[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]



 
                  OVERSIGHT OF THE SIGTARP REPORT ON 

             TREASURY'S ROLE IN THE DELPHI PENSION BAILOUT
=======================================================================


                                HEARING

                               before the

                 SUBCOMMITTEE ON GOVERNMENT OPERATIONS

                                 of the

                         COMMITTEE ON OVERSIGHT

                         AND GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

                               __________

                           SEPTEMBER 11, 2013

                               __________

                           Serial No. 113-60

                               __________

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


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





                  U.S. GOVERNMENT PRINTING OFFICE
85-115                    WASHINGTON : 2013
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing 
Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC 
area (202) 512-1800 Fax: (202) 512-2104  Mail: Stop IDCC, Washington, DC 
20402-0001


              COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

                 DARRELL E. ISSA, California, Chairman
JOHN L. MICA, Florida                ELIJAH E. CUMMINGS, Maryland, 
MICHAEL R. TURNER, Ohio                  Ranking Minority Member
JOHN J. DUNCAN, JR., Tennessee       CAROLYN B. MALONEY, New York
PATRICK T. McHENRY, North Carolina   ELEANOR HOLMES NORTON, District of 
JIM JORDAN, Ohio                         Columbia
JASON CHAFFETZ, Utah                 JOHN F. TIERNEY, Massachusetts
TIM WALBERG, Michigan                WM. LACY CLAY, Missouri
JAMES LANKFORD, Oklahoma             STEPHEN F. LYNCH, Massachusetts
JUSTIN AMASH, Michigan               JIM COOPER, Tennessee
PAUL A. GOSAR, Arizona               GERALD E. CONNOLLY, Virginia
PATRICK MEEHAN, Pennsylvania         JACKIE SPEIER, California
SCOTT DesJARLAIS, Tennessee          MATTHEW A. CARTWRIGHT, 
TREY GOWDY, South Carolina               Pennsylvania
BLAKE FARENTHOLD, Texas              MARK POCAN, Wisconsin
DOC HASTINGS, Washington             TAMMY DUCKWORTH, Illinois
CYNTHIA M. LUMMIS, Wyoming           ROBIN L. KELLY, Illinois
ROB WOODALL, Georgia                 DANNY K. DAVIS, Illinois
THOMAS MASSIE, Kentucky              PETER WELCH, Vermont
DOUG COLLINS, Georgia                TONY CARDENAS, California
MARK MEADOWS, North Carolina         STEVEN A. HORSFORD, Nevada
KERRY L. BENTIVOLIO, Michigan        MICHELLE LUJAN GRISHAM, New Mexico
RON DeSANTIS, Florida

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

                 Subcommittee on Government Operations

                    JOHN L. MICA, Florida, Chairman
TIM WALBERG, Michigan                GERALD E. CONNOLLY, Virginia 
MICHAEL R. TURNER, Ohio                  Ranking Minority Member
JUSTIN AMASH, Michigan               JIM COOPER, Tennessee
THOMAS MASSIE, Kentucky              MARK POCAN, Wisconsin
MARK MEADOWS, North Carolina


                            C O N T E N T S

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

                               WITNESSES

The Hon. Christy L. Romero, Special Inspector General for the 
  Troubled Asset Relief Program
    Oral Statement...............................................    10
    Written Statement............................................    12
Ms. Barbara D. Bovbjerg, Managing Director, Education, Workforce, 
  and Income Security Issues, U.S. Government Accountability 
  Office and Ms. A. Nicole Clowers, Director, Financial Markets 
  and Community Investment, U.S. Government Accountability Office
    Oral Statement...............................................    71
    Written Statement............................................    73
Mr. Matthew A. Feldman, Partner, Wilkie Farr & Gallagher, LLP
    Oral Statement...............................................    95
    Written Statement............................................    97
Mr. Steven Rattner, Chairman, Willett Advisors, LLC
    Oral Statement...............................................   102
    Written Statement............................................   105
Mr. Harry J. Wilson, Chairman, CEO and Founder, The Maeva Group, 
  LLC
    Oral Statement...............................................   108
    Written Statement............................................   110
Mr. Harvey R. Miller, Partner, Weil, Gotshal & Manges, LLP
    Oral Statement...............................................   114
    Written Statement............................................   116

