    advocate on behalf of both the union and the non-union labor to
    ensure that all retirees receive whatever benefits that they
    were promised. All of these retirees, regardless of labor
    affiliation or not, worked alongside each other during their
    careers and were part of the success of Delphi. They earned
    these pensions, and they deserve them. They should not be
    differently in retirement.
        I think as we have all said as we looked at this issue, we
    want to know where did the money go and how do we get the money
    put back? This is part of our quest today as we look to
    accountability in the administration and the decisionmaking
    process.
        I also want to thank Congressman Dan Burton for being here
    from Indiana. He has been also a strong advocate on this as he
    has had a number of retirees in his area that were impacted.
    And certainly I want to recognize Representative Austria for
    being here today.
        Mr. Chairman, thank you for this opportunity, and thank you
    for being here in Dayton, OH.
        Chairman Issa. Thank you. We now go to the former chairman
    of the full committee who represents, among other places,
    Kokomo, and as much as Mr. Turner, clearly has a huge
    population of people who have earned retirement who are not
    getting it today?
        Mr. Burton. Thank you, Mr. Chairman. I appreciate you
    having this hearing. I appreciate the comments of from
    Representative Turner, who shares my concern about the
    inequities that have taken place.
        Mr. Chairman, Delphi Corp. was created in 1999 by General
    Motors through the spinoff of the company's automotive
    component group into a separate entity. In fact, many of the
    current Delphi retirees, hourly and salary, spent the majority
    of their working career, on average about 25 years, with GM
    until they were involuntarily moved to Delphi.
        Regrettably, in 2005, Delphi Corp. filed chapter 11
    bankruptcy protection. On October 6, 2009, 4 years after
    entering into chapter 11, Delphi Corp. exited bankruptcy as
    Delphi Holdings under a restructuring plan, facilitated by the
    Obama administration, and approved by the U.S. District
    Bankruptcy Court for the Southern District of New York. Under
    the terms of the agreement, the Federal Pension Benefits
    Guaranty Corp. assumed responsibility for all of the Delphi
    pension plans, roughly $6.2 billion in liability, for six
    Delphi pension plans covering approximately 70,000 employees
    and retirees.
        However, in a very unusual agreement as part of the
    restructuring plan, GM consented to use money from its own
    pension funds to supplement the 46,000 Delphi hourly union
    employees' pension payments to make up for the 30 to 70 percent
    cuts in benefits resulting from a PBGC takeover of the Delphi
    pension plan. This unprecedented agreement was not extended to
    the 21,000 salaried workers and retirees, which is really
    terrible. By some estimates, this resulted in a 70 percent
    reduction in pensions and loss of health care for salaried
    Delphi retirees.
        When questioned about the disparate treatment of Delphi
    employees and retirees, to this day executives for GM only say
    that the company agreed to supplement Delphi union employees
    and retirees because it had promised to do so in 1999, and that
    the company did not supplement Delphi non-union employees or
    retirees because it, ``is not something that GM has any control
    over.'' And GM does not have a legal obligation, nor does it
    have the money to refund those pensions. The explanations
    offered by GM are woefully insufficient.
        Once GM entered into bankruptcy, the contractual promises
    made in 1999 were null and void, and it makes no business sense
    for a company trying to shed excessive debt to assume more
    debt. In reality, though, the blame does not lie with GM. I
    believe that evidence uncovered by this committee and others
    clearly shows that the Obama administration's auto task force
    made this decision for purely political reasons. In fact, Mr.
    Ron Bloom, former senior advisor to the Secretary of the
    Treasury, on the auto bailout admitted as much when he said in
    a celebratory dinner for the auto bailout, ``He did this for
    all of the unions.''
        On June 22, 2011 during the last committee hearing on this
    issue, when I questioned Mr. Bloom about his statement, he
    flatly and unequivocally denied that he ever said that.
    Unfortunately for Mr. Bloom, this statement was corroborated by
    a reporter for the Detroit Free Press, and in a book by Mr.
    Bloom's former boss, auto czar Steve Radner.
        Two weeks later, after coming under fire from this
    committee and the media about his blatant lie under oath, and
    he should have been held in contempt--I still think we ought to
    do that, Mr. Chairman. [Laughter.]
        Mr. Bloom retracted his denial and instead claimed he did
    not ``recall'' ever saying that. But he did.
        Mr. Bloom's actions are sadly typical of this
    administration's blatant disregard for Congress' pursuit of the
    truth in this case. To the best of my knowledge, all
    congressional requests to the administration about this case
    have either been ignored or obfuscated. This is unacceptable
    and should not be tolerated, and I applaud the tenacity you
    have shown, Mr. Chairman--I do not tell you very often, but I
    mean that--to keep investigating this matter further so we can
    uncover the real truth behind the Delphi pension scam, and it
    is a scam.
        I said back in October 2009 when I, along with others,
    first requested a congressional hearing on this issue, that I
    understood the restructuring of America's auto industry
    required a shared sacrifice and responsibility. But Delphi's
    salaried retirees are being forced to bear extra burdens that
    are not warranted and have not been explained. It seemed to me
    at the time, and it still does, to be fundamentally unfair to
    salaried and union employees in the same company who face the
    same unfortunate situation, were treated so unequally by the
    administration and the Federal Government.
        The American people, especially from my perspective, the
    thousands of Hoosier families and people from Ohio who have
    been impacted by this policy, and whose tax dollars were used
    to facilitate this travesty, deserve a full and transparent
    explanation from all parties involved, especially the
    administration. Hopefully today we can move one more step
    closer to an explanation.
        And once again, Mr. Chairman, I really want to thank you
    for having this hearing. I yield back.
        Chairman Issa. And with that, we will recognize the
    chairman of the subcommittee who has done more to further this,
    if he chooses?
        Mr. Jordan. Well, I would just say, Mr. Chairman, I want to
    thank you for having this hearing and for our colleagues for
    being here at Sinclair for this important event. And I will
    just yield back with that with all the testimony.
        Chairman Issa. Thank you.
        Mr. Austria. Thank you, Mr. Chairman, for holding this
    field hearing, and my colleagues for attending. It is very
    important, and I appreciate all the work that the Committee on
    Oversight and Government Reform has done thus far on this
    issue, and particularly Chairman Issa for scheduling this
    hearing. It is very important to our community. I know many of
    the folks here today I represent, and it is important that we
    have this hearing here in our area. And I thank you for that.
        And I especially want to thank the Delphi salaried retirees
    for testifying today, and all their efforts over the past
    several years to hold the administration accountable so that
    retirees can receive a fair pension.
        You know, I am very concerned about the unfair treatment
    received by Delphi salaried retirees during the Delphi and GM
    bankruptcy proceedings. The administration, as Mr. Burton
    pointed out, picking winners and losers with Delphi retirees is
    something that should trouble I think all Americans.
        While Delphi workers stood side by side every day doing
    similar jobs at the same plants, the administration proactively
    made a decision that retirees from three unions would be
    basically unaffected by the bankruptcy. But that is not the
    reason that we are here today. The reason we are here is
    because of the unfair treatment of the Delphi salaried
    retirees.
        While in some cases, and I had an opportunity to recently
    meet with several Delphi salaried retirees last week in my
    office from our area, and I listened to the challenges that
    they have been facing with this unfair treatment. Some salaried
    Delphi employees had a 30 to 70 percent reduction in their
    pensions, and others have lost all their health care and life
    insurance, and that is unacceptable and troubling. And it is
    unacceptable, and it must be fixed. And that is why we are here
    today to hear your testimony. And I thank you all for being
    here today.
        Thank you, Mr. Chairman. I yield back.
        Chairman Issa. Thank you. Does the gentleman wish unanimous
    consent?
        Mr. Turner. Mr. Chairman, before we proceed, I would like
    to ask unanimous consent that the written statements of Delphi
    salaried retirees that are unable to be here today to testify
    be included in the record.
        Chairman Issa. Without objection, so ordered.
        We now recognize our first panel of witnesses, Mr. Steven
    Gebbia.
        Mr. Gebbia. Gebbia.
        Chairman Issa. Gebbia. He is a former executive director
    for employee benefits and salary policies at Delphi Corp. And
    Mr. Chuck Cunningham is the former senior executive at Delphi
    Corp.
        Gentleman, pursuant to the rules of the committee, would
    you please rise and take the oath?
        [Witnesses sworn.]
        Chairman Issa. Let the record reflect that both witnesses
    answered in the affirmative. Please take a seat.
        Now the rules of the committee are pretty straightforward.
    Your entire statement will be placed in the record, plus any
    additional remarks that you would like in the next 5 days. We
    would ask you to stick to the 5-minute rule, which means that
    when the green light comes on, you may begin, when the yellow
    light comes on, please summarize, and when it gets red, I am
    going to gavel you fairly quickly, and I will do that for each
    of the panels. This really allows us to quickly get to the
    portions not in the record, which is the questions and answer
    that I think you want to give you to us as much as we want to
    receive it.
        Mr. Cunningham.

      STATEMENTS OF CHUCK CUNNINGHAM, FORMER EXECUTIVE AT DELPHI
       CORP.; AND STEVE GEBBIA, FORMER EXECUTIVE AT DELPHI CORP.

                     STATEMENT OF CHUCK CUNNINGHAM

        Ms. Cunningham. Mr. Chairman, members of the committee,
    thank you so much for the opportunity for the Delphi retirees
    to tell our story today.
        My name is Chuck Cunningham, and I am a retiree who worked
    27 years for GM and three for Delphi. I now serve as the DSRA
    legal liaison to our Washington law firm, coordinating the
    activities between the retirees and our attorneys.
        In 2009, the Obama administration decided to bail out
    General Motors through an expedited bankruptcy. We are not here
    today to discuss the merits or the wisdom of that bailout. That
    is not for us to discuss. But we are to talk about the
    consequences of those actions that were devastating for one
    group, the Delphi salaried retirees.
        In order to ensure a successful emergence from bankruptcy
    for GM, the issue of Delphi had to be dealt with. And that was
    a task the auto task force and the Treasury took up, because
    Delphi was previously spun off from GM. It was their major
    parts supplier, and in order for GM to be successful in the
    future, it had to be a viable Delphi. It just had not happened.
    We understand that. I think everybody understands that.
        One of the issues of importance to the purchase of Delphi
    was the Delphi pension liabilities. The auto task force looked
    at various options, and we know they looked at them, including
    returning those pensions to GM, but they chose not to do this.
    They decided that this would not look good on GM's balance
    sheet. Therefore, the decision was made to turn over all Delphi
    pensions to the PBGC with one caveat. The new GM would top off
    only Delphi UAW pensions and make them up. The auto task force
    called this a commercial decision to ensure the UAW's
    cooperation and restructuring.
        More than a month later, the announcement was made that the
    pensions of the Delphi CWEA/IUE and steelworkers would also be
    topped up, leaving only the salaried employees and a few small
    unions without the top ups.
        Now, we hear many, many times from people that advocate on
    the part of the administration and the task force that it was
    contractual. It was done in 1999. The truth of the matter is,
    as Representative Burton so well put, these things would have
    been thrown out in bankruptcy court. They always were. A less
    than astute student in bankruptcy knows that. But they were
    not.
        As Fritz Henderson, the CEO of GM, testified at the time of
    the bankruptcy, there was absolutely no reason for them to have
    this arrangement with the CWEA/IUE steelworkers. They had no
    employees. They had divested themselves of all those employees
    from those unions. There was no contract, and he said so. In an
    A-K filing that was done by GM, it called these gratuitous. The
    tops offs were gratuitous.
        Now, why were they done? We believe they were done because
    the IUE/CWEA steelworkers put pressure on the administration,
    put pressure on the Treasury, to provide those top offs also.
    It is interesting to note that a large portion of membership in
    those unions was present from the State of Ohio, which is a
    very important swing State. And we believe that these were
    basically politically motivated. Unfortunately, we do not have
    the pensions.
        We thought it was a pure of discrimination against the
    salaried employees who had chosen not to join the union. I
    would ask anyone to think about this in terms of our country's
    social security. Now, suppose an administration decided that
    everybody but Asians would receive social security. I think we
    would be outraged. How could that be? How could we decide one
    group would not receive the same pension treatment as another?
    I think this is about the same thing we are talking about
    today.
        The worst part about this is that PBGC, who I understand is
    on a later panel, was complicit in all this. They did not
    object to the impermissible followup plans that were disguised
    as top offs. They have always objected to those plans in the
    past, and in fact took LTV to the Supreme Court to fight the
    top up plan. But for some reason, they choose not to now. I
    would mention that the Secretary of Treasury is head of the
    board of directors, but that is a fact.
        Instead----
        Chairman Issa. If you could summarize.
        Mr. Cunningham. Okay. We are in a legal conflict right now,
    and we are moving forward with it, but we are in the discovery
    stage and moving very slowly. The PBGC has failed to give us
    the information that the Federal judge has demanded of them. We
    have had a motion to compel on many other issues. Three times
    they have been told to comply, but they will not comply.
        Chairman Issa. Thank you.
        Mr. Cunningham. Thank you.
        [The prepared statement of Mr. Cunningham follows:]
        [GRAPHIC] [TIFF OMITTED] 73164.002

        [GRAPHIC] [TIFF OMITTED] 73164.003

        [GRAPHIC] [TIFF OMITTED] 73164.004

        [GRAPHIC] [TIFF OMITTED] 73164.005

        Chairman Issa. Mr. Gebbia.

                       STATEMENT OF STEVEN GEBBIA

        Mr. Gebbia. I am Steven Gebbia, former executive director
    of employee benefits for Delphi Corp. I held that position
    since Delphi's inception in 1999 until I retired in June
    earlier this year in 2011. During this entire time, I held
    administrative responsibilities for Delphi's local employee
    benefit plans, including the U.S. salaried and hourly defined
    benefit pension plans that were involuntarily terminated by the
    PBGC in July 2009.
        My administrative responsibilities included designing and
    developing the various pension plans and negotiating their
    provisions with the unions, ongoing communications with
    employees, retirees, unions, and oversight of the day-to-day
    administration of these pension plans. This oversight involved
    frequent interaction with Towers Watson, a consulting firm
    hired by Delphi to conduct actuarial work on these pension
    plans, including annual evaluations of these plans as required
    by law.
        During the almost 4-year period during Delphi's bankruptcy
    cases up until the PBGC involuntarily terminated Delphi's
    pension plans, Delphi's management team repeatedly communicated
    to employees its desire to retain these plans as part of the
    bankruptcy restructuring. Like others, I was very surprised
    when I learned that the pension plans were going to be
    terminated and taken over by the PBGC, and I was extremely
    disappointed when I learned that it was decided that only the
    hourly employee pension benefits, but not the salaried employee
    pension benefits, would be topped up by General Motors, and,
    therefore, would be made whole.
        Several employees came to me and asked me to quantify for
    them the impact on this seemingly unexplainable action on their
    drastically reduced pension benefits. Because I did not
    personally have the access to the information they were
    requesting, I contacted Towers Watson and asked for their help
    in responding to the questions and concerns being raised by
    Delphi salaried employees.
        During our discussion, Towers Watson offered to me and the
    members of my staff that while the salaried pension plan was
    not fully funded at the time of the involuntarily termination,
    it was, however, funded well above a level that would have
    required mandatory termination of this plan. In fact, Towers
    Watson stated that this plan had enough assets to pay benefits
    for decades to come, and that they also opined that this plan
    was very salvageable should there be any sincere desire to save
    it.
        They stated the reasons for their opinions were based on
    these four items: one, the data derived from their most recent
    actuarial evaluation of the plan; two, the fact that the plan
    was frozen in October 2008, meaning no new benefits would
    accrue going forward from that point in time; three, the equity
    market, the stock market, at that time were at a historic low,
    keeping asset values lower than they normally would have been;
    and, four, the discount rates were also extremely low by
    historical standards, thereby overstating the plan's liability
    valuations over the near term.
        Towers Watson further offered that they believed that other
    bankruptcy cases existed where pension plans were funded at
    levels lower than the Delphi salary pension plans but had not
    been taken over by the PBGC.
        Now, to the best of my personal recollection, the Delphi
    salary pension plan had total liabilities of about $4 billion
    at this time, and was under funded by roughly $1 billion at the
    time, the plan was last valued by Towers Watson prior to the
    plan's termination.
        This concludes my statement.
        [The prepared statement of Mr. Gebbia follows:]
        [GRAPHIC] [TIFF OMITTED] 73164.006

