[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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              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:]
    [GRAPHIC] [TIFF OMITTED] 73164.008
    
    [GRAPHIC] [TIFF OMITTED] 73164.009
    
    [GRAPHIC] [TIFF OMITTED] 73164.010
    
    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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    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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    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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