                                APPENDIX

The Honorable John L. Mica, a Member of Congress from the State 
  of Florida, Opening Statement..................................   186
The Honorable Elijah Cummings, a Member of Congress from the 
  State of Maryland, Opening Statement...........................   188
The Honorable Gerald G. Connolly, a Member of Congress from the 
  State of Virginia, Opening Statement...........................   190
The Honorable Paul Ryan, a Member of Congress from the State of 
  Wisconsin, Opening Statement...................................   192
SEC Charges Steven Rattner in Pay-to Play Scheme Involving New 
  York State Pension Fund........................................   193
Response to Questions from Barbara D. Bovbjerg...................   211
Questions for the Record: The Hon. Christy Romero................   214


   OVERSIGHT OF THE SIGTARP REPORT ON TREASURY'S ROLE IN THE DELPHI 
                            PENSION BAILOUT

                              ----------                              


                     Wednesday, September 11, 2013

                  House of Representatives,
             Subcommittee on Government Operations,
              Committee on Oversight and Government Reform,
                                                   Washington, D.C.
    The subcommittee met, pursuant to call, at 1:30 p.m., in 
Room 2154, Rayburn House Office Building, Hon. John Mica 
[chairman of the subcommittee] presiding.
    Present: Representatives Mica, Turner, Amash, Connolly, 
Pocan, and Cummings.
    Also Present: Representatives Brooks, Tiberi, and Ryan of 
Ohio.
    Staff Present: Molly Boyl, Senior Counsel and 
Parliamentarian; John Cuaderes, Deputy Staff Director; Linda 
Good, Chief Clerk; Tyler Grimm, Senior Professional Staff 
Member; Christopher Hixon, Deputy Chief Counsel, Oversight; 
Michael R. Kiko, Staff Assistant; Mark D. Marin, Director of 
Oversight; Laura L. Rush, Deputy Chief Clerk; Scott Schmidt, 
Deputy Director of Digital Strategy; Matthew Tallmer, 
Investigator; Sarah Vance, Asistant Clerk; Jaron Bourke, 
Minority Director of Administration; Jennifer Hoffman, Minority 
Communications Director; Adam Koshkin, Minority Research 
Assistant; Julia Krieger, Minority New Media Press Secretary; 
Jason Powell, Minority Senior Counsel; and Cecelia Thomas, 
Minority Counsel.
    Mr. Mica. Good afternoon. I would like to call the 
Subcommittee on Government Operations to order.
    Today we are conducting a hearing entitled ``Oversight of 
the SIGTARP Report on the Treasury's Role in the Delphi Pension 
Bailout.'' Given a few minutes for the minority to appear, but 
I want to go ahead with the proceedings. It appears that there 
will be votes and they will probably be the last votes of the 
day, beginning at a little after 2 o'clock. So we want to try 
to get through at least part of the witnesses and the opening 
statements, but welcome everyone today.
    I guess I can't start without remembering that today is 
September 11th. We did a memorial, a small service on the steps 
of the Capitol, and remembered those who lost their lives and 
others on the day that many of us were alive and have a memory 
we'll never forget. So I, too, remember them.
    I will remember, too, Barbara Olson, who was killed on the 
plane that crashed into the Pentagon, who worked for this 
committee, a wonderful young professional. We have lost her and 
lost a number of staffers, the 11 who worked with Senator 
D'Amato, who was head of the New York Port Authority. I left 
him in a room in the World Trade Center in a hearing I 
conducted there about a month before September 11th, and he and 
everyone who helped us during our hearing, none of them 
survived except for one.
    And then remember Terry Lynch, who was an aide to Senator 
Shelby, was in the Pentagon. I left the Pentagon from Secretary 
of Defense office September 11th with a breakfast meeting there 
just a few minutes before he and others were killed, Terry 
Lynch. So we remember him today and others that we lost on that 
fateful day. So remember him.
    And then Members of the Florida delegation also mourn today 
the loss of our recent member of the delegation, E. Clay Shaw, 
who passed away last night. So a day that we do remember both a 
former Member and the tragic events of September 11th.
    In just a minute I will yield to the minority, but I want 