        [GRAPHIC] [TIFF OMITTED] 73164.007

        Chairman Issa. Thank you. I am going to ask just a couple
    of questions, and I will start by saying my family was a
    General Motors family, but my father passed away many years
    ago. So, I am not personally affected by it, but I do look at
    the broader problem of what I call the would have, could have,
    and should have--what would have happened had this been handled
    any of the two ways that you are mentioning. I will follow up
    with that.
        What could have happened if the government had, if you
    will, what is the best course to take rather than making a
    decision that undoubtedly had a lot to do with their
    relationship with the unions. And they are, in fact, getting
    made 100 percent whole.
        And then, for our committee, I think the most important
    thing that we are here is in addition to trying to bring
    justice for the retirees that you represent, quite frankly we
    have to figure out how to make sure this does not happen again
    either by government fiat or, in fact, in the defined benefit
    packages that continue to sustain the main companies.
        So, if we could just go through a couple of numbers to make
    sure I get this right. If I look at the two figures that are
    most significant, if General Motors had said this is all the
    money we can do to try to make as whole as we can everybody,
    even with the termination, basically leaving the salaried
    employees with about a 70 percent discount, and making whole
    the roughly twice as many union employees, it comes out to
    about to 66 percent if you simply divide the money equally. Is
    that roughly what you are seeing, is that the haircut that you
    took would have been less than half as much had the same amount
    of money been broadly put into all the pensions?
        Mr. Gebbia. I am not sure I can speak to that.
        Chairman Issa. That is roughly the arithmetic----
        Mr. Cunningham. I guess would go to----
        Chairman Issa. I am not suggesting that it is a should
    have, would have, could have. But the fact is if everyone had a
    shared sacrifice as has been said by so many, the shared
    sacrifice would have been less than half as much for people
    represented by the DSRA, if it had been shared across all
    employees.
        Mr. Cunningham. To give you a reference to that, I would
    agree with you, and I think that work on both sides of the----
        Chairman Issa. Well, the other part of it, if you simply
    left it continuing to go and assuming kind of a lackadaisical
    performance of the market, you still would have gotten about 75
    cents on the dollars if it simply had been terminated. So,
    whether it is terminated at low and spread plus up, or do not
    terminate, either way it would have been half the haircut you
    had taken.
        Mr. Cunningham. In fact, the irony is, if they would have
    just done what they were discussing with the PBGC and GM
    originally and folded it into the GM salary plan, those two
    plans together, the Delphi and the GM plan, would have been
    about 94 percent financed. But it was decided that they did not
    want to do that.
        Chairman Issa. You know, one of the things that our
    committee has to look at is, can we unring the bell? I think
    for many people here today, that is one of the biggest
    challenges. When we get to the third panel, the third panel is
    going to basically say due process was executed pursuant to our
    rules. We had no choice. You back up and say maybe they are
    right. Assuming that a bankruptcy did not give a clean bill of
    health to a very unusual deal, assuming that they did not do a
    Claude Act the way they did with Bernie Madoff and say, no, no,
    this was a preferential payment, and that preferential payment
    has to be divided throughout the entire plan, all of those
    would haves, could haves, and should haves we are going to look
    at.
        Are there other areas that you think this committee should
    delve into going forward that would be helpful, not to specific
    litigation--that is not within our jurisdiction--but for us to
    see if we cannot bring justice separately in congressional
    action and, more importantly, to the American people beyond all
    of you who are so affected, making sure that this does not
    happen again?
        Mr. Gebbia. Well, I think interesting enough, some people
    say, well, you know, you are asking Congress to appropriate
    money. We are not. In fact, the PBGC has stated in an affidavit
    in the legal text that they are putting $2.1 billion into our
    plan. If you add that together with the $2.4 that they admit
    was the amount that plan was funded, that comes out to $4.5.
    Watson Wyatt came in somewhere between $3.4 and $4. All we
    would like to do is sit down with PBGC and work through those
    numbers. We believe that under normal actuarial data, that we
    could have a fully funded pension administered by the PBGC,
    which is totally legal, but we cannot even get them to give us
    the option. And it is a shame.
        Chairman Issa. Thank you. I am going to be respectful of
    the 5-minute rule also, and I will recognize Mr. Burton?
        Mr. Burton. Why can you not get the records if the court
    has said that those records must be given to you?
        [Applause.]
        Mr. Burton. Has the judge moved a contempt citation against
    them for not complying?
        Mr. Gebbia. We have not set forth a motion for contempt
    yet. We have another meeting with the PBGC coming up. But this
    is the third time that the judge has ordered discovery, and it
    is the third time we are now seeing resistance on the part of
    the PBGC.
        Mr. Burton. Are you concerned that the judge will not move
    a contempt citation if you ask him to do so?
        Mr. Gebbia. I would rather not speak to that, but I do not
    think that is the case at all.
        Mr. Burton. Well, if that is not the case, and, of course,
    you are the lawyer and I am----
        Mr. Gebbia. I am not a lawyer. I am the liaison.
        Mr. Burton. Well, whatever you are. [Laughter.]
        Chairman Issa. Folks, please do not applaud to find out
    that he is not a lawyer. Please. [Laughter.]
        The gentleman may continue.
        Mr. Burton. Well, whatever is your law firm, I would urge
    them, if the judge has said not once, not twice, but three
    times there should be discovery and that information should be
    given to you, that your law firm say, okay, enough is enough to
    the court and urge them to go ahead and move a contempt
    citation, because if the administration or if those in charge
    will not give it to you or to your legal counsel, then, by
    golly, they should be held in contempt, and there should be a
    severe fine involved.
        So, anyhow, can you elaborate a little bit further? What is
    your lawyer's explanation for why they have not done it?
        Mr. Gebbia. Well, I think our lawyers cannot give an
    explanation for what they say.
        Mr. Burton. No, no, but, I mean, why have they not moved a
    contempt citation?
        Mr. Gebbia. I believe there are civil procedures that have
    to be followed before we can ask for that. There are civil
    rules of Federal court, and we are following those. And,
    believe me, we will do everything we can under the law to get
    that information.
        We have gotten some information. We have what they call the
    administrative record, but we have not gotten all the
    information that the judge has given us in a broad discovery
    sense.
        But a lot of the information we have received, like from
    the PBGC and the Treasury, is really interesting. It says--an
    e-mail, and it says, Dear John. The rest is redacted, and it
    says, yours truly, Fred. I mean, that is the type of
    information we are getting from them, huge redactions or
    nothing at all.
        Mr. Burton. Well, redactions, they are usually only
    utilized when there is some kind of national security issue
    involved. I cannot understand why the court is allowing
    redactions, which means crossing out things so you cannot read
    them.
        But anyhow, thank you very much, Mr. Chairman. I yield
    back.
        Chairman Issa. I thank the gentleman.
        Mr. Turner [continuing]. Mr. Jordan has held because we are
    getting the picture of really the crux of the problem in that
    we do not have the information from the administration as to
    how these decisions were made for a full and complete
    understanding of what was the process that was undertaken, what
    was the decisionmaking that was undertaken, and how can we
    review it through congressional oversight, how can the courts
    review it, to determine if you have been treated fairly and
    properly.
        Now, both of you were just testifying concerning the
    pension plans, and we all know that pensions are contractual
    obligations. They are highly and heavily regulated. And it was
    my understanding that as Delphi went into bankruptcy, General
    Motors went into bankruptcy, of course they had a number of
    different pension plans.
        But the pension plans, if I am understanding you, is that
    you were unaware of any reason why your pension plan on an
    entitlement basis, a legal basis, would have less standing than
    other pension plans with Delphi and General Motors, because you
    went into the bankruptcy process that your pension would have
    been as great of a contractual obligation and heavily federally
    regulated so that when you went into the process, you did not
    expect it would be handled differently than the other pension.
    Is that correct?
        Mr. Gebbia. That is absolutely correct.
        Mr. Turner. They know your and everybody else's
    understanding also, and I want to congratulate you and the
    other Delphi salaried retirees because you have--in the manner
    in which you approach the success of Delphi, you have
    approached this issue. You have professionally managed it to
    give us the issues and the information so that we can do this
    oversight.
        Now, you frequently referred to decisions that were made
    along the way that your pension plan was equal to everyone
    else's, went into bankruptcy, came out the other end not the
    same as everyone else's. There were decisions made you
    identified it was decided. And my understanding is because you
    have not gotten discovery because they have not been
    forthcoming to you, you do not know who made these decisions.
    You do not know the basis of those decisions. You do not know
    why and you do not know how. Is that correct?
        Mr. Gebbia. It is correct, from my standpoint, yes.
        Mr. Turner. And the thing that is most disturbing to me
    about that, which is why I am, again, so appreciative of
    Chairman Issa and Chairman Jordan for holding these hearings,
    is that this was done with taxpayers' dollars ultimately. The
    bankruptcy did not receive it as a normal bankruptcy. Our
    taxpayers' dollars were utilized, were injected into this
    process so that what came out at the other end with General
    Motors and Delphi was a different animal that went in, more
    than what would normally occur in a bankruptcy.
        So, there is a higher level of scrutiny. It is not just
    that we want to ensure we are treated the same, which of course
    we do, but also you were not treated the same, and your own
    taxpayers' dollars, the taxpayers' dollars of every Delphi
    salaried retiree were used in that process. It is
    discriminating.
        [Applause.]
        Chairman Issa. If you could hold the applause, it will help
    us make the record more complete.
        Mr. Turner. And the troubling aspect of the fact that the
    taxpayers' dollars were there is not in dispute, but I am going
    to ask you to provide some asset valuation, because it seems to
    me that the PGBC is giving us answers as to what the financial
    status of the pension was before it went into bankruptcy. It
    has used its financial status and bankruptcy and even its
    status as it came out. My understanding is that the basis of
    your complaint is that you do not agree with their assessment
    as to the valuation of the assets before the handling of the
    assets during bankruptcy or even the manner in which they were
    valuating or allocating assets as they came out. Is that
    correct?
        Mr. Gebbia. Well, I think the message that I wanted to
    convey here, coming from Towers Watson, who are the experts
    here, is the population of that salaried pension plan was not
    the reason that it was terminated. It did not have to be
    terminated because of the lack of funding. So, there must have
    been other reasons; I do not what they were, but it was not
    this.
        Mr. Cunningham. Representative Turner, if I may make a
    point. After getting knowledge of that Towers Watson report, we
    contracted with PDS&M, which is a wholly owned subsidiary of
    Wells Fargo, to do a followup analysis for the court. They
    found the same thing, that our pension plan was funded at the
    time of termination. In fact, higher than that, over 80
    percent, and that it stood above the midpoint of the hundred
    largest pension plans in the country at that time, none of
    which were terminated.
        So, no, it was expeditious to do that. It was not the right
    thing to do. Besides, in cases like this, ERISA is clear. These
    kinds of things have to be adjudicated. They should not have
    done it like passing the gravy between the people who wanted to
    be rid of the plan and PBGC.
        Mr. Turner. Thank you. Mr. Chairman, I have looked at this
    as a who, what, when, where investigation on the Federal side,
    and also the issue of, you know, where was the money, where did
    it go, and then ultimately how do we get it back?
        Chairman Issa. Will the gentleman yield?
        Mr. Turner. Yes.
        Chairman Issa. I just want to interject into this portion
    of the testimony that although the committee has been receiving
    documents from the PBGC--relatively unredacted, we have gotten
    almost no documents from Treasury. I know that will not be as
    much mentioned in their dialog, but it is one of the early
    frustrations, that even the committee is having trouble getting
    from Treasury, the behind the scenes decision separate from the
    actual decision about witnesses we have here today.
        I would be happy to recognize the chairman of the
    subcommittee?
        Mr. Jordan. I thank the Chair. And Mr. Turner is exactly
    right. This is all about transparency. What we have had, as Mr.
    Burton talked about, Mr. Bloom in our subcommittee and
    committees in Washington talking about the lack of
    transparency. And it is not just yours. It is a whole host of
    issues which closed facilities. We have had GM in Mansfield,
    OH, which I have the privilege of representing, close. We have
    had dealerships close.
        So, the idea that we need to bind up all these decisions,
    particularly, as Mr. Turner pointed out, when taxpayer dollars
    are stake, and when the auto task force made up of Federal
    employees is making the decision, that is the key issue here.
    And when you start down this road, which is why I have been
    troubled by this whole process where government gets this
    involved in the private sector, where you have the President of
    the United States firing the CEO of General Motors, where you
    have the auto task force taking over, that is the problem. And
    we just want to continue to look at this, delve into this, and
    get the answers needed for transparency that is needed for
    taxpayers to understand what is going on.
        With that, I would yield back my time. I would be happy to
    yield time to----
        Chairman Issa. Mr. Austria.
        Mr. Austria. Well, thank you, Mr. Chairman. Mr. Gebbia and
    Mr. Cunningham, thank you both for being here today and sharing
    your story with us, because as I heard your testimony, like
    many members up here, my uncle and brother-in-law both retired
    from GM. It is very troubling as to what is happening here.
        And I would like to just continue on, if you could, as much
    as you are able to, with the ongoing lawsuit between Delphi
    Salaried Retiree Association and the Pension Benefit Guaranty
    Corp.
        Let me first of all say that I applaud your determination
    to ensure that Delphi retirees receive a fair pension. However,
    it is concerning to me that while the trial court has ordered
    this discovery, and you mentioned that there a lot of documents
    or some of the documents have been redacted as far as much of
    the information, which is very troubling. PBGC continues to
    delay and refuse to comply with these orders.
        Are you able to describe to the committee the effects that
    these actions have on the retirees, and your lawsuit, and the
    longer this goes, because I think one of you mentioned, or
    someone mentioned to me before this hearing, that this has now
    been going on and this issue has been going on for over 1,000
    days now.
        Mr. Cunningham. I think that the second panel will probably
    do a better job of describing that. That is their mission here
    today. But I will say that, I mean, the financial burden of the
    lawsuit is tremendous. I mean, you know, the irony of this,
    again, is this whole thing. We are spending money that we do
    not have to fight the government that has our money.
    [Laughter.]
        It is a little odd, but that is what we are doing. I mean--
    --
        Mr. Austria. It sounds like an unfair fight to me.
        Mr. Cunningham. Well, you know, they can spend all the
    money they want on attorneys, and, believe me, we have
    wonderful attorneys, the best we could have. But, you know, it
    gets a little long, and it gets very expensive. But we are not
    going to quit.
        Mr. Austria. Let me just, if I could, just one last comment
    because you brought up the Treasury, Mr. Chairman, which is
    very important. I know our delegation and many other Members of
    Congress signed that letter that we sent to Secretary Geithner
    and never get a response back. And I wanted to discuss that
    with you as well as to what input Delphi retirees and non-union
    employees had during this time to protect their interests in a
    fully funded pension and receiving benefits? I am talking about
    when Delphi went through bankruptcy in terms of the pension
    plan, so there were several parties that were involved,
    including the Treasury Department, the auto task force, PBGC,
    and each of these parties were concerned with resolving the
    bankruptcy in a manner that would be most beneficial for their
    particular interests.
        What was your position on that?
        Mr. Cunningham. We were never invited to the table in any
    way, shape, or form. Delphi salaried retirees were not invited
    to the table. Meetings were held, in fact, a meeting which we
    would love to get information on was held in Poughkeepsie, New
    York, at the direction of the bankruptcy court. The PBGC and
    its attorney, one which is here today, I think, were there. UAW
    was there. The Treasury Department was there. GM was there.
    Delphi salaried retirees were not there. So, all the
    constituents were there, except us.
        Mr. Austria. Was there a reason that they gave you that you
    were not included in those meetings?
        Mr. Cunningham. Well, they would not answer those kind of
    questions. You know, we went to bankruptcy court, this is not
    just the 6th Circuit we were fighting in. We fought in the
    bankruptcy courts. We watched the pirate case get thrown out
    just like that from the judge. We also watched three small
    unions that had the same problem. They were often important. I
    watched their attorneys argue cases where their contracts in
    1999 were identical to the UAW's, and then they could not go
    back because they were too small. We reached out to those
    people and talked with them.
        So, you know, we were not going to be part of the process.
    The decisions were made. If you go back, we have a lot of
    information, not enough, not all of it. But if you go back to
    even the written testimonies of Matthew Sullivan from the
    automotive task force, you will see that, you know, they
    basically orchestrated this whole thing, and the PGBC was
    complicit.
        One of the other things, and I would just bring this up,
    and I have someone with me here today who is from the minority
    side from Ohio, that is Senator Sherrod Brown, who held up the
    nomination of Mr. Gotbaum, the director of the PBGC, until the
    President decided to do a recess appointment. And guess what
    Mr. Gotbaum did before that? He represented the DIP financers
    for Delphi, who were part of a deal with PBGC, with the
    Treasury. And ironically, a month ago, Harry Wilson, who was on
    the automotive task force, especially responsible for GM, and
    one of the architects, became a member of the advisory board of
    the PGBC. Something is wrong.
        Chairman Issa. Gentleman, I am going to ask you, before I
    dismiss you, one quick round of questions that I saved until
    the end, figuring someone else might ask you.
        But the union represents UAW, correct, that they might
    strike if they did not get topped up. Everybody knows that. Do
    you believe as people who did not get the benefit, that the
    real difference was that salaried workers could not reasonably,
    you know, current workers threatened to walk off the job in
    order to ensure that you got the same benefit. Is that really
    what separated, in your mind, the difference between large
    organized labor using current willingness to strike or it pulls
    out of the deal, if you will, by saying it would versus the
    inability of you as retirees not represented by a union that
    would take current workers and strike? Do you believe that that
    was, more than anything else----
        Mr. Gebbia. I believe that is half, that half being the UAW
    had leverage, okay? But I believe the other top ups had nothing
    to do with leverage as far as GM's exit in bankruptcy. I
    believe they were totally influenced by using membership and
    the ability of those unions to lobby and get a paper trail.
        Chairman Issa. So, you would say one group had power and
    used it, the other group had the power of helping the President
    be elected or his party. Is that more or less----
        Mr. Gebbia. It is the only way I can see it. I mean, that
    is the way a logical person would.
        Chairman Issa. Well, thank you. As I said, I am going to
    ask all the panels the same question. I think that would be
    appropriate in this case.
        We are going to take a very short recess and set up the
    second panel. Thank you.
        [Recess.]
        Chairman Issa. Would everyone please take their seats? The
    hearing will now resume. We will now recognize our second
    panel.
        Mr. Den Black is the former chief engineer at Delphi Corp.
    Mr. Bruce Gump is a former senior engineer at Delphi Corp. Ms.
    Mary Miller formerly provided human resource leadership at
    Delphi Corp.'s brake assembly operations. And Mr. Tom Rose is a
    former plant manager at Delphi.
        Again, you saw in the first panel, pursuant to our rules of
    our committee, all witnesses are to be sworn. Would you please
    rise and take the oath? Raise your right hands.
        [Witnesses sworn.]
        Chairman Issa. Let the record indicate all witnesses
    answered in the affirmative. Please be seated.
        As you saw in the first panel, I thank and reward those who
    stay within 5 minutes. [Laughter.]
        I am a little less thankful if you go over, and if you go
    far over, I will have to ask you to come to a stop. And I would
    like you to end on a high note, which is best done when the
    yellow light is on.
        And so, with that, I believe we are starting with Mr.
    Black. The gentleman is recognized?

    STATEMENTS OF DEN BLACK, MEMBER OF THE DELPHI SALARIED RETIREES
    ASSOCIATION; BRUCE GUMP, MEMBER OF THE DELPHI SALARIED RETIREES
        ASSOCIATION; MARY MILLER, MEMBER OF THE DELPHI SALARIED
       RETIREES ASSOCIATION; AND TOM ROSE, MEMBER OF THE DELPHI
                     SALARIED RETIREES ASSOCIATION

                         STATEMENT OF DEN BLACK

        Mr. Black. Thank you for the opportunity for this panel to
    share the story of the Delphi Salaried Retirees Association,
    and to ask that this committee leave here today with a renewed
    determination to ensure an immediate end to our 32-month long
    search for justice is forthcoming.
        My name is Dennis Black. I am trained as a mechanical
    engineer, and my career spanned 36 years with GM and Delphi
    Corp.s--34 years with GM and only 2 years with Delphi. During
    my career, I served GM in a large variety of capacities,
    including project engineer, engineering supervisor, chief
    engineer of two business units, chief engineer for global
    future products, global quality management, and divisional
    strategic planning.
        Along the way I was fortunate enough to be the inventor of
    what has turned out to be a game changing innovation in the
    field of providing automotive air conditioning comfort for
    millions of vehicle owners around the globe. This was the
    infinitely variable displacement AC compressor that has
    literally created tens of thousands of living wage jobs around
    the globe, subsequently jobs that have allowed workers to
    support their families since the mid-1980's. This innovation
    has been emulated by every major competitor, and as a result,
    everyone in the globe has followed our lead.
        I was honored to receive GM's highest engineering honor,
    the Boss Kettering Award, for inventions considered to be of
    particular significance to General Motors.
        Now, please understand that I only tell you this to
    emphasize that it is the salaried workers of General Motors and
    Delphi whose historical role has been to first imagine, then
    design and develop the automotive products and production
    facilities. Without question, the salaried workers have made
    tremendous contributions to the American auto industry, and our
    contributions were in no way less valuable than those of our
    union counterparts.
        I had served as the chairperson for the Delphi Salaried
    Retirees Association since its inception in early February
    2009. One thousand twelve very long and stressful days ago, the
    DSRA seeks to represent the interests of as many as 20,000
    Delphi salaried retirees, supervisors, accountants,
    administrators, administrative assistants, technicians, and
    engineers whose economic futures have been intentionally and
    needlessly torn asunder since our ordeal began.
        As I mentioned, we organized DSRA in February 2009, and
    subsequently we have left absolutely no stone unturned in our
    efforts to seek justice. We have taken our story to the Federal
    courts, to our congressional officials, to the GAO, to SIGTARP,
    to our union counterparts, to the national and local media
    everywhere. We have expended several million dollars in our
    unrelenting quest, dollars that many simply cannot afford to
    contribute due to their depleted financial resources.
    Nevertheless, they find a way to contribute anyhow. We will
    never, never cease our unrelenting quest for justice until we
    obtain the pension benefits that we earned after a lifetime of
    playing by the rules.
        We have collected hundreds of human impact testimonials,
    and a large sampling of these have been submitted for the
    hearing record. However, they tell the story of damage already
    done as a result of the loss of benefits earned over a lifetime
    by folks who simply played by the rules. However, they do not
    tell of the damage to come, in the next 10 to 30 years. They do
    not tell of victims who have not yet drowned, those who
    continue to slowly sink, like sinking in quicksand, due to
    negative cash-flows, which insidiously deplete their monitory
    reserves. Fortunately, my wife and I have not yet drowned. Not
    yet. But it is entirely possible that we could succumb, due to
    the huge pension losses imposed upon us in the years to come.
        Here is just one letter from an Ohio resident to share with
    you. He wrote this on November 3rd following a November 1st
    Detroit News article by David Shepardson, entitled ``Ratner
    Applauds Auto Bailout's Happy Ending.'' ``I am a Delphi
    salaried retiree. The Delphi's story may have been a happy
    ending for Mr. Ratner, who is all warm and fuzzy to the point
    of almost crying tears of joy, but for many of us, myself being
    one, we have been crying tears of pain and anguish over what
    Delphi did to us.'' The remainder of his letter, which is
    anguishing indeed and only an indication of hundreds more, is
    in the record. And he is sitting right here in the audience, by
    the way, Mr. David Kane.
        Since those first chaotic days of DSRA, we have come a long
    way with regard to our factual understanding of how we have
    become hapless victims of discriminatory actions of our Federal
    Government's executive branch. These actions have resulted in
    egregious harm to thousands while using taxpayer dollars. We
    have learned that the earned pension benefits of non-union
    Delphi retirees have been slashed by as much as 70 percent as a
    result of needless and inappropriate termination of our Delphi
    salaried pension funds by the Pension Benefits Guaranty Corp.
    We, of course, have learned that we were singled out as losers
    by the executive branch, while the earned pension benefits of
    our union counterparts were kept whole by a top ups.
        Let me be extremely clear, though. We do not for a moment
    begrudge the fact that our union counterparts have remained
    whole and they are receiving the pension benefits that they
    earned over decades. But we cannot abide by the loss of our
    earned pension benefits.
        In addition, our ordeal has caught the attention of a
    growing number of media sources that include Fox News, New York
    Times, Wall Street Journal, The Daily Caller, or the Detroit
    News? and many more. Also, our story has been reported in a
    recent 2011 book by David Freddoso of the Washington Examiner.
    Chapter 2 (Stop Us If You Can: Saving the UAW) is recommended
    reading for all.
        Finally, we have learned that our congressional requests
    for full disclosure have been consistently ignored and
    obstructed by the executive branch. And in closing, our
    situation is not complicated. Very simply, our major union
    counterparts receive taxpayer provided top ups to keep their
    earned pension benefits, whole. In contrast, our nonunion
    Delphi people did not receive equal treatment. This is wrong.
    This was needless. This is illegal. All that we require of our
    Federal Government is fair and equitable treatment. And we----
        Chairman Issa. Thank you. Your entire statement will be
    placed in the record.
        [The prepared statement of Mr. Black follows:]
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        Chairman Issa. Mr. Gump.

                        STATEMENT OF BRUCE GUMP

        Mr. Gump. Chairman Issa----
        Chairman Issa. By the way, only Senators get to filibuster.
    [Laughter.]
        Mr. Gump.
        Mr. Gump. Chairman Issa, Congressman Turner, and members of
    the committee, thank you for another opportunity to explain our
    issues and the effect the treatment that we have received at
    the hands of the Obama administration and the PBGC has had on
    our members and the Nation, and to request your help in
    resolving those issues.
        I am here to represent the more than 20,000 Delphi salaried
    retirees. Please understand that these salaried retirees worked
    as secretaries, technicians, and engineers, as well as
    supervisors and managers. We worked hard. We did what we were
    told. We did everything right, and we expected to be paid for
    our efforts, both with our wages and the deferred compensation,
    known as a modest pension. But when our government stepped in,
    they chose to protect but only their favorite groups and throw
    us out like yesterday's trash.
        The effects of this treatment have been devastating. My own
    story includes the fact that my wife and I have four children,
    all currently in college. Paying for health and life insurance,
    plus tuition, housing, and loans takes 90 percent of my monthly
    pension. Our other expenses, like utilities, mortgage, fuel,
    food, medicine, require us to spend my wife's small income,
    plus some of our savings each month. We calculate that so far
    over the last 30 months. We have spent more than $60,000 we had
    not planned to spend this early in my retirement.
        The future outlook is getting worse for us. Just because I
    was a salaried worker instead of a member of a group our
    government chose to protect. I warned our children that they
    must be prepared to prove their commercial necessity to our
    government, as in the end that is all that matters.
    Citizenship, contribution to society, planning or effort, do
    not matter at all. That is the lesson in all of this.
    Government, the PBGC, and industry are not to be trusted.
        The story of Mary Ann Hudzik is no better. She lost 40
    percent of her earned pension. That, along with a 500 percent
    increase in the cost of healthcare insurance for herself and
    her self-employed husband, has resulted in them having to spend
    down their savings much faster than planned. Her husband has a
    degenerative disease, and so cannot always work, but no work
    means no pay when one is self-employed. Mary Ann is a fighter,
    though, and as the chairman of the group that she works on, I
    will guess that she has spent more than 7,000 hour over the
    last 30 months working to have this situation corrected. Mary
    Ann could not be here today because she has depleted her own
    physical resources and has contracted mononucleosis. I
    guarantee you she will continue to fight, though.
        Jim Kane is here today. While working for Delphi in Mexico,
    he contracted a virus that destroyed the hearing in his right
    ear. Even though his superintendent told him to get whatever
    healthcare was needed, he ended up spending more than $12,000
    out of his own retirement savings to pay for it. When he was
    involuntarily terminated he had lost his life and health care
    insurance, and then the PBGC reduced his pension by 30 percent.
    He has since had a heart attack and has developed diabetes. His
    retirement savings are now gone. He could no longer provide for
    his wife or himself. Living on a reduced pension alone is
    extremely difficult and may not be possible over time. He says,
    ``I want what was promised, to survive with some dignity in my
    final years. I want justice.''
        That is what we all want, what was promised, to survive
    with dignity and justice.
        The stories you hear today are just examples, and just the
    beginning. They will get worse as time goes forward as the
    economy takes its toll, and savings are depleted. Many of our
    members have already had to declare personal bankruptcy, some
    seeing their homes foreclosed. We have had to endure additional
    health issues from the stress and conditions and because we
    cannot always afford to get preventative care. I know a co-
    worker who delayed going to the doctor while he worked at a
    part-time job to earn enough to cover the expense. He knew
    something did not feel right, and by the time he did see his
    doctor and was diagnosed, it was too late. He died in just a
    few weeks.
        On our larger scope, there are indications the effects on
    retirees are causing economic problems and our communities,
    too. In the area where I live in Northeast Ohio, a recent
    Brookings Institute study determined that Youngstown, OH has
    the highest concentration of poverty in the Nation. The poverty
    rate there got to be 49.7 percent. I saw an article in the
    local newspaper that 30 percent of the dwellings in Warren, OH,
    are unoccupied. There is a nine story bank building in good
    condition directly across the street from the courthouse was
    recently sold at auction for $75,000.
        A study by Youngstown State University requested by
    Congress, and Tim Ryan, predicted that the pension issue alone,
    the cost to local economy, $58 million per year, or $145
    million so far. When the cost of health care issues for all
    Delphi retirees is added, that that jumps to $400 million lost
    to the local economy so far. Adding in retirees from Dayton and
    Columbus and Sandusky, the losses in economic activity in Ohio
    are now over $1.2 billion. Nationally, it is about $4 billion,
    all because our government incorrectly chose to treat us as
    having no commercial necessity. The PBGC was willing to play
    along. These losses will continue to grow for decades if they
    are not corrected.
        The PBGC has chosen to defy the Federal court. They are
    denying us access to documents and people we have requested.
    And one must ask why, and the only answer I can think of is
    that they feel that the consequences of defying the Federal
    court are not as bad as complying with it.
        Here is one area where you can help. We need transparency
    on the actions of the PBGC and the administration regarding the
    treatment of the Delphi salaried retirees. I will summarize. We
    have lots of support, including the UAW, the Ohio AFL-CIO. The
    Senate in Ohio unanimously passed a resolution saying that all
    the retirees should be treated fairly. The State Democratic
    parties in both Ohio and Michigan, the Democratic Party, said
    that everybody should be treated fairly.
        We need your help, and we ask your help to end this
    nightmare and reverse the precedents set by this administration
    and the PBGC, so that we and those behind us will have to deal
    with the same horrible issues. Help us stop the slide down the
    financial cliff. Thank you very much.
        [The prepared statement of Mr. Gump follows:]
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        Chairman Issa. Thank you, Mr. Gump.
        Ms. Miller.

                        STATEMENT OF MARY MILLER

        Ms. Miller. Thank you, Congressman Issa, for inviting me to
    testify today. I am Mary Miller. It is an honor and privilege
    to be here. I am here to tell you how the GM bailout has
    shattered my plans for retirement, and to ask you to fix this
    shameful injustice.
        I worked for 22 years for General Motors and nine for
    Delphi. While I held many different positions over my 31 year
    career, one of the jobs I held for quite some time was to
    partner with an appointed hourly employee to manage the UAW and
    GM and Delphi training funds. I am still good friends with this
    coworker. While he continues to receive the full pension and
    health-care benefits he earned, I do not.
        How can it be legal for the government to pick winners and
    losers amongst its own citizens? Why did the administration
    deem my friend and his family as more valuable to America that
    my family and me?
        For me, and many of my fellow retirees, the burden of
    trying to figure out how to make ends meet gets heavier every
    day. Let me tell you a little more about me, what my plan was
    for retirement, and what will happen to my plan unless you can
    fix this disaster.
        I am a mother of four young adults ages 20 to 26. I am a
    home owner, a taxpayer, a person of deep faith, and a law
    abiding citizen. I am divorced. As a single mom, I have long
    been the main provider for my four children. Prior to losing my
    job at Delphi, I was a human resources manager. I am a
    professional certified Coach. I started my own business, MTM
    Transformation Coaching, after I lost my job at Delphi. Being
    only 57, I knew I needed to start a new career to earn
    additional income. Due to the recessionary economy, it has been
    very challenging to build my coaching practice.
        In 2009, Delphi stripped its retirees of all promised
    healthcare coverage. That means retirees under the age of 65
    have to purchase it. In my case, that means the cost for health
    care for my family has increased from $179 in 2008 to $787 a
    month now, even with HCTC benefits. This means I cannot afford
    to provide health care coverage for my three sons who are in
    college. I feel that I have failed my children when I cannot
    help to provide the basics while they are full-time students.
        And, sadly, that was just the beginning of the retirees'
    horror story. Just a few months later, the bottom fell out when
    the PBGC took over the Delphi pensions. The PBGC slashed my
    pension check by 30 percent. This is not a situation that can
    be remedied by just cutting out all discretionary spending. I
    am struggling to pay for the basics, to keep my 10-year-old car
    running, to pay my property taxes, and to make critical home
    repairs.
        Even though I have bought health insurance for myself, I
    was not able to afford a CAT scan my doctor ordered last June.
    When I learned my portion of the bill would be $278, I had to
    take cancel the test.
        I have been put in this crushing position because the
    government intentionally chose to treat me and all Delphi
    salaried retirees with absolute disdain and disregard. What
    does the future hold? Without your help to resolve this
    travesty, I will not be able to maintain my own home or pay for
    my own medical needs. How can it be that a person who put
    herself through graduate school, worked hard in two Fortune 500
    companies for over 31 years, earned a comfortable pension and
    health care benefits to have in retirement, will live her
    golden years in such poverty? How can it be legal for the
    government to pick winners and losers amongst its own citizens?
    I have learned that when you are in the right, you do not back
    down. We will never give up our fight to regain powerful
    pensions.
        Please take up our cause and help us to regain the full
    pensions we earned and so desperately need. Thank you.
        [The prepared statement of Ms. Miller follows:]
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        [GRAPHIC] [TIFF OMITTED] 73164.017

        Chairman Issa. Thank you.
        Mr. Rose.