to again welcome everyone. Today we are conducting the business 
of the people, and part of the responsibility of this 
subcommittee and our committee is to look at various operations 
of government, Federal Government, make certain that Americans 
see that their taxpayer dollars are properly spent, that we 
conduct thorough oversight of the legislative and executive 
process as we intend it and as we pass them, as things are 
executed. So that is an important responsibility that we share 
today in this committee and part of our business here.
    The order of business will be opening statements, I will 
give mine. We will recognize other members as they appear. And 
we may be joined with some Ohio members, I think we have, and I 
would like to ask unanimous consent that our colleague from 
Indiana, Mrs. Brooks, be allowed to participate in today's 
hearing. Without objection, so ordered.
    So we have one member from Indiana, and I think we may have 
some from Ohio joining us, too, who have interest in this 
hearing.
    So with that, then, we will recognize our panel of 
witnesses, hear from all of them, and then we will move to 
questions. So I will start with my opening statement.
    Again, welcome. Today's hearing concerns a very important 
issue that this committee has been working on for over 3 years. 
In June of this year, our subcommittee convened a hearing in 
Dayton, Ohio, an area hard hit by the substantial losses of 
pensions to the Delphi retirees. At that hearing, we heard from 
retirees who are, unfortunately, feeling the pain of some of 
the Obama administration's decision to pick very distinct 
winners and losers in the context of the GM bailout. As part of 
that, unionized Delphi retirees were made whole because they 
just happened to be a politically favored group and, 
unfortunately, the salaried, non-unionized pensioners were left 
out in the cold.
    This is somewhat sad because we used Federal money to which 
all these folks had contributed in their tax dollars to bail 
out these activities. And some were treated, again, we believe 
very unfairly. In fact, some 23,000, I think Mr. Turner has a 
great number in his district, and others that are affected.
    In addition to this financial hardship, non-unionized 
Delphi retirees feel betrayed by their government, and also by 
their former employer. While the unions, we find out from a 
special investigator general report, the unions, we find out, 
were pretty heavily involved in the negotiations surrounding 
the GM and Delphi bailout, the salaried employees did not have 
a seat at the table and unfortunately were left in the dark. 
This whole mess could have been avoided were GM to pursue a 
traditional bankruptcy route and not be subject to the 
political whims of the administration. The traditional 
bankruptcy route would have been better for GM in the long run 
and would have mitigated the risk of politicized decision 
making, such as what not just our committee found, but also 
confirmed now by the Special IG report that verifies the way 
this was conducted and how the Delphi salaried retirees' 
pensions were affected.
    The bankruptcy proceedings that occurred were simply a 
legal vehicle for delivering ownership shares in the auto 
companies to the government. In the words of one legal scholar, 
instead of a traditional bankruptcy, and let me quote, that 
scholar said, ``The Obama administration, working with the 
automakers, patched together a process without precedent, a 
bankruptcy without a bailout incorporating the worst elements 
of both.''
    The recent release of an audit by the Special Inspector 
General for the Troubled Asset Relief Program sheds light on 
the facts and circumstances surrounding this decision. We know 
that despite the Treasury's pledge not to be involved in the 
day-to-day operation of GM, that, in fact, Treasury and the 
auto task force played a major role in the decisions concerning 
GM operations.
    As you may know, just for the record, we tried for several 
years to get data and information which was withheld from this 
committee. I'm pleased that we have had the cooperation both of 
the pension guaranty fund now supplying the committee 
information we requested that was denied, and also we've gotten 
information from Treasury and others that I demanded that this 
committee have. And I appreciate now the compliance that's 2 
years overdue.
    Finally, from the report, and this is not my opinion, this 