                         STATEMENT OF TOM ROSE

        Mr. Rose. Thank you, and good morning. My name is Tom Rose.
    I am a salaried retiree from Delphi, having worked 30 years for
    General Motors, and another 9 years for Delphi. My entire
    career has been spent working at five of the former eight
    Delphi plants in Dayton.
        I grew up in Nashville, graduated from college, served our
    country in the military, including a year in Vietnam, met a
    wonderful girl in Dayton, married, three children, all of whom
    graduated from college and are themselves married, with two
    grandchildren.
        My working career began as a young engineer at the local GM
    plant on Wisconsin Boulevard, and included many different
    management jobs, including, plant manager at the Kettering
    Boulevard plant. I was fortunate to lead many talented salaried
    and union people as we delivered quality parts to our customers
    on time. Our plans and people contributed greatly to the local
    economy.
        I am now using retirement savings at a much faster rate
    than originally planned to compensate for my missing pension
    dollars. The careful financial plan for retirement, that my
    wife and I were taught to achieve was wiped out and became
    meaningless. My wife and I are paying three times more for our
    healthcare than with Delphi, even with HCTC, and we are paying
    for it with 40 percent fewer pension dollars. We use what
    little is left to help fund the DSRA lawsuit to correct what
    never should have happened in the first place.
        A successful retirement for my wife and I is now in
    jeopardy. Salaried and union employees worked for the same
    company, were in the identical situation, in many instances
    worked side by side, but were treated in distinctly different
    manners. The current administration created solutions in which
    our suspensions were sacrificed to help enable GM's emergence
    from a choreographed bankruptcy in a record 44 days.
        You have heard some of how my wife and I have been
    impacted. I would like to share input from other salaried
    retirees: Saginaw, Michigan--``My unemployment ran out, so I am
    really under water right now. I am using my savings account to
    pay my bills, but that is quickly dwindling, and I may have to
    sell my house by spring time and find a cheap place to live.''
    Dayton, OH--``This past year has been hard for me. I am making
    it through, but just by a thread. I had to borrow money from my
    family this month to make it to payday.'' Cicero, Indiana--``I
    have great difficulty providing even the basics for my family.
    I am appalled and enraged at the treatment I am receiving in
    retirement. As a result of this discrimination, my annual
    income is more than $6,500 below poverty level guidelines.''
    Boyne City, Michigan--``The 30 percent reduction in my pension
    has put my wife and me in a situation where in order to make
    ends meet, we have to live apart Monday through Friday, working
    in two separate towns. I have been blessed with a wonderful
    wife. We have been married for 35 years, and this is the first
    time in my career that we have been separated on a regular
    basis. It is very hard on both of us.'' Sandusky--``What makes
    what has been done to us so damndable is this. We are at an age
    and state of health where we cannot bounce back. There is too
    little time remaining and too little opportunity available. I
    do not want a hand out, but I do want a hand back of what was
    taken from me.''
        Earlier in my testimony, I mentioned we were forced into a
    legal effort to gain back that which we had earned and was
    denied us by the administration. In closing, please let me give
    you to brief examples of exceptional sacrifice and the tenacity
    of our membership. Bonita Springs, Florida--``I have been
    pretty well consumed with caring for my wife, who has had a
    recurrence of breast cancer this spring. I have just sent $40
    through PayPal, and next month I will send $35. Sorry I cannot
    do more, but we have some large medical bills this year.'' West
    Carrollton, OH--``In April, I took a part time job, along with
    my full time day job. I would get up at 5 AM and return home at
    11 p.m. I soon had to quit my part time job for concerns about
    my health and lack of rest. After 39\1/2\ years at GM/Delphi, I
    never imagined that I would be working two jobs to try and
    support my family. I am doubling what I would normally give to
    our cause. I hope someday that we will prevail. I feel that
    time is on the PBGC's side by dragging this out and not
    cooperating. This may someday deplete our funds in a way we
    cannot support our lawyers.''
        Members of the committee, these are real people, real
    lives, real impact. More than 20,000 current and future Delphi
    salaried retirees and our families are appealing to the
    oversight committee today to hold the administration
    responsible to correct this injustice. We are not asking for a
    handout or an entitlement, only the deferred compensation that
    was earned by us and taken away by the executive branch of our
    own government.
        Thank you for this opportunity.
        [The prepared statement of Mr. Rose follows:]
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        [GRAPHIC] [TIFF OMITTED] 73164.020

        Chairman Issa. Thank you, Mr. Rose.
        As I said to the earlier panel, I am going to ask each
    panel substantially the same question, and I know some of you
    may have slightly different takes on it. And I will preface it
    by saying, you know, when I worked for General Motors, I was a
    machinist, Aerospace Workers Union in Cleveland. Enjoyed the
    job, enjoyed the benefits, did not stay for a career. But I
    knew at that time I was represented by a powerful union that
    had a lot of clout. None of you were represented by a powerful
    union who had a lot of clout. What part do you believe not
    being represented by a union played in the decision to have
    people, like Mr. Black and all of you who had special skills--
    some might say harder to duplicate skills--than a line worker,
    in many cases, choose to have retirees of that category receive
    only what was in the bank, so to speak, versus union workers
    who were topped up?
        Anyone can answer. I want to make sure we go away with the
    record clear about why you might make a decision that one group
    was important versus another. Is there any reason you can find
    other than, in fact, the clout of the union and its influence
    on the administration?
        Mr. Gump. The reason is the involvement of the U.S.
    Government. The issue here is that the government stepped into
    this with our dollars, with our money, right, and allowed
    General Motors to make totally different decisions than they
    would have had that not happened. In the end, the Treasury knew
    that the folks represented by the unions tend to support them
    very strongly. And so, there is even some testimony that has
    already been offered in deposition that indicates that the
    political sensitivity of certain groups was a criteria that was
    considered during the bailout. So, we know that that was one of
    the things that was an issue.
        I do not believe that the UAW would have struck General
    Motors, which was already in bankruptcy and in danger of
    liquidation, because that would have ruined all of the jobs for
    all of their members at General Motors. They would have found
    some other way to have worked and tried to make their point
    with General Motors. I do not think there would have been a
    general strike.
        Chairman Issa. So, your belief is that it was more the
    political importance to the current administration rather than
    the likelihood of a strike leading to the crippling of the
    company.
        Mr. Black. Let me comment also and reiterate what was
    mentioned in the prior testimony, and that was immediately when
    the plan of reorganization for General Motors was announced, it
    immediately was said that our UAW counterparts would be topped
    up. But the other major unions were left out of that. Some
    weeks passed before it eventually came that the decision was
    changed to also top up our IUE counterparts and steelworkers,
    okay? That alone is indicative of why if they all had
    contractual agreements, why did it happen?
        And, of course, clearly why it happened, especially in this
    State of Ohio, which I am a Buckeye and started my job with IUE
    representation here, is that IUE is very, very, very powerful
    in Ohio. And the decision to change and include the IUE clearly
    had to do with political considerations, not contractual
    considerations.
        Chairman Issa. Mr. Rose.
        Mr. Rose. I concur. As you heard Mr. Gebbia's testimony,
    there was no financial justification given the, you know,
    actuarial funding level of the pension plan. So, what else
    happened? It is my personal belief that when the Federal
    Government interjected itself into the GM bankruptcy process,
    and you can only wonder why they did, but to me, clearly the
    Delphi pension plan was an obstacle to quickly getting GM out
    of bankruptcy. So, they dealt with it in a way that I believe
    favored the current administration politically.
        Chairman Issa. Well, I also serve on the Judiciary
    Committee, and I was there for bankruptcy reform. Mr. Jordan
    also serves on the committee. The amazing thing to me is that
    we in government do not need a Constitution for the powerful.
    We do not need laws for the powerful. We need the Constitution
    and laws for the weak. Ultimately the success of our democracy
    is about the minority having rights, not the majority. If you
    want to see the majority have rights, just go to any Third
    World country and see who is in charge. They do not need any
    more government than in fact a one party.
        So, I can only say to you and to all of the salaried
    employees that have suffered now and will continue to suffer
    until there is a resolution, that this committee will look into
    both the bankruptcy inequities and, in fact, the misconduct
    that we believe may in part have come out of Treasury and come
    out of the administration, to see if we cannot get a full
    disclosure and then rectification once that has seen the light
    of day.
        I know that is not enough while you are continuing to
    suffer, but it is what we will do, and this committee will
    additionally make public such documents as we can from our
    discovery. Now, that will not necessary be the documents you
    want, but it is our intention to be as transparent as we can
    be, and particularly when we get into the details of
    Treasury's, what they did, why they did it, and what they did
    not tell all of you.
        And with that, I would recognize former chairman of the
    committee, Mr. Burton?
        Mr. Burton. I think these stories that we have heard are
    heart rendering. It makes you kind of ashamed that our
    government even considers doing these sorts of things. We have
    another investigation going on right now with the National
    Labor Relations Board where they are trying to use political
    muscle to force unionism on a company down in South Carolina.
    It is a different issue, but, once again, you have the Federal
    Government, this administration, trying to control the people
    of this country instead of working for the people of this
    country. And I think it is very sad.
        I do not have any questions, Mr. Chairman.
        Chairman Issa. I thank the gentleman. Mr. Turner.
        Mr. Turner. Thank you for your compelling testimony, and
    also thank you for your diligence in working on this issue. I
    know in addition to sharing your personal stories that each of
    you have taken responsibility in working on behalf of
    yourselves and all the Delphi retirees on this issue.
        I want to commend you because one of the things that you
    have said that I think is very striking is the wide range of
    support that you have. The unions who have received their full
    pensions support that the outcome should have been you had
    received your full pensions. So, this is not an issue of
    division between you. It is winners and losers chosen by the
    government, not chosen by your fellow co-workers. And I think
    their solidarity with you is incredibly compelling.
        And I also note your statement that in Ohio your strong
    support that you have, and the State Senate had passed a
    resolution calling on full funding of the pensions. I know
    Secretary Peggy Laner was here earlier, and she was one of the
    champions that you have worked with on this issue.
        Over the last several years that I had the opportunity to
    work with you on this, and we have tried to advance this in a
    number of areas, one asking for GAO studies of the GAO today.
    Another study is ongoing. And working with the chairman,
    Chairman Jordan, on trying on the congressional side to get
    documents produced, to get people to answer appropriate
    questions, working also in putting additional pressure on the
    administration and then looking to, as your litigation
    proceeds, ways in which we might be able to assist in making
    certain that the story that you do not know yet, how did this
    happen, gets told.
        So, I want to tell you that, I think you have heard from
    the chairman, and I know that you know from the things that are
    in front of us that we are not going to stop on this. You are
    not going to stop, and we are not going to stop. The
    administration is not going to be able to say, I am not going
    to tell the Federal courts, I am not going to tell Congress how
    or why I did this. The administration is going to have to 'fess
    up that there were decisions that they made. We want to know
    why and the basis of the decisions.
        We know the outcome. The outcome is discriminatory. We need
    to determine and learn the manner in which this was done so
    that we can correct it. So, thank you for your diligence. Thank
    you for being here, and also thank you for the fact that you
    have continued to reach out so that this is not just an issue
    of you standing here alone. It is an issue of you also working
    with the other Delphi retirees in unison. So, thank you again.
        Chairman Issa. Thank the gentleman. Mr. Jordan.
        Mr. Jordan. If I could just real quickly, Mr. Black, come
    back to something you had just said. GM initially only wanted
    to top up the UAW plan. And yet, to your understanding,
    Treasury forced them to also add in the IUE and the UAW.
        Mr. Black. Yeah. For about 40 days in continuing
    discussions by the IUE and the steelworkers, a miraculous thing
    happened, and it was decided that we will also top them up.
        Mr. Jordan. Yes. Mr. Chairman, I would just point out that
    this pattern, you remember in prior hearings we have had, the
    overall restructuring plan that GM first submitted to the auto
    task force was turned down, was rejected. And, you know, this
    idea that GM would make the decisions and not people in
    Treasury, not the auto task, not the government I think is just
    absolutely not true. Because the initial restructuring plan was
    turned down, the subsequent restructuring plan was accepted
    where facilities were closed, dealerships were closed, etc.
        So, again, this I think points to a pattern where political
    influence was, in fact, at play. And I yield back.
        Chairman Issa. Go ahead.
        Mr. Gump. I am sorry. You asked at the last hearing to get
    a copy of the first restructuring plan.
        Mr. Jordan. We are looking over it now.
        Mr. Gump. You got it?
        Mr. Jordan. Yes.
        Chairman Issa. Yes. In consultation with the chairman, our
    anticipation is we would post an appropriately and limited
    redacted portion of that as soon as it has been reviewed by
    counsel. As you know, our committee has a unilateral right to
    determine what we will or will not release. We try to be
    considerate, but certainly this is something that has a huge
    public interest.
        Mr. Austria.
        Mr. Austria. Thank you, Mr. Chairman. Let me, first of all,
    take a moment to thank all of you for being here today. I think
    it is important that you share the stories that you have with
    this committee so we understand the direct impact it is having
    on you all and other families, which is very important. I know
    the last few years have been extremely difficult for you and
    your families, but we appreciate your determination to ensure
    that every Delphi retiree receives a fair pension.
        And what I would like to ask you is about, and you have
    touched on this, is the reduced pensions. I know, Ms. Miller,
    you mentioned that your pension has been reduced another 30
    percent. Mr. Gump, I think you talked about somebody who had a
    49 percent loss.
        And, as you know, the Federal law limits the maximum
    benefit a person can receive through the PBGC under a partially
    funded pension plan. The limit is based on the year the plan
    was terminated or went bankrupt and does not include an
    adjustment for inflation. As a result, not only have Delphi
    salaried employees had pensions cut, as I mentioned earlier,
    and you have mentioned also, as much as 70 percent with our
    discussions, Mr. Rose, last week, but each year, and this is
    the point I am trying to make, each year your pension has less
    and less purchasing power.
        Can you describe for the committee how this has impacted
    your lives. And also, Mr. Black, you talked about the future, I
    mean, in planning for the future when you have less and less
    purchasing power.
        Mr. Rose. Yeah, inevitably, of course, now there are signs
    that even with inflation and everything it might be picking up
    steam, especially if you are trying to buy gasoline or food, so
    indeed. You know, those who have not suffered complete economic
    wreckage yet will most certainly suffer it in the next decade
    or two should they be unfortunate enough to live that long.
    [Laughter.]
        Mr. Austria. That is the bottom line.
        Mr. Gump. I would like to point out, you talked about the
    49.7 percent. That is actually the levels of concentrated
    poverty in Youngstown, OH is what I was trying to make. That
    same study, by the way, pointed up that for every million
    dollars lost, about 30 people downstream of us will also lose
    their jobs. So, you go do the math, at $161 million in the
    Mahoney Valley alone up in Northeast Ohio, that is nearly 5,000
    people that were still waitresses, and service workers, and
    electricians, and plumbers that might do work. They lose their
    jobs, too, because we are not out participating in the economy
    any more, all right? That is the effect that commercial
    necessity, if you will, of including us. But the government
    chose to not do that because it was not just commercial
    necessity; it was also political necessity, all right? We are
    absolutely convinced of.
        Mr. Austria. One follow-up real quick, Mr. Chairman, if I
    can in the short time allotted. Today, I think all four of you
    expressed your frustration with government, and the numerous
    hardships that have been put on you as a result of what has
    happened. And I know many of the retirees feel betrayed by the
    government because the administration's quest to quickly
    resolve the Delphi bankruptcy without adequate consideration
    for the effects on retirees.
        And I know this panel, and I know this committee, and many
    of my colleagues have worked very hard to help your cause
    through the hearings and requesting this information from the
    administration. But I also know there have been obstacles and
    roadblocks have been put forward with government, and also
    Members of Congress. I know we want to continue to work hard. I
    have co-sponsored bills. There have been letters that we have
    sent that we have taken the lead on, and working coordinating
    with you. But what are some of those roadblocks that you have
    been faced with in trying to work with government and trying to
    work with Congress in particular?
        Mr. Gump. I think, first of all, the reluctance of both the
    Treasury and the PBGC to allow any transparency. They
    essentially tell us that we should be glad to be able to get
    anything at all, while our next door neighbors are out buying
    boats and taking vacations because they were members of the
    union. I think that is probably the most difficult.
        There are some obvious political issues, one party versus
    another. Those kinds of issues have played a role.
        What we found was that if we do get an opportunity to speak
    to the right people and explain the realities of the decisions
    that they are making, they tend to carve out niches in their
    ideologies to try to work against that. I would point out that
    we do have support on both sides of the aisle, very strong
    support. In fact, two of our very best supporters up to now
    have been Senator Brown and Congressman Ryan, both Democrats.
    That is not to leave out, you know, your committee and others
    on that side of the aisle.
        The point I am trying to make is that this really is not an
    issue of one party versus another. The parties themselves have
    spoken and said this was wrong. This is an issue of right and
    wrong, and that is why they are protecting it. That is why they
    do not want to let anything out. They know they did wrong. They
    do not want to admit it. They do not want to allow anything
    out. So, they are going to go to the mat and prevent anybody
    from learning what happened. That is where we need your help.
        Mr. Rose. So, in a nutshell, of course, the roadblock has
    been the utter unwillingness to have transparency, utter
    unwillingness. And even Federal judges are slapped upside the
    head when they say you are going to be transparent. That is the
    problem.
        Mr. Austria. Thank you.
        Chairman Issa. We are going to have a very limited second
    round. What I would add for all of you, I think you have done a
    good job of explaining for the record that this is not about
    bringing down the successes of a union or several unions
    looking out for the benefit of the people they represent. They
    did their job. We expect they would. And union members come in
    all party persuasions, from the far left to the far right. So,
    hopefully you are helping us make that record, additionally
    making the record that this is not a partisan issue of
    Republicans versus Democrats. You have support on both sides of
    the aisle in the House and the Senate. And, last, that in fact
    we cannot make you whole by taking away anything from the men
    and women who are receiving a greater benefit. To make you
    whole, we have to use other means available, either with
    Congress or with the Benefit Corp.
        With that, I would recognize Mr. Burton for a second round
    of questions?
        Mr. Burton. Yes, real quickly, one of the things that Mr.
    Bloom, who lied to our committee and then said he could not
    remember once he was caught, staff just reminded me, he was the
    senior advisor to the President of the steelworkers union
    before he got his present position. So, when you think that
    there was not politics involved, it is clear as the day is long
    that it was definitely involved.
        I just had one question I wanted to ask, Mr. Chairman, and
    that is, do you have any idea how much it has cost in legal
    fees, the people who are involved in this lawsuit?
        Mr. Rose. Yeah. We are over several million dollars so far,
    and we got plenty more if we need it.
        Mr. Gump. I would like to make the point, if I may, Mr.
    Burton, that the attorneys have worked very strongly and
    carefully with us on that. And our members send in $10, $20,
    $30 a month, $50 a month to support that, and every bill has
    been paid, and we are ahead. We are in this. We are going to
    finish this, and our attorneys are, too.
        Mr. Burton. Well, I appreciate your dedication. But it is
    unfortunate that the people who are suffering have to pony up
    the money for legal fees as well when their opponent, the
    Federal Government, has unlimited resources.
        Chairman Issa. I thank all of you for your testimony. Mr.
    Rose, you included a number of references to other letters that
    you had received. As I said in the beginning of the hearing, we
    will leave the record open for five additional days. That would
    include any and all letters or information from your various
    members that you want to make sure were added to make the
    record complete.
        And with that, as we take a brief recess to set up the next
    panel, I want to ask the audience to be just as kind and
    considerate to people who were obligated to come here to tell
    what is to a great extent the other side of the story. They are
    career professionals. Their job is not to make political
    decisions, and they are here at our request to explain what
    they can and to take candid questions. So, I want you to be
    just as genteel and kind as you have been to the first two
    panels. [Laughter.]
        With that, we will take a short recess.
        [Recess.]
        Chairman Issa. Thank you. This hearing will come back to
    order. I am going to place in the record by unanimous consent
    the additional statements of Senator Sherrod Brown and
    Congressman Tim Ryan. They were unable to be here today, but
    wanted to make sure their thoughts were known on this hearing.
        [The information referred to follows:]
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        Chairman Issa. With that, we now recognize our third panel,
    as I said, career professionals. Ms. Barbara Bovbjerg is
    director for education, work force, and income security issues
    at the U.S. Government Accountability Office, which is a branch
    of Congress. Mr. Vincent Snowbarger is the deputy director for
    operations at the Pension Benefit Guaranty Corp., again, a
    career professional.
        Pursuant to the committee rules, I would ask you to rise
    and take the oath.
        [Witnesses sworn.]
        Chairman Issa. Let the record indicate that both witnesses
    answered in the affirmative. And you have sat patiently through
    two previous panels, so you know it better than I can describe
    how this is going to work.
        And, Ms. Bovbjerg, you first?

     STATEMENTS OF BARBARA BOVBJERG, MANAGING DIRECTOR, EDUCATION,
           WORKFORCE, AND INCOME SECURITY ISSUES, GOVERNMENT
       ACCOUNTABILITY OFFICE; AND VINCENT K. SNOWBARGER, DEPUTY
        DIRECTOR FOR OPERATIONS, PENSION BENEFIT GUARANTY CORP.

                     STATEMENT OF BARBARA BOVBJERG

        Ms. Bovbjerg. Thank YOU, Mr. Chairman, members of the
    committee. I appreciate your inviting me here today to speak
    about events leading to termination of the Delphi pension
    plans, and the differential benefit payments that resulted. My
    beat at GAO includes income security issues, and we have heard
    truly heart wrenching stories this morning.
        My testimony today presents a timeline of key events
    leading to the plan's termination, focusing in particular on
    decisions allowing General Motors to provide retirement benefit
    supplements to some Delphi employees, but not to others. This
    information is drawn from our March 2011 report prepared for
    Mr. Turner and others, and relies on publicly available
    documents.
        The story begins in 1999 when the Delphi Corp., once part
    of GM was spun off as an independent company. As part of that
    arrangement, GM was required to bargain with the unions
    affected by the spin off. In those negotiations, GM agreed to
    provide top ups to collectively bargained employees, meaning
    that if something went wrong with the pension plans for these
    employees under Delphi, GM would make good on their promised
    benefits.
        At the time of these agreements, Delphi's hourly plan was
    not fully funded, meaning that absent a top up agreement, some
    benefits could have been at risk. In contract at that time, the
    Delphi salaried employees' plan was fully funded.
        So, fast forward to October 2005 when Delphi filed for
    bankruptcy. The pension plans were under funded, and Delphi was
    not planning to make contributions to these plans during the
    bankruptcy process; hence, prospects for the plans and a
    prospect for participants' future benefits got substantially
    worse.
        Two years later in 2007, Delphi was still in bankruptcy. In
    its initial reorganization plan, Delphi proposed to emerge from
    bankruptcy with its pension plans intact, which could have
    removed the need for top up agreements, but this proposal fell
    through. Shortly thereafter in 2008, GM agreed to take
    responsibility for about $3.4 billion of net liabilities in
    Delphi's hourly plan in two phases. Phase one took place in
    September 2008 when GM assumed about $2 billion in plan
    liabilities. Economic conditions deteriorated throughout the
    auto industry in fall 2008, as we all know. GM's losses led the
    company to seek assistance from the Federal Government.
        By April 2009, the Department of the Treasury was working
    with GM to develop a restructuring plan, and by June, GM, too,
    had filed for bankruptcy.
        In May 2009, Treasury believed that the hourly plan would
    be assumed by GM, at least for the UAW workers. However, phase
    two of the Delphi/GM transfer agreement required Delphi to pay
    GM about $2 billion, and because Delphi, in its bankrupt state,
    could not make such a payment, the phase two transfer never
    took place. Meanwhile, GM and Treasury both understood that the
    salary plan would be terminated.
        In June 2009, as part of an arrangement for GM to emerge
    from bankruptcy, GM and the UAW agreed to modify wages,
    benefits, and work rules to be more cost competitive, and
    agreed that new GM would assume all employment-related
    obligations and liabilities for their hourly benefit plan. This
    agreement did not include other unions or salaried employees.
        Meanwhile, Delphi and PBGC began the process of what we
    call a distress termination of Delphi pension plans. PBGC
    estimated that Delphi plans were $7 billion under funded, with
    PBGC expected to bear $6 billion of that shortfall, and Delphi
    plan participants the remaining $1 billion through the
    application of benefit limitations as required by law.
        After objections from the other unions and the salaried
    employees, objections that threatened to thwart Delphi's and
    GM's future viability, GM entered into a settlement agreement
    that, among other things, resulted in top up payments to the
    unionized workers of the main unions. No such agreement
    pertained to salaried workers, and this is where the situation
    lies today.
        GAO will be reporting more substantively to Mr. Turner and
    other requestors on these issues next month, and in that work,
    we will be talking about what precipitated plan termination,
    what actions were taken to preserve assets for PBGC in the
    plans, why some employees were topped up and others not, and
    what was communicated to employees about the termination, and
    we expect that in mid-December. And, unfortunately, I will not
    be able to talk about that work in progress today.
        Thank you, Mr. Chairman. That completed my statement.
        [The prepared statement of Ms. Bovbjerg follows:]
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        Chairman Issa. Thank you.
        Mr. Snowbarger.

                    STATEMENT OF VINCENT SNOWBARGER

        Mr. Snowbarger. Good morning, Chairman Issa, and other
    members of the committee. I am Vince Snowbarger, deputy
    director of operations at the Pension Benefit Guaranty Corp.,
    and I also ought to mention at the times relevant to our
    proceedings here, I was the acting director of PBGC.
        I will testify today about the termination of the pension
    plans of Delphi Corp., the Nation's largest producer of auto
    parts, and specifically about PBGC's role.
        As you know, in July 2009, PBGC stepped in to protect the
    pension of Delphi's 70,000 workers and retirees. PBGC will
    cover about $6 billion of the plan's shortfall, but there is
    also a shortfall of $1.2 billion in benefits that are not
    guaranteed by the insurance program.
        Delphi, which was originally an in house parts manufacturer
    for GM, was spun off as an independent company in 1999. At that
    time, GM transferred assets and liabilities from the salaried
    and hourly pension plans to the newly established Delphi
    salaried and hourly defined benefit pension plans. GM
    negotiated with certain unions to provide benefit guarantees if
    the hourly plan terminated or was frozen at a later date.
    Delphi began suffering significant losses in January 2001, and
    the funding of pension plans deteriorated.
        On October 8, 2005, Delphi entered chapter 11 bankruptcy,
    and ultimately liquidated in 2009. The old Delphi ceased to
    exist. The new Delphi, as United Kingdom Co. purchased most of
    the old Delphi's assets, including its name.
        After Delphi entered into bankruptcy protection in October
    2005, PBGC worked intensely with Delphi, GM, and other
    stakeholders to keep the pension plans ongoing. As mentioned
    earlier, during the bankruptcy Delphi consistently told PBGC
    and its employees that it intended to reorganize with the
    pension plans intact. However, Delphi failed to make required
    minimum funding contributions to the plans, and as a result
    liens were triggered on behalf of the plans against the assets
    of Delphi's non-bankruptcy foreign subsidiaries.
        Beginning in March 2006, PBGC perfected those liens as the
    law provided so that the plans had a secured interest against
    the foreign Delphi entities. In September 2007, Delphi filed a
    reorganization plan with the Delphi bankruptcy court, and as a
    part of that reorganization, GM and Delphi entered into a
    settlement agreement to transfer part of Delphi's hourly plan
    to GM's hourly plan. Delphi was to continue to sponsor all of
    its other plans, including the salaried plan.
        That fell through in April 2008, but in the latter half of
    2008, as Ms. Bovbjerg has mentioned, Delphi still anticipated
    reorganization through bankruptcy, maintain its salaried plans
    and merge the hourly plan with the GM hourly plan. And they
    indeed transferred part of the hourly plan to GM for
    compensation.
        Unfortunately, Delphi experienced severely declining
    revenues in the fall of 2008 and the spring of 2009 as GM and
    other manufacturers sharply reduced production. When Delphi's
    financing agreement with its debtor in possession [DIP],
    lenders was scheduled to expire on April 24, 2009, Delphi was
    faced with the prospects of imminent liquidation.
        On April 21, 2009, I signed a notice of determination
    seeking to terminate the six Delphi salaried and hourly pension
    plans to avoid losses to participants in the insurance fund, if
    the DIP lenders were to foreclose on their collateral. PBGC
    agreed with the Delphi DIP lenders to postpone the effective
    date of the termination decision to allow the parties to
    negotiate a resolution of Delphi's bankruptcy. However, in July
    2009 as Delphi was being liquidated, the DIP lenders initiated
    foreclosure, leaving PBGC with no choice but to step in and
    take over Delphi's underfunded pension plans.
        I want to emphasize that PBGC treated the salaried plan no
    differently than the hourly plan. The only difference in
    treatment of the participants resulted from decisions made by
    GM. PBGC's involvement in the Delphi and GM bankruptcies was
    limited to the disposition of the pension plans. PBGC did not
    have any influence in GM's restructuring decisions, including
    the decision to assume the collectively bargained top up
    agreements entered into by the old GM in 1999.
        In conclusion, Mr. Chairman, companies that sponsor pension
    plans have the responsibility to live up to the promises they
    made to their workers and retirees. Plans come to PBGC because
    their sponsors have failed to properly fund them. In
    unfortunate cases like Delphi where sponsors fail and
    liquidate, PBGC is forced to, and will, step in to protect
    workers and retirees.
        I would be happy to answer questions.
        [The prepared statement of Mr. Snowbarger follows:]
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        Chairman Issa. Thank you.
        I recognize myself for a round of questioning.
        In June 2009, General Motors, as you know, received $50
    billion in taxpayer money, and it used $2.5 billion of that $50
    billion to buy a stake in Delphi, essentially an indirect
    bailout. In early 2011, Delphi bought back its assets from
    General Motors. However, GM still owes about $26 billion to the
    taxpayers, and unless the stock more than doubles, the
    taxpayers will not be made whole at General Motors.
        So, ultimately that $2.5 billion was, in fact, simply a
    pass through of taxpayers' dollars. It was not within General
    Motors' means or anticipated means in the foreseeable time.
    Literally, they need 10 years' worth of profits they have never
    had in modern times in order to come close to paying back the
    government.
        So, in that scenario, the question I would ask you, first
    of all, is, at the time the PBGC terminated Delphi's pension,
    did you know General Motors was going to own a large stake in
    Delphi? Did you know about the purchase?
        Mr. Snowbarger. Obviously we knew about the interconnection
    between GM and Delphi, but at the time we made the decision in
    April 2009 that the plans were going to need to be terminated,
    I do not think any decision had been made at that point. Well,
    I guess there had been a couple of----
        Chairman Issa. April to June was pretty close. That is why
    I asked.
        Mr. Snowbarger. No, I understand that. But I think it is a
    significant difference in timing. Again, our decision was based
    on factors that were beyond what was happening with GM. We were
    looking solely at----
        Chairman Issa. Sure, and I am not questioning your
    termination. It is simply, at that time--I mean, April to June
    was very, very close. At the time of the termination, were you
    aware of obviously the top ups and this investment that was
    literally a conduit of taxpayer money?
        Mr. Snowbarger. My understanding is those decisions had not
    been made by GM at that point in time.
        Chairman Issa. Did you know----
        Mr. Snowbarger. To my knowledge.
        Chairman Issa. Did you have any knowledge that it might
    happen?
        Mr. Snowbarger. We understood that that agreement was in
    place in 1999, yes.
        Chairman Issa. Well, that agreement expired with the
    bankruptcy, did it not?
        Mr. Snowbarger. I do not think it automatically expires. I
    think they have to reject the agreement. I am not a bankruptcy
    lawyer, but I believe GM would have had to reject those parts
    of the agreement.
        Chairman Issa. But GM had the power to reject all
    agreements, void all leases, all purchase agreements. That is a
    standard part of bankruptcy is you can literally pick and
    choose what you want to get rid, and all you have to show is a
    business reason to do it.
        Mr. Snowbarger. Again, PBGC was not a part of that
    decision, but I do not disagree with the chairman.
        Chairman Issa. Okay. Well, but it is safe to say that GM's
    purchase of Delphi is the equivalent of an indirect bailout
    from the Treasury to Delphi. You would agree with that, that
    that $2.5 billion of the $50 billion is essentially a conduit
    of a loan to GM that passed through to Delphi. And you knew
    that that was anticipated.
        Mr. Snowbarger. I do not know that we did anticipate that
    in terms of our decision about terminating the plans, no.
        Mr. Burton. What was the timeframe?
        Chairman Issa. The timeframe was April to June. But am I
    right to assume that terminating these pension plans made
    Delphi a more viable company? That these were somewhat anchors
    to them, the fact that they were, at that point, underfunded.
    And unless the market rose, would remain underfunded, and would
    cause dollars to have to be put into them?
        Mr. Snowbarger. PBGC made its decision to terminate the
    Delphi pension plans because Delphi was going away. It would no
    longer exist.
        Chairman Issa. But if General Motors getting $50 billion
    had given $10 billion to Delphi instead of $2.5, would there
    not have been enough money to view it differently?
        Mr. Snowbarger. I suppose. I do not have any basis on which
    to make a decision like that.
        Chairman Issa. So, if the administration had handed $10
    billion in TARP money to Delphi, and I use this point because,
    remember, with Chrysler, we sold Chrysler to Fiat, but we also
    put the money in out of TARP never to get it back. Is that
    correct, to your understanding?
        Mr. Snowbarger. That is my understanding. And, again,
    whether $10 billion was the right number or something more than
    that, sure, TARP funds could have been used for a different
    purpose.
        Chairman Issa. Do you have any knowledge as of today if you
    had not terminated the fund as the earlier panel said, would
    that amount of funds be still able to pay out substantially
    more than you are currently paying out? That is their
    allegation is that the funds were there. They were at a low
    point. The funds were essentially transferred to you as part of
    the termination. If those funds were put back into ordinary
    investments today, would they yield as much as the recipients
    are getting today, or would it be likely more?
        Mr. Snowbarger. The problem, Mr. Chairman, is that there is
    no sponsor to turn this plan back over to. Delphi no longer
    exists.
        Chairman Issa. And retirees are no longer working.
        Mr. Snowbarger. I understand.
        Chairman Issa. Okay. I just want to understand that General
    Motors, for example, and I said earlier would have, could have,
    and should have. General Motors could have taken back the
    retirees at least and said, you retirees, we are going to fold
    you back into our plan, and then you would not have terminated
    had they agreed to be the sponsor.
        Mr. Snowbarger. If there had been another sponsor willing
    to take over the plan, that is correct.
        Chairman Issa. So, it was General Motor's decision to cut
    and run from its former employees, longstanding former
    employees, that in no small part played a part in this. They
    could have made that decision. They considered that decision.
    It was even in earlier proposals. And they chose not to.
        Mr. Snowbarger. I am not aware that it was in earlier
    proposals to take over the salaried plan. My understanding was
    they had a number of times talked with Delphi about taking over
    the hourly pension plans, but I do not believe the salaried
    plans were ever treated that way, or considered that way.
        So, the more powerful of the group was considered, and
    ultimately taken care of, while the less powerful, less
    represented group, in your opinion, was always going to get
    screwed.
        Mr. Snowbarger. Well, again, I think--[laughter.]
        Chairman Issa. It is a technical term. You remember we use
    that in Washington. [Laughter.]
        Mr. Snowbarger. I have heard the term before, yes. And,
    again, I do not think it is my position to respond to that
    because we were not a part of those decisions by them or
    Treasury.
        Chairman Issa. But you know there could have been a better
    outcome than there was by several means that you have described
    here today.
        Mr. Snowbarger. Well, obviously the people that lost an
    awful lot of those salaries--excuse me, those pensions that
    were not topped up obviously could have been treated better.
        Chairman Issa. Thank you.
        Mr. Burton.
        Mr. Burton. This is a little confusing to me. Did the
    administration have any hand in any of the decisions that were
    made?
        Mr. Snowbarger. I want to try to understand the definition
    here of the word ``administration.''
        Mr. Burton. The President, the people that work in his
    administration.
        Mr. Snowbarger. If you are talking the task force or the
    political side of the administration, the answer is no, not in
    terms of our decision to terminate the pension plans.
        Mr. Burton. I am trying to figure out how the topping up
    decision was made. The Federal Government, the taxpayer, put
    all that money into it. General Motors gets the money, and then
    they decide that the unions are going to be made whole or
    almost completely whole, but the salaried employees, the hourly
    employees, are not. And I am just wondering how that decision
    was made.
        Mr. Snowbarger. We were not a part of that decision. And
    that was not a part of our decision to terminate.
        Mr. Burton. So, it was left up to General Motors.
        Mr. Snowbarger. Again, we were not a part of that process,
    part of the auto task force's decisions.
        Mr. Burton. Do you know anything about the auto task
    force's decisionmaking process?
        Mr. Snowbarger. What I read in the papers, you know, and we
    had some conversations about both GM's plans and Chrysler's
    plans early that spring.
        Mr. Burton. But you did not have anything to do with any of
    that.
        Mr. Snowbarger. No, we had no part in the decision about
    how they were spending their funds.
        Mr. Burton. You just turned it over to GM and that was it.
        Mr. Snowbarger. We did not turn anything over to GM, I am
    sorry.
        Mr. Burton. Explain to me real quickly the process that you
    went through, because I am not sure I got it right.
        Mr. Snowbarger. Sure. Our focus in this particular case was
    solely on the pension plans sponsored by Delphi. Let us say old
    Delphi is what came out. In looking at those plans, we were
    looking at are they funded? The answer was no. For all the
    hourly plans and for the salaried plans, none of them were
    funded as well as they should have been funded, as well as they
    needed to be funded. The second thing we looked at is there----
        Mr. Burton. When you were asking the question, you said
    between April and June they got another $2.5 billion?
        Chairman Issa. Terminated in April. The money came in from
    GM in June. Obviously it was anticipated at that point.
        Mr. Burton. Did you know that that money was--you did not
    know that that money was coming?
        Mr. Snowbarger. Well, let me----
        Mr. Burton. When you made the decision to terminate these
    plans.
        Mr. Snowbarger. When I made the decision to terminate, when
    I signed off on the notice of determination in April, no. It
    was not a part of our consideration.
        Mr. Burton. And had you known, would that have changed your
    decision?
        Mr. Snowbarger. Well, again, it depends on whether--the
    third factor that we look at is, is there going to be an
    ongoing sponsor. If, as the chairman posited, Delphi somehow is
    going to continue and come out bankruptcy because they were
    able to get lending from other source, that would be one
    scenario. That was not a scenario that existed as of April
    21st. The fact of the matter was, as of April 21st, the lenders
    in the Delphi bankruptcy were ready to foreclose on their
    liens.
        Now, they agreed to postpone that a little while longer,
    and we agreed to postpone taking action on our decision until--
    --
        Mr. Burton. And 2 months later, $2.5 billion came in.
        Mr. Snowbarger. Yes. And it did not go----
        Mr. Burton. But that would not have changed your decision
    at all.
        Mr. Snowbarger. If it would have made Delphi a viable
    ongoing sponsor for the pension plan, yes, it would. But it did
    not.
        Mr. Burton. Ms. Bovbjerg, you said that Mr. Turner asked
    for information from you, and you said that you could not talk
    about it today, but that you would get it to him in December.
    Can you tell me why you cannot talk about it today?
        Ms. Bovbjerg. Because it is ongoing work.
        Mr. Burton. But what do you mean ongoing work? Do you have
    any kind of answers at all today?
        Ms. Bovbjerg. We have answers, but they could be wrong
    since it is ongoing work. We want to make sure that we are
    right when we are reporting to the Congress. We did this
    interim report in March that was really just a sort of a
    sequence of events, a timeline, not particularly analytic, from
    publicly available documents. And you will note in here that--
    --
        Mr. Burton. How long have you been working on this? I am
    just curious.
        Ms. Bovbjerg. I want to say about a year. About a year.
        Mr. Burton. About a year, and you could not have the
    information for us today. It has to be after the hearing in
    December.
        Ms. Bovbjerg. Well, that was the schedule. I was notified
    of the hearing last week.
        Chairman Issa. I would ask unanimous consent that the
    gentleman have an additional minute.
        Mr. Burton. Sure. I yield back, Mr. Chairman.
        Chairman Issa. And I would ask you to yield.
        I might note for the record that GAO is very conscious that
    in the for-profit education preliminary report that was issued
    that was essentially reversed in the final report, the early
    report, we have chastised GAO for issuing anything that they
    could not stand behind 100 percent. So, although it is the
    original schedule and we would love to have it faster, I think
    on behalf of the former chairman and myself, we do want you to
    get it absolutely right the first time when it comes out.
        Ms. Bovbjerg. Thank you, Mr. Chairman. I wonder if I might
    make----
        Chairman Issa. Of course.
        Ms. Bovbjerg [continuing]. A remark about the question of
    who did what, and where the money went. We have done a fair
    amount of work in another part of GAO on the auto task force
    and the auto bailout, and we have done some work jointly on GM
    and Chrysler and how that all worked, and how it worked with
    pensions particularly. We did that about a year and a half ago.
    And we have made recommendations in that report and prior to
    Treasury that they really need to be more transparent about how
    they do this business, that the auto task force and with
    Treasury as a whole.
        The Secretary of Treasury is not only over the auto task
    force and everything else in Treasury, he also sits on a three-
    person PBGC board of directors. It is critically important,
    even if there is indeed this steel curtain that we have heard a
    lot about, and everyone is doing everything completely without
    conflict. It is very important that the appearance of conflict
    not exist as well. And we felt that if they had been more
    transparent about how all these things were working and when,
    that would have been very helpful, and it would help you all in
    this hearing today.
        Chairman Issa. Thank you.
        Mr. Turner.
        Mr. Turner. Thank you. And I also want to note for the
    record that there is a GAO response of November 14th that is in
    our materials that includes an overview of some of the things
    that you have looked at. So, we do have that information from
    you.
        Mr. Snowbarger, I want to thank you for the responses that
    I just received November 9th to the questions that I had given
    you at our hearing of June 22nd. I want to ask you, are you
    familiar with these----
        Mr. Snowbarger. Yes.
        Mr. Turner [continuing]. With these answers----
        Mr. Snowbarger [continuing]. Yes.
        Mr. Turner [continuing]. And these questions. You are under
    oath. I would like you to affirm the content of these as being
    truthful and correct.
        Mr. Snowbarger. They were true when I signed it. They are
    true now.
        Mr. Turner. Excellent. Thank you.
        There is a lot of talk about the issue of the termination.
    I want to get to the issue of the settlement. The PBGC approved
    the settlement. They were a party to the settlement. We have
    heard today about these Delphi retirees, and really the
    perception that we all have is that this was wrong, that the
    pension plans were dealt with differently, that some were
    topped up and some were not. Does this happen a lot with the
    PBGC, or is this unusual that pension plans would come out of a
    bankruptcy, a legal proceeding that you are a part of, that
    there would be a settlement that results in just one group that
    had a pension from the company versus others, being so
    significantly impacted and others being made whole. Is that
    unusual?
        Mr. Snowbarger. I am not aware of any other situation where
    there was an agreement like this between a former plan sponsor
    and a union that carried through. I do believe we have had
    situations where you have multiple plans sponsored by a
    company, and some of the plans are terminated and others remain
    ongoing.
        Mr. Turner. I have three topics I want to deal with, ask
    you about. And one is the issue of conflicts, and another is
    asset and liens, and the other is openness and transparency.
    And I appreciate that the statement on the issue of the
    conflict. I am going to walk you through that a little bit,
    because in the question that I have to you, part of what you
    gave me on September 9th, I asked, please describe the actual
    conflicts and potential conflicts between the Secretary's
    duties as a PBGC board member and the Treasury Department's
    duties as the majority owner of the new GM. And you wrote, we
    are not aware of any conflict. And I think our GAO
    representative gave us a great outline of those conflicts.
        In your testimony, you say, ``I want to emphasize that PBGC
    treated the salaried plan no differently from the hourly plan.
    The only difference in treatment are the participants resulted
    from GM's decisions.'' Well, you know, part of the reason I
    voted against TARP and why I think people are so upset about
    all these bailouts is because that is not really an accurate
    statement, participants resulted from GM's decisions, because
    there was no independent GM when the President publicly called
    for the firing of the CEO. The Treasury Department is bailing
    them out. The auto task force reports to the Secretary of
    Treasury, and the Treasury Secretary is on your board.
        And when I get to the question that I ask you about the
    settlement negotiations, you indicate that PBGC notes that
    attorneys for the auto task force participated, along with the
    PBGC, GM, Delphi, and Delphi debtor in possession lenders in
    telephone conversations during which the terms of the PBGC
    settlements were negotiated.
        I mean, you really have the government there three times,
    General Motors and Delphi being bailed out through the TARP
    program as in the stock being owned ultimately by the Treasury
    Department, you have the auto task force that reports to the
    Treasury Secretary, and you have PBGC which has the
    representation of the Treasury Secretary.
        Do you not think that since--well, actually I cannot find
    one of them that was on the telephone that did not have some
    direct connection with the Treasury Secretary. Do you not
    believe that that can result in conflicts?
        Mr. Snowbarger. I can only speak to PBGC's side of things.
    When decisions are made to terminate plans, we keep our board
    informed about the actions that we are taking. But----
        Mr. Turner. In this instance, the board member that you are
    keeping informed also is in control of the other entities.
        Mr. Snowbarger. Mr. Chairman, I cannot speak to all the
    other rules that the Treasury Secretary has. I can speak to his
    role as a board member for PBGC, and I can tell you how PBGC
    interacts with that board. But I do not know anything more
    about that. I do not know he----
        Mr. Turner. I perceive it as a conflict. I think GAO will
    perceive it as a conflict, as was stated. I think certainly the
    people here today in this committee will.
        Mr. Chairman, are you going to do a second round of
    questions?
        Chairman Issa. We will.
        Mr. Jordan. Would the gentleman yield?
        Chairman Issa. Following up on Mr. Turner, though, it is
    impossible to have the Secretary, Secretary Geithner, not know
    what you intended to do prior to your doing it. Well, it is
    impossible for Secretary Geithner not to have the ability to
    order moneys made available to General Motors. Well, it is
    impossible for him not to have influence on the auto task force
    as to what they might recommend or recommend to General Motors
    that they should do.
        That is an impossibility. There is no Chinese firewall
    between Secretary Geithner, Secretary Geithner, and Secretary
    Geithner, is that correct? [Laughter.]
        Mr. Snowbarger. To my knowledge, no.
        Chairman Issa. Thank you. Mr. Jordan.
        Mr. Jordan. Thank you, Mr. Chairman. And I do have to leave
    here after my questioning. I apologize. I got to run to another
    meeting here in the Dayton area.
        Mr. Snowbarger, you mentioned that you were totally
    impartial when you initiated the termination of the Delphi plan
    in the spring of 2009, this April to June timeframe. But the
    first restructuring plan, to my knowledge, came out in February
    2009. Is that not correct?
        Mr. Snowbarger. The restructuring plan of which?
        Mr. Jordan. General Motors. The overall restructuring plan.
        Mr. Snowbarger. Again, we were not concerned with General
    Motors.
        Mr. Jordan. But that is not my question. My question is----
        Mr. Snowbarger. I do not know. I do not know.
        Mr. Jordan. The restructuring plan came out in February
    2009.
        Mr. Snowbarger. Okay.
        Mr. Jordan. Right? Did you have a chance to look at that
    plan?
        Mr. Snowbarger. I did not, but I do not know if our
    attorneys did or not. Again, we were not focused on General
    Motors.
        Chairman Issa. Your attorney is shaking his head yes.
        Mr. Snowbarger. Maybe they did.
        Mr. Jordan. So, PBGC looked at the plan, and in the plan
    was the top up agreement was contained in the restructuring
    plan in February 2009. So, before you made the initial
    termination decision in the spring of 2009, you knew about the
    top up plan being part of the overall new restructuring plan.
    Is that correct?
        Mr. Snowbarger. PBGC, I guess, was. When I made my decision
    and when I signed off, it was not part of----
        Mr. Jordan. Well, but you are PBGC, right?
        Mr. Snowbarger. Well, I was the ultimate signer and the
    ultimate decider about whether or not these pension plans
    should be terminated.
        Mr. Jordan. All I am trying to get at is you----
        Mr. Snowbarger. And I am suggesting to you that that was
    not a part of my rationale for signing off on that, on those
    terminations.
        Mr. Jordan. But it was common knowledge that that was part
    of the deal, part of the restructuring plan, correct?
        Mr. Snowbarger. I do not how to respond. I mean, common
    knowledge? You know, it was a restructuring plan that fell
    through as well.
        Mr. Jordan. Okay.
        Mr. Snowbarger. My decision was not made on the basis that
    there were going to be top ups.
        Mr. Jordan. Okay then, let me move on to this. When you
    were dealing with the Delphi plan, who did you primarily deal
    with? Was it General Motors, or was it the Treasury Department
    auto task force?
        Mr. Snowbarger. Delphi.
        Mr. Jordan. You never dealt with General Motors at all?
        Mr. Snowbarger. I am not going to say we did not talk to
    General Motors because, again, they were a potential rescuer
    for Delphi. If we could have found a sponsor that would have
    carried on the pension plans after Delphi, then that is fine.
    We do not care to take over pension plans when there is a
    sponsor out there.
        Mr. Jordan. I am just asking about this. When you dealt
    with General Motors, was it General Motors or was it the auto
    task force, or could you make a distinction?
        Mr. Snowbarger. I think they were all in the room at the
    same time when discussions were had.
        Mr. Jordan. So, it is fair to say you were dealing with the
    Treasury and auto task force.
        Mr. Snowbarger. And Delphi.
        Mr. Jordan. And Delphi, okay. And did it ever come up in
    those discussions that General Motors or Treasury auto task
    force when you were dealing with it, did it ever come up, did
    they explain why they wanted the top up agreement to take
    place, why they wanted that to be in place?
        Mr. Snowbarger. I am not aware of that.
        Mr. Jordan. And in those discussions when you were dealing
    with GM, did it ever come up with why they were not going to
    treat the salaried the same as they were going to treat the
    hourly employees? Did that ever come up?
        Mr. Snowbarger. To my knowledge, the only discussion about
    top ups were related to the agreements that they entered into
    in 1999.
        Mr. Jordan. Okay. Mr. Chairman, I yield back. Thank you.
        Chairman Issa. Thank you.
        Mr. Austria.
        Mr. Austria. Thank you, Mr. Chairman. Deputy Director
    Snowbarger, I want to ask you about the Pension Benefits
    Guaranty Corporation v. LTV Corporation case that PBGC won in
    1990 in the U.S. Supreme Court. That case had very similar, I
    think, facts to the Delphi pension termination. And when LTV
    went through bankruptcy, it created an agreement with the steel
    workers, which provided additional payments based on reduced
    benefits that retirees receive through PBGC, and what the
    retirees would have received if the plans had not been
    terminated.
        In that case, PBGC objected to the agreements as improper
    follow-up on plans, and, in fact, one of the main reasons PBGC
    has a policy against followup plans is because such plans
    remove employee resistance as a significant check against
    termination. Therefore, PBGC has sought to restore those
    pension plans back to LTV, and the Supreme Court agreed.
        So, I ask you why hasn't PBGC filed a similar lawsuit
    against GM to restore the union pension plans based on top up
    agreements? And, I mean, it seems that if this were to occur,
    then all the windfall payments could be used to fund the salary
    plan as a fully funded pension with full benefits.
        Mr. Snowbarger. I think there are two significant
    differences between LTV and Delphi. The agreements that we
    opposed in LTV were in the context of the LTV bankruptcy case.
    The agreements between GM and the unions were a matter of
    contract between private parties.
        The second major difference----
        Chairman Issa. Private parties both in bankruptcy, right?
        Mr. Snowbarger. No.
        Chairman Issa. In 2005, both were in bankruptcy.
        Mr. Snowbarger. What I am referring to are the agreements
    that were made back in 1999.
        Chairman Issa. Subsequently, both entities were in
    bankruptcy.
        Mr. Snowbarger. Yes, but they were not in a court setting
    that PBGC had standing to be a part of complaining about those
    particular agreements. In 1999, it was the spin off in a
    private business setting where those agreements arose. In this
    situation where the top ups, or, excuse me, where the
    supplements were promised in LTV, that was still in a
    bankruptcy setting where PBGC was still an active party to the
    bankruptcy.
        The second major difference between the two cases that you
    gave me is that LTV came out of bankruptcy as LTV, and then
    prospered and was able to take on those pension plans. That was
    what we were arguing.
        In this case, you have Delphi who is the sponsor of the
    pension plans. They go into bankruptcy, and they did not come
    out.
        You are asking us to turn these pension plans over to
    General Motors. General Motors does not have a legal obligation
    to take over those pension plans. That was Delphi's
    responsibility as of the spinoff of the pension plans to
    Delphi.
        Mr. Austria. Mr. Chairman, I would be glad to yield to you,
    because I think a good point to make here is that were both
    parties not in bankruptcy? Would you respond to that question
    because I think that is a very important question.
        Mr. Snowbarger. They were not in 1999 when the agreements
    were made.
        Mr. Austria. All right. Well, I know I have one other
    question, we are short on time.
        Chairman Issa. Please, go ahead.
        Mr. Austria. We will get this on the second round because
    it is important. But let me ask you this, Deputy Director
    Snowbarger. You know, Delphi employees believe that prior to
    termination, PBGC overestimated the pension liabilities and
    under estimated the level of funding. Can you explain to the
    committee, and I am interested in knowing what determinations
    were made for the Delphi pension plans?
        Mr. Snowbarger. Well, first of all, I want to caveat all
    this by saying that that is part of the litigation that is
    ongoing, so I would rather talk about it in general terms. From
    what I have seen, and I have seen the Watson Wyatt report that
    has been referred to. It is referred to as an adjusted funding
    target attainment percentage. That is a formula specified in
    the Pension Protection Act, or at least the parameters are set
    out in the Pension Protection Act.
        When PBGC tries to decide whether or not a pension plan is
    funded sufficiently, we look at it as a termination liability
    because we presume that if PBGC is interested and PBGC is going
    to take it over, that plan is terminating and it is not going
    on any further.
        There are three major differences in the way we would
    calculate things. One is the discount rate that is used. And,
    again, one of the earlier people testified if you use a higher
    discount rate, the liability is lower. We normally use a lower
    discount rate than our use for ongoing pension funds.
        A second is what do you consider the normal retirement age.
    And our experience is when a company goes out of business,
    people tend to retire earlier than if a company is staying in
    business. And so, the assumed retirement age that we use is
    probably lower than the one that was used by Watts Wyatt.
        And the third thing is the value of the assets and the date
    when you value those assets. My understanding is the Watts and
    Wyatt report valued assets in the salaried pension plan as of
    October 1, 2008, we valued them at January 1st or January 31,
    2009. I do not think I need to tell the members of the
    committee what happened between October 8th and January 2009.
    There was a significant decline in the market and a significant
    decline in the assets, and also a significant decline in the
    interest rate. So, you have liabilities are going up at the
    time assets are coming down, and a lower retirement age. And it
    leads to the conclusion that we have that at termination, the
    Delphi salaried pension plan was about 46 percent funded.
        Mr. Austria. My time has expired. Thank you, Mr. Chairman.
        Chairman Issa. We are going to do a second round.
        You were there in 2008 and 2009. Is it not true that
    everybody's pension plans enjoyed that same precipitous fall?
    So, if I was at General Electric, or I was at General Motors,
    or I was at dozens of Warren Buffet's various holdings, working
    for the railroad, wherever I was, I probably had my pension
    dropped by 25 or 30 percent, meaning it was at least 30 percent
    underfunded. If it had been fully funded or the usual 90-some
    percent in 2008 at that exact low point that you fund it. I
    mean, virtually a lot of them, you could have gone to every
    pension plan there was and said, boy, you guys are grossly
    underfunded, could you not?
        Mr. Snowbarger. Correct.
        Chairman Issa. Okay. And nobody was forced to top up based
    on a moment in time. I mean, and I am not trying to push you
    beyond making sure we get the current law. Current law, you
    mark to market on a date.
        Mr. Snowbarger. Correct.
        Chairman Issa. The reality, though, is had you been allowed
    to anticipate those revenues over the life of an ongoing use of
    those revenues, you would never have marked them to the current
    value, would you? In other words, functionally those assets,
    assuming that America did not go down rat hole and never come
    back, those assets were worth a lot more in a relatively short
    period of time because everybody knew this was a short term
    disaster for which the American people were bailing out all
    kinds of entities, knowing that good times comparatively were
    coming back.
        So, part of the problem for Delphi retirees, salaried
    retirees, is you marked--statutorily I understand why you did
    it. But you marked at literally the worst possible time for
    valuation.
        Mr. Snowbarger. We revalued by the time we had come to
    June, and we continued to revalue as we find out what the
    assets were actually worth at the day of termination.
        The biggest problem for Delphi employees is that Delphi no
    longer exists. There is no plan sponsor. So, you cannot really
    assume an ongoing plan when there is no sponsor.
        Chairman Issa. Now, I want to get back to that. First of
    all, Mr. Austria makes the point better than I was making. Very
    clearly, you had two entities in bankruptcy, and bankruptcy is
    the wild west. Companies ask for relief any which they want to,
    so there is no question, I think, in anyone on this panel's
    mind or anyone here today. They could have absolutely reneged
    on that 1999 agreement, and I assume your counsels have told
    you that General Motors could have reneged on it, that they
    could have sought complete relief. Is that correct?
        Mr. Snowbarger. I think it is accurate legally, yes.
        Chairman Issa. Okay. So, the idea that it was an obligation
    just is not so. It was an obligation for which they could have
    gotten relief.
        Now, let me go through one line of thinking or two lines of
    thinking.
        First of all, could General Motors have been a sponsor at
    amount less than 100 percent? Could they have taken both of
    these plans, but had them taken at an adjusted amount and
    having them transferred from Delphi back?
        Mr. Snowbarger. I do not about the adjustment part. I think
    we have concluded that they have could have taken both over
    both of these plans.
        Chairman Issa. And they could have taken--right. They could
    have taken over at 100 percent, but to your knowledge, under
    existing law, could they have taken them over at 90 percent?
        Mr. Snowbarger. I do not believe they could. I believe
    ERISA does not allow cutbacks by the sponsor of benefits that
    have already been promised.
        Chairman Issa. The sponsor was gone.
        Mr. Snowbarger. Well----
        Chairman Issa. Let me put it another way, because I want to
    get to the forward looking. We will assume for a moment----
        Mr. Snowbarger. I thought you were positive that GM was now
    the sponsor, so I misunderstood this.
        Chairman Issa. Okay. Right. What I want to do is I want to
    go to two things. First of all, let us assume for a moment that
    the company has gone. These two pensions have not been
    terminated. General Motors walks in under current law and says,
    we will take these, but we cannot have the anchor as great as
    it is. We will take all the assets and we will agree to 80
    percent or 90 percent, and Delphi says to the bankruptcy judge,
    will you grant us that relief? Is that not available under the
    law today, either bankruptcy law or ERISA, do you believe it
    should be available to salvage a greater amount than these
    salaried Delphi workers had salvaged when you took it over in
    termination?
        Mr. Snowbarger. I appreciate the comment of the chairman
    earlier on that I am a career Federal employee. I do not have a
    position on that issue. [Laughter.]
        Chairman Issa. You are not getting away with that.
    [Laughter.]
        But nice try. I ask unanimous consent I have an additional
    minute. So ordered.
        You are a person who has the tools that you have. Would
    that tool be, and this is where you may not be able to lobby
    for it, but you do have an opinion on it. Would that tool be a
    good tool for people in your position now or in the future to
    have if it were made available by Congress?
        Mr. Snowbarger. I think PBGC has taken the position before
    that we wish we had more tools to keep plans out there for
    participants. Currently, the major tool that we have is
    threatening to terminate a plan. If you think that through,
    that does not make a lot of sense for an agency that is
    supposed to be promoting defined benefit pension plans.
        Chairman Issa. Okay. So, we will take that as it is.
        The goal here today obviously is to try to find out what
    happened, and you have been helpful on that, and I want to
    thank you for it. And I know some of the other Members have a
    second round. But prior to adjournment, I will not be speaking
    to either of you again.
        I want to thank you for being here. As you said, you are
    career professionals. You are limited to answering our
    questions and not lobbying for, and I appreciate that. And I
    want to thank you for being here and giving us your testimony.
        And with that, I recognize Mr. Turner for a second round? I
    am sorry----
        Mr. Burton. It is okay. I am just sitting here. [Laughter.]
        Chairman Issa. You know, Dan, I am going to call you Mica
    if you are not careful. [Laughter.]
        Mr. Burton. That is an inside joke, folks.
        Chairman Issa. Former chairman?
        Mr. Burton. Let me follow up. You said that nobody in the
    administration had any influence on the decision that was made.
    There was a meeting----
        Mr. Snowbarger. Well, again, I have never quite understood
    in the parlance here whether you are including us as a part of
    the administration, or the executive branch.
        Mr. Burton. Okay. Well, the executive branch includes
    Treasury, does it not?
        Mr. Snowbarger. Yes.
        Mr. Burton. Okay. And Geithner and Mr. Bloom were part of
    Treasury.
        Mr. Snowbarger. Correct.
        Mr. Burton. And they are also part of PBGC.
        Mr. Snowbarger. Mr. Bloom is not.
        Mr. Burton. Well, Mr. Bloom is not, but Geithner is. They
    work together, do they not? They know each other.
        Mr. Snowbarger. Not anymore, but, yes, they did.
        Mr. Burton. What I am trying to find out is during your
    telephone conversations and during the meetings that you had,
    what went on? What was said by Treasury who also had a
    tremendous amount of influence on PBGC. What did they say to
    you? Did they say, hey, this is what we ought to do? I mean,
    they went ahead and upped the pension for the union people, but
    they did not for the salaried or hourly people. What went on?
    What was said that made that decision?
        And you told me earlier, you said, well, the administration
    had no influence on the decisionmaking process. Well, Treasury
    is part of the administration. Geithner is part of the
    administration. Bloom is part of the administration.
        I want to know what went on in the meetings that you had,
    and what did they say? I mean, somebody said something about
    helping the unions. Somebody said something about not doing it
    for the hourly employees. And you were on the phone with them.
    You were talking to them. So, what happened?
        Mr. Snowbarger. Number one, let me explain that when I said
    that they were not a part of the decision, the decision I was
    referring was the decision about whether or not to terminate
    the pension plans, which pension plans, the timing of that,
    etc. That decision was solely done in PBGC by career employees,
    as it turns out.
        Mr. Burton. But Treasury is on the board, and Bloom is----
        Mr. Snowbarger. They were not part of the decision. The
    board is not a part of the decision.
        Mr. Burton. Well, wait, wait, wait. What do you mean they
    were not part of the decision? There are three people on the
    board, right?
        Mr. Snowbarger. The day-to-day operations of PBGC are
    vested with the director of the corporation.
        Mr. Burton. And so, they do not have any input on these
    kinds of things.
        Mr. Snowbarger. As a practical matter for the history of
    PBGC, no, they have not. We have done that to avoid political
    influence on those kinds of decisions.
        Mr. Burton. That just mystifies me. I do not know how you
    can have Bloom, who lied to our committee, and who also was an
    executive for the steel workers union. He was one of the people
    that was involved in this decisionmaking process.
        Mr. Snowbarger. I met Mr. Bloom when we terminated a number
    of steel plans, yes.
        Mr. Burton. And Geithner, and I just do not understand how
    they were not involved in the decisionmaking process. But you
    said they were not, so I guess I will take your word for that.
        Mr. Snowbarger. They were not.
        Mr. Burton. Okay. You know, I am a stickler for people
    being under oath. When Mr. Bloom testified, he said he did not
    say things, and we proved that he did and he recanted. So, it
    is very important that you remember because we are going to
    pursue this.
        Mr. Snowbarger. Like I said, I was the ultimate
    decisionmaker on whether or not to terminate these plans, and
    Mr. Bloom did not talk to me about them, and Secretary Geithner
    did not either.
        Mr. Burton. None of these meetings on the phone or anything
    else. There was no influence exerted by Treasury or by the
    administration.
        Mr. Snowbarger. No. I think we communicated with them that
    we thought we were going to have to terminate those plans, if,
    in particular because there was no sponsor.
        Mr. Burton. What did they say when you communicated that to
    them?
        Mr. Snowbarger. They normally did not respond back to me.
        Mr. Burton. They did not say anything. They just listened.
        Mr. Snowbarger. For most of the conversations, I think that
    is correct.
        Mr. Burton. Thank you, Mr. Chairman.
        Chairman Issa. If the gentleman would yield.
        Mr. Burton. I will yield to you, sure.
        Chairman Issa. I just want to review for the record,
    Secretary Geithner knew you were going to terminate the plans.
    Secretary Geithner, through the TARP, his control of General
    Motors and the task force, made sure that the union workers
    were made whole in the termination, while Secretary Geithner,
    informed of the termination, allowed the salaried workers to be
    terminated with 30 to 70 percent loss by not topping it up or
    taking steps to have them made whole.
        Clearly, Secretary Geithner was aware of this at all times,
    and had the power and influence to change that.
        Mr. Snowbarger. I can talk to you about what influence he
    may have had in the decision on PBGC side of things. I cannot
    tell you what decisions were made on the auto task force side.
        Chairman Issa. Following up, Secretary Geithner left you no
    choice but to terminate as a result of Delphi not being viable,
    General Motors not taking it. And the losses experienced by the
    salaried employees and retirees of Delphi is the result of his
    not taking steps to make them whole, while clearly steps were
    taken to make the union employees whole. That is your
    observation, even though your decision, you had no choice.
        Mr. Snowbarger. Mr. Chairman, that is not my observation.
    That is your observation. All I can talk to you about is the
    decision that PBGC made, what went into those decisions. And
    the only part of that that goes into that decision was there
    was no plan sponsor going forward.
        Chairman Issa. Thank you.
        Mr. Snowbarger. The plans were basically abandoned.
        Chairman Issa. Mr. Turner.
        Mr. Turner. Thank you, Mr. Chairman. I just want to know
    one thing for the record with respect to your answer on the LTV
    case. I understand that you are saying that the agreements for
    General Motors from 1999 predated the bankruptcy. They were not
    top up agreements that were made in bankruptcy. But to buy your
    argument that there were parties that made an agreement in 1999
    is to assume that the parties that were in the bankruptcy were
    the same. I mean, we do not buy, and no one in this room buys,
    that there was independent General Motors in that bankruptcy.
    That bankruptcy had new parties. The new party was the Treasury
    Secretary, and that is how it becomes like the case that Mr.
    Austria is citing of the LTV because it is not this independent
    decisionmaking of affirming this. There is not only this new
    party, but it is the government, and that is why everyone is so
    particularly disappointed and upset.
        And I want to turn to the issue on the liens because part
    of the concern that everyone has is, you know, the valuation of
    assets, but also the termination of the plan, but also what
    happened with respect to liens.
        Now, in your written testimony, you indicate that Delphi
    entered bankruptcy in October 2005, and that they failed to
    make the required minimum funding contributions to the plans,
    so as a result liens were triggered, and that PBGC perfected
    those liens in March 2006.
        In your November 9th answers to me from the June 22nd
    questions, you indicate when the plan was terminated, PBGC had
    perfected $195.9 million in liens for the benefit of the
    salaried plan due to Delphi's failure to make statutory
    required minimum funding contributions. You did say, which is
    what confuses me, this was the largest lien amount that PBGC
    could assert under the law because a secured interest exists
    only to the extent there is a debt. It is underfunded; they
    clearly were not during that period making payments.
        Is it really your testimony that from the period of October
    2005, where PBGC went into bankruptcy, up to the point of plan
    termination, that there was no additional opportunities for the
    PBGC to assert liens? And we know, by the way, that those liens
    were largely against foreign assets that had their value. I
    mean, did you have----
        Mr. Snowbarger. That is correct.
        Mr. Turner. You had no additional time period from October
    2005 until plan termination to assert any additional liens.
        Mr. Snowbarger. Yeah. There are only certain events that
    give rise to liens, and we file the lien every time one of
    those events occurred. And it normally is missed contributions.
        I think I am not sure they were actually liens. We also
    received, I guess that was letters of credit on the waivers
    that were given by Treasury for funding contributions. But we
    did receive those back. PBGC does not receive any of these, by
    the way. It goes into the plan.
        But, no, there are only a limited amount of circumstances
    that allow us to file a lien. And the lien is not for all of
    the underfunding. It is for the amount of the contribution that
    was missed.
        Mr. Turner. And you are saying that during that time
    period, all the way up until termination, you were dealing only
    with the liens that you had placed, and that was on the foreign
    assets going into the settlement.
        Mr. Snowbarger. Yeah. Let me expand that just a little bit.
    And I think this is correct, and we will correct if it I am
    wrong. But I believe there were other liens that were filed on
    behalf of the hourly plan, and when GM took over half of the
    hourly plan, as Ms. Bovbjerg indicated, I believe those liens
    expired at that point. So, the only liens we are talking about
    here is, what, it is about $195, $196 million for the salaried
    plan, and I think there was another smaller amount of liens for
    some of the other smaller plans. But in terms of the large
    salary plan, there had been liens, but those were satisfied
    when GM took over the first half of the hourly plan, as they
    had agreed to.
        Mr. Turner. As you went into the settlement negotiations,
    you had the liens that had been in place. You relinquished the
    liens in part for unsecured debt and payments.
        As part of the FOIA request, as part of the whole process
    that the Delphi salaried retirees have requested is that these
    settlement negotiations, what had been said, the documents that
    had passed between parties, be made public. The settlement is
    over. This certainly is an issue that has taxpayers' dollars.
    How the settlement proceeded should be both a discoverable item
    in Federal court, but also should be released with respect to
    FOIA.
        As we heard from those that had testified, when they have
    made their requests under Freedom of Information, they get
    pages that look like this. Governmental pre-decisional,
    attachment deleted, 34 pages. I mean, the government is not
    telling the taxpayers, part of which were the Delphi salaried
    retirees who had their retirements reduced, what were those
    settlement negotiations, and what was on the table, and who was
    saying what, and who told who to do what.
        I do not understand, and I would like you give us, as you
    said, you know, you are the decider. Why isn't this information
    being released? This is public information about public
    taxpayers.
        Mr. Snowbarger. I think all the documentation that was
    requested pursuant to FOIA has been produced, with the
    exceptions that are allowed by FOIA, with the exceptions that
    are allowed by FOIA.
        Mr. Turner. Okay. Now, let us emphasize that word,
    ``allowed by,'' which means that you are exercising discretion
    to hold the documents back. It is not required by FOIA. You
    have the ability under FOIA to fully comply and release the
    documents. Will you?
        Mr. Snowbarger. That is a matter under litigation, and
    when----
        Mr. Turner. No, no, no, it is not under litigation. The
    FOIA request is not, the subject matter is. You have the FOIA
    request. You know you have the discretion to release the
    documents. I personally believe, like this panel believes, that
    this is taxpayers' dollars that were handled here. These
    retirees deserve an answer. Will you release the documents?
        Mr. Snowbarger. Well, let me make clear, PBGC does not
    operate on taxpayer dollars. I understand you are not drawing a
    distinction between the amount of money that came from TARP and
    what PBGC does, but PBGC does not receive taxpayer funding.
        Second part is, as long as this is a matter of litigation,
    I will stay with the decisions that we have made thus far.
        Mr. Turner. Well, I think that is wrong. I mean, I think is
    it wrong that you not be held accountable in the decisionmaking
    that you had. This was a heavily taxpayer subsidized
    transaction in the General Motors and Delphi bankruptcy. These
    individuals have been significantly impacted. I thank the
    chairman for his push to make you give him the documents so he
    can make the decision as to whether or not they be released.
    But you should be releasing those documents.
        Chairman Issa. Mr. Austria.
        Mr. Austria. Thank you, Mr. Chairman. And I would just
    follow up to what Mr. Turner was saying as far as the
    transparency here. I mean, if we want a level playing field, so
    to speak, and we want to make sure that things are done right,
    then there should not be any reason there should not be full
    transparency.
        But let me go back to this valuation of the level of
    funding. And I agree with the chairman, the timing--and I think
    you might acknowledge, is the timing in which that valuation
    was done was when the markets were down. And what was the
    funding level that you valuated the pension at that time?
        Mr. Snowbarger. A specific dollar amount?
        Mr. Austria. Or percentage, whatever.
        Mr. Snowbarger. Again, when we did our initial review of
    this, it was about 46 percent funded.
        Mr. Austria. About 46 percent funded. Okay. Let me ask you
    this. When you did the revaluation, what was the difference?
        Mr. Snowbarger. There wasn't a lot of difference.
        Mr. Austria. There was not a lot of difference? There was
    not a lot of difference?
        Mr. Snowbarger. It was still below 50 percent.
        Mr. Austria. Now, let me ask you, because I am looking at
    some information here. It shows that the average funding level
    for the top 100 pension plans in 2009 was 81 percent, and that,
    again, and you made reference to it, there were two independent
    actual firms that analyzed DSRs pensions and determined that it
    was actually 86 percent funded.
        Those are big differences. I mean, can you further
    elaborate and give us your thoughts as to why we have such big
    differences other than the timing of when you valuated it?
        Mr. Snowbarger. If one is calculating the funded percentage
    for an ongoing plan, that means there is going to be a sponsor
    at the end of the day. There was not going to be a sponsor
    here. Therefore, PBGC evaluates the funding of the plans on a
    termination basis, and, again, on a termination basis, we use
    an interest factor that is derived from the annuity markets. We
    use a retirement age that reflects our experience that people
    retire when their employers go out of business. They retire
    earlier. And we use mark to market on the value of the assets.
        Mr. Austria. Well, it seems to me that, again, we are going
    back to transparency here as far as--and I appreciate you
    disclosing this now because it is important that we understand
    how you evaluate these pension plans. But when we look at the
    average level of the other, you know, top 100 pension plans in
    2009 and how they were valuated, it does not seem like we are
    comparing apples to apples.
        Mr. Snowbarger. Well, Congressman, we are not. We are not.
    Those are ongoing pension plans. Those sponsors are still out
    there. They are still viable entities. To the extent they are
    not a viable entity and they underfunded in the same way that
    these plans were, then we look to terminate those. You are
    talking about the funding of all pension plans, and, again, not
    all plan sponsors are in financial difficulty. Delphi was not
    only in financial difficulty, it went away. It is no longer
    there. It does not exist.
        Mr. Austria. What was the revaluation as far as with this
    plan?
        Mr. Snowbarger. I would have to check. I do not know what
    the latest valuation is on that. But it would go toward the
    benefits that are paid to participants.
        Let me put it this way. We have certain limitations, and I
    believe one of the earlier witnesses testified to the
    limitations by law that are placed on us. There are times when
    we can pay above those limitations for a certain limited group
    of people. That is for people that have retired or could have
    retired 3 years prior to the termination date. So, that goes
    back to could have retired in 2006. They fall under the
    category called priority category 3, and I very frankly could
    not go through the exact calculations of how you get there. But
    it is possible that if assets are sufficient, we can pay
    benefits above guarantees for those folks. But we will just
    have to wait and see what the ultimate valuation is of the
    assets. And that is ongoing.
        Mr. Austria. Thank you, Mr. Chairman.
        Chairman Issa. I am going to take two chairmen
    prerogatives. First, Mr. Turner is going to close the hearing.
    And, second, I am going to renege on I have asked my last
    question. [Laughter.]
        Because I think there are two things I want to make clear.
    I serve on the company that I founded when it became public,
    and our stock traded below certain minimums, and
    PriceWaterhouseCooper came to us and said, oh, by the way,
    because your stock is trading low, because people do not
    appreciate its going concern value, its actual earnings, we are
    going to make you take $100 million write down on your good
    will. And I never understood it. I never agreed with it. But
    the SEC and GAP and so on, they could do that.
        I will never agree that you have to diminish somehow an 80
    percent to a 60 percent or a 50 percent for the difference
    between the two without at least stating that as a going
    concern, there was 80 percent.
        And the reason simply is that if we continue to allow you
    to do that, then pensions need to be funded at 120 percent.
    They need to be funded as though the entity is not going to be
    a going concern. And, by the way, it is not just General
    Motors; it is the State of California. It is an awful lot of
    other groups, because sovereigns can default, and if they
    default, then you are stuck with the assets you have.
        So, I think that is an area that this committee and
    Congress needs to look at is to beg the real question of, if
    you are correct, not as to the early retirement because I think
    there is a little bit of wiggle room there, but as to these
    other diminishments of the amount, then to be honest, 85, 90
    percent just is not enough. And it is not enough because
    ultimately we need to be protected, or we need to protect those
    people who rely on these pensions at a level that if the
    company defaults, or if anyone defaults, the pension is going
    to be able to pay substantially close to what was promised and
    not end up where these people did, or, for that matter, the
    United Airlines pilots and flight attendants who today, and I
    will use the word ``enjoy'' in a terrible way, enjoy the same
    kind of same kind of diminishment that the salaried workers for
    Delphi do.
        Let me ask you one last question, and you can respond for
    the record if it requires more counsel than you have here
    today. Most of these workers contributed most of their money as
    General Motors employees. And none of these workers got a real
    say in being spun off. If they cannot claw back to the parent
    entity, if they cannot demand that 70, 80 percent of their
    retirement, which was really GM retirement, be able to go back
    to GM, which is still around, then do we not open everyone to a
    situation, not one in which there was a legitimate spin off
    that was intended to work, but to a spin off that would be just
    absolutely designed to do in their existing retirees? Because
    ultimately anybody could say, well, I am going to spin off a
    subsidiary, and I am going to spin off this, and I am going to
    make it all sound good, but I am basically after 2 years going
    to quit buying from that subsidiary that I set up, and it is
    going to go bust, and they are just going to be screwed, to use
    that technical word again. [Laughter.]
        Doesn't Congress have an obligation to ask, should they not
    be able to claw back to the parent, which they were taken away
    from involuntarily, or some other remedy that would prevent
    this from happening in the future, which I believe you are
    going to say does not exist in the law today.
        Mr. Snowbarger. Well, it does not exist in the law today,
    but PBGC watches those transactions all the time. And if we are
    concerned that the pension plans are either being transferred
    to a spin off that will not be able to sufficiently fund that,
    or if they see that the assets of a company are being spun off
    leaving the pension behind, we try to intervene in those
    transactions and stop them or make sure there is some kind of
    protection for the pension plans.
        Chairman Issa. But is it not true, both in the case of
    Delphi and Visteon, the Ford spinoff, that their entire
    viability was dependent upon continuing the tier 1 suppliers at
    substantially the same revenue as they had been when they had
    been part of General Motors or Ford. I mean, basically that was
    always the case is their viability. The Delphi, and I bought
    from Packard Electric and some of the other divisions for my
    company.
        But the fact is, 90-some percent of their revenues was
    father to child kind of thing. So, when you did that
    evaluation, weren't they completely dependent upon the success
    of General Motors continuing to buy, and isn't that really why
    the unions had the 1999 agreement that required General Motors
    to protect them for an indeterminate period of time while the
    salaried workers did not get the same?
        Mr. Snowbarger. Well, it was also the fact that their plan
    was underfunded when the spin off occurred.
        Chairman Issa. But under your calculations, they were both
    underfunded.
        Mr. Snowbarger. No, I have not made any comment about what
    the funding status was of the salaried plan in 1999.
        Chairman Issa. Well, but----
        Mr. Snowbarger. And that is the time period I am referring
    to when the spinoff actually occurred.
        Chairman Issa. Yeah, but today you gave testimony that
    shows if you are fully funded and if the fit hits the shan, you
    are going to, in fact, be underfunded by 30 percent or more. I
    mean, the fact is they were underfunded if Delphi did not
    remain a going concern, and Delphi's going concern was
    completely linked both to General Motors' continuing to be
    viable and General Motors choosing to continue buying. So, they
    were in a precarious position in 1999, and that is why the
    unions, on behalf of their portion of the work force, demanded
    something. Shouldn't that have been a red flag to your role or
    your entity's role that if the union needed it, why did the
    salaried workers, the people who had less power to negotiate,
    why did they not need the same guarantee?
        Mr. Snowbarger. I have no response.
        Chairman Issa. I now turn the gavel over to Mr. Turner.
        Mr. Turner [presiding]. I did not want our chairman to
    leave because obviously one of the things that I want to do is
    to thank him.
        Chairman Issa. You are the chairman.
        Mr. Turner. Well, I appreciate that.
        Mr. Chairman, if you had not held the prior hearings that
    we have had, or, Chairman Jordan, the subcommittee under your
    committee having had inquiries in this and hearings, we would
    not know as much as we even know today.
        But thank you for coming here, for having this hearing.
    Thank you for granting my request for these retirees to have an
    ability to speak with you, and for this issue to gain
    additional light. I think we have learned a couple of things,
    one of which is the fact that the administration was in on all
    sides of this deal. But the second thing, which I want to thank
    you for, is that we have learned that, you know, PBGC has the
    ability to release these documents, is exercising discretion
    under FOIA. Some of those documents have been or will be
    released to this committee, and I know you are going to be
    reviewing the issue as to what of those the committee might
    under its own guise make public that PBGC chooses on their own
    accord not to.
        So, thank you for your consideration of that, and thank you
    for being here today. And thank you for being in Dayton, OH.
        Chairman Issa. Well, thanks for inviting me.
        [Applause.]
        Mr. Turner. With that, the committee stands adjourned.
        [Whereupon, at 12:27 p.m., the committee was adjourned.]
        [The prepared statement of Hon. Dan Burton and additional
    information submitted for the hearing record follow:]
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