is the Inspector General, Special Inspector General said, and 
let me quote, that ``despite the assurances that Treasury's 
role, as well as the Presidential task force for the auto 
industry, was purely advisory,'' and this is what SIGTARP 
found, the four Treasury auto teams, and I again quote, 
``played a direct role in GM's decisions and operations up to 
and through bankruptcy,'' including replacing the then-chief 
executive officer with Treasury's choice. So it shows a story a 
little bit different than we have been told and confirms, 
unfortunately, some of our worst suspicions.
    Today we will hear from key members of the President's 
automotive task force about the decisions they made, what took 
place, how those decisions led to, unfortunately, some very 
gross inequity between certain classes of employees, some with 
unions and some non-unionized Delphi employees. We will also 
hear from SIGTARP and the Inspector General--Special Inspector 
General--and GAO, both of whom conducted thorough audits 
relating to this issue.
    Lastly, I can't help but thank Mr. Turner of this panel for 
his unyielding dedication, determination, to get to the bottom 
of these issues. With his assistance, we are getting more of a 
complete picture and the information we requested and the 
taxpayers deserve in what took place in this whole process. Mr. 
Turner has tirelessly pursued justice in the area, he 
represents many of the folks who were affected, and our 
committee is, in fact, committed to finding out exactly what 
happened, when, who was involved, why, and particularly why 
there was unfair treatment with taxpayer dollars for some and, 
again, the unfairness of the whole process. These decisions 
were made on the basis of politics and not prudence. Those 
responsible need to be held accountable for their actions.
    I am now very pleased to recognize the distinguished 
ranking member, the gentleman from Virginia, Mr. Connolly, for 
an opening statement.
    Mr. Connolly. Mr. Chairman, I do have an opening statement, 
and I thank you. But I was running a little bit late. And out 
of courtesy, if the ranking member of the full committee wishes 
to go I would defer to him,
    Mr. Mica. Mr. Cummings, then, is recognized.
    Mr. Cummings. Thank you very much, Mr. Chairman. I want to 
thank the ranking member for his courtesy.
    Mr. Chairman, I want to thank you for convening what common 
sense would suggest will be the capstone on this committee's 
five-hearing inquiry into GM's decision making on Delphi 
pensions during the extraordinarily successful rescue of the 
United States automotive industry.
    In 2009 the administration's auto team members came from 
the private sector, took up the mantle of public service, and 
assumed responsibility of managing the investments that the 
Bush and Obama administrations made to save the United States 
auto industry from collapse. Thanks to their work, America's 
automotive industry today directly employs 1.7 million people, 
and indirectly this industry accounts for roughly 8 million 
jobs nationwide. That represents 4.5 percent of all private 
sector employment. It also accounts for roughly $500 billion in 
wages being paid to workers and $70 billion in personal income 
tax revenue.
    I thank the former auto team officials for their work to 
protect this industry and the American economy. You did a 
critical job, and you did it exceedingly well.
    It is unfortunate that, regardless of these impressive 
results, Republicans continue to criticize the successful 
rescue of the American auto industry. The majority, including 
members of this Committee, has perpetuated the narrative that 
government officials made the decision that the salaried 
retirees of Delphi would not get top-ups. We know now that that 
narrative is inaccurate. SIGTARP's report makes clear that a 
high-ranking GM official made that decision, not the 
administration. SIGTARP also found that at the time of the 
Delphi's spinoff from GM in 1999, the pensions of Delphi's 
salaried workers were fully funded. That is why the high-
ranking GM official believed that giving the salaried workers a 
top-up in 2009 would have been tantamount to paying that group 
of workers twice.
    SIGTARP also found that the unionized workforce did not 
receive fully funded pensions when Delphi was spun off. To the 
contrary, their pensions were underfunded. But their union 
negotiated contracts with GM to top up their pensions in the 
future, and when the union insisted that those contracts be 
honored in the bankruptcy process they were honored without 
question. SIGTARP found that, ``No person SIGTARP interviewed 
could recall any discussion of the top-up agreement at the 
negotiations.''
    The facts found by SIGTARP are consistent with GAO's 
review, completed more than a year and a half ago. GAO detailed 
the business reasons for GM to honor previous agreements with 
certain unions. A failure to honor those agreements would have 
jeopardized the company's ability to move forward.
    I feel bad for the Delphi employees who did not receive 
top-ups. There will be hard days ahead for them. They were 
betrayed by Delphi's management, which did not make pension 
payments for years after spinoff. But none of that is the fault 
of the government's effort to save GM. The investigation into 
this matter has been thorough.
    As an investigative body it is critically important that we 
follow the facts wherever they need. And it is equally 
important that when we get answers we accept those answers. We 
now have the facts. We now have the answers. And I ask that the 
majority accept them.
    And with that, Mr. Chairman, I yield back.
    Mr. Mica. Thank the gentleman.
    Yield now to the gentleman from Ohio, Mr. Turner.
    Mr. Turner. Thank you, Mr. Chairman.
    I am just astonished. And I'm sorry, Mr. Cummings, I 
usually don't respond directly to what someone else is saying 
in their opening statement, but all of that has absolutely 
nothing to do with this hearing whatsoever, and I hope that you 
actually sit down and read this report. There is nothing in 
this report that says that they were not involved in the PBGC's 
decision making with respect to Delphi's salaried retirees. In 
fact, this report is about the hourly, not the salaried, and 
you are going to see that when we have this discussion.
    In fact, it does say on the hourly the opposite of what you 
just said--again, if you'd read the report. Page 38 says, ``The 
Auto Team's role in the decision to top up the pensions of 
Delphi's UAW's workers was not advisory. Consistent with the 
Auto Team's practice, as with any liability, it would have been 
Treasury's decision as the buyer to assume or reject the 
liability to top-up the pensions of Delphi hourly UAW 
employees. The Auto Team actively negotiated and made the 
overall deal.''
    Now, there is partisan politics that shouldn't be happening 
here in this hearing. And the GAO report was not as extensive 
as this SIGTARP report has been. And I want to thank Ms. 
Romero, thank you for your in-depth review. This is the first 
time we have ever really had an insight into what the auto task 
force did. And I must tell you, it is just shocking, because 
remember the last hearing that we had, Mr. Cummings, Mr. 
Cummings, the last hearing we had, we had to have it because 
these gentlemen refused to even talk to the Inspector General. 
They said, we've left the government, we no longer have to 
answer questions on the work that we did. We have had to 
subpoena Treasury just to get to the bottom of what happened in 
these things.
    So now I want to give some context of what we are doing 
here today because this really, really is important. And this 
is the fact, that in the TARP process what occurred was not 
just the tragedy of the Delphi salaried retirees getting their 
pensions cut unjustly and I believe illegally, and the courts 
will determine that, but what we had with the entire process 
was thwarted, because of TARP. Normally when you have a 
bankruptcy each of the parties who have an interest in either 
the new entity that is coming out of the old entity that is 
going through the bankruptcy process sits in a chair and 
represents their interests or they have someone who sits there 
in a fiduciary capacity representing their interest.
    But what we had with TARP was this perversion of the 
process where each and every person sitting around the table 
suddenly became the Treasury Department. The banks became the 
Treasury Department, the lienholders and bondholders, the PBGC 
became the Treasury Department. Each and every one of these 
people became the Treasury Department. And what we kept saying 
throughout all of this, which is why we are having this hearing 
today, is tell us how you made your decisions. Tell us once you 
had all of these chairs whether or not you go to the standard 
of protecting the fiduciary interests of the people who were 
behind you because we don't believe that you did.
    What we find now from the SIGTARP report, which is the 
first time we have ever had any insight into what occurred in 
the decision making, we understand that they have set this 
unnecessary and artificial timeline of the quick wash, that 
they set the terms and the conditions, they determined who had 
leverage and who did not, some political, some not, and clearly 
throughout all of this is this concept of exceeding and abusing 
authority. This concept of commercial reasonableness that this 
group used as a standard for determining their decision making 
that had no definition and no legal justification, had people 
rewarded and people who were penalized. The administration 
picked winners and losers, and that is what this report says. 
And that is what we are going to get to today.
    Now, this does not decide the issue of PBGC and the Delphi 
salaried retirees. It was not intended to. This hearing is not 
to determine the end of the PBGC issue and GM issue with 
respect to the Delphi salaried retirees. That we will have to 
continue. GAO when they did their report only looked at public 
sources. They didn't have access to what the Inspector General 
did where they looked at the documents and looked at the emails 
between these individuals. And the SIGTARP Inspector General 
did not check or review the GAO work to determine whether or 
not additional documents were necessary or whether or not the 
documents that they had needed to have the GAO report amended 
or redone.
    But it tells us what we didn't see before: The 
administration has said they were not involved. They said they 
didn't do it, that they only were on the sidecar and watched as 
General Motors made the decisions. And what we know now from 
this report is the decision making was absolutely being made by 
the auto task force individuals themselves, that they were--the 
four Treasury auto team officials played a direct role in GM's 
decisions and obligations up to and through GM's bankruptcy. 
Treasury's auto team had significant leverage and influence on 
GM's decisions leading up to and through the bankruptcy first 
exerted by replacing the GM chief executive.
    So if the document itself is allowed to go through this 
hearing, instead of us just reading our own texts that our 
staffs have written, I think we will get to what really is the 
truth, what really happened, what needs to happen, was there 
injustice, and what this committee needs to do in further 
investigation, because this is not over.
    Thank you, Mr. Chairman.
    Mr. Mica. Thank the gentleman.
    Mr. Connolly.
    Mr. Connolly. Thank you, Mr. Chairman, and thank you for 
holding this hearing.
    Let me just say as a member of this committee I would 
caution my colleague as to characterizations about what 
homework is done or what reading is done or not done by the 
distinguished ranking member of this committee. I have known 
Mr. Cummings a long time. He does his homework. To suggest that 
his opinion is wrong because he didn't read the report I think 
crosses the line. If you want to disagree, disagree. But to 
impugn the reputation of the distinguished ranking member as 
somebody who comes here unprepared I take exception to on his 
behalf and on behalf of this side of the aisle. And I urge my 
friend from Ohio to restrain from such characterizations.
    Mr. Chairman, SIGTARP's report directly and definitively 
refutes the narrative we have just heard on this subject. And 
we just heard, for example, that this report didn't really 
address certain subjects. And I put up this slide.
    [Slide].
    Mr. Connolly. On Page 29 it most certainly does. It most 
certainly does talk about the salary plan and explains what 
happened, at least from somebody's point of view, SIGTARP's, 
why they didn't top-off the nonunion salaried retired pensions 
after the 1999 separation.
    This committee has explored in great depth the Federal 
Government's unprecedented intervention that not only rescued 
our Nation's auto industry, but enhanced the global 
competitiveness of the auto sector. Hopefully with the issuance 
of SIGTARP's report and today's hearing, we can finally put to 
rest the unsubstantiated conspiracy theories about picking 
winners and losers to benefit political allies.
    Unfortunately, some refuse to acknowledge the sheer 
complexity of the challenge then facing the administration in 
assisting General Motors to navigate what SIGTARP characterized 
as; ``one of the largest and fastest bankruptcies in the 
Nation's history.''
    It is easy to discount the monumental achievement in light 
of current auto industry conditions. Consider, just 2 years ago 
GM sold more than 9 million vehicles on its way to posting a 
record-breaking profit of $7.6 million, a company on the ropes 
that was looking at liquidation in 2009. Just last month GM 
posted its best month ever since the great recession.
    We must not forget the perilous days in late 2008 when 
leading economic think tanks were projecting the bankruptcy of 
all U.S. automotive manufacturing and that would trigger a 
collapse in the domestic auto industry costing us an additional 
3 million jobs while we were shedding 750,000 a month. Indeed, 
it was estimated just the liquidation of GM alone would lose 
900,000 industry jobs. And, of course, SIGTARP found; 
``Ultimately, GM did not fail and the broader systemic 
consequences of a GM failure that Treasury had feared were 
avoided.''
    Yet, the majority narrative continues to appear 
disinterested in convening a hearing to examine the lessons 
learned from all of that and from the effective Federal 
initiative to save the U.S. auto industry. Instead, we find 
ourselves holding what is now the fifth hearing to rehash some 
hackneyed assertions from the past.
    Of course a thorough review of SIGTARP's report enables one 
to test, and I think ultimately debunk, those unsubstantiated 
claims. For example, did the administration inappropriately 
intervene in the decision to deny Delphi's salaried workforce 
top-ups as part of the nefarious scheme to use GM's bankruptcy 
proceedings as a cover to protect political allies? No. As 
SIGTARP itself reports, there was no impropriety, and it was a 
sound business decision, from a substantial point of view, for 
GM to deny pension top-ups to certain Delphi employees.
    According to SIGTARP, more than a decade ago Delphi's 
salaried workers received full funding of their pensions when 
the firm was spun off from GM, while the unionized workforce 
did not. Instead, in exchange for underfunding union pensions 
in the spinoff, labor negotiated contractual agreements with GM 
legally binding contracts to protect the pensions of certain 
unionized Delphi hourly employees, not in the context of TARP, 
but 9 years earlier than that. This strategic decision paid off 
when the financial crisis hit and Delphi's unionized workforce 
emerged with its pensions protected.
    Regrettably, Delphi's salaried workforce had not negotiated 
similar contracts. And when GM entered bankruptcy, the firm had 
no contractual obligations to top-off their pensions. As 
SIGTARP noted, a hypothetical GM decision to top-off those 
pensions, a cohort that no longer worked for nor had any 
association with GM by the time of TARP, would be equivalent to 
GM paying for the Delphi salaried pensions twice from their 
point of view.
    The bottom line is that GM's refusal to top-off the 
pensions was a business decision, not a government policy 
decision. Nor is GM in the position before a bankruptcy judge 
to undertake a new financial obligation while it is trying to 
go through bankruptcy. In a perfect world, perhaps GM would 
have prioritized fairness over commercial interests and treated 
the pensions of all of its former employees at Delphi equally. 
But bankruptcy is not a perfect world. It is an unfair and 
staggeringly difficult battle for survival itself. And I 
believe the record presented by SIGTARP and the witnesses 
before us today clearly demonstrates that GM, supported by 
Treasury and the auto task force, made those tough decisions 
under tremendous pressure, but not political pressure.
    Thank you, Mr. Chairman.
    Mr. Mica. I thank the gentleman.
    Mr. Amash, did you have an opening statement?
    Mr. Pocan?
    Mr. Connolly. Mr. Chairman, could I ask unanimous consent 
to allow our colleague Mr. Tim Ryan of Ohio to participate?
    Mr. Mica. Yes. And what I'm going to do then is we've had 
Mrs. Brooks, who is not a member of the panel, and we approved 
her. I have your request for Mr. Ryan, gentleman from Ohio. And 
then we have a request for Mr. Tiberi, also a gentleman from 
Ohio. I ask unanimous consent that both of these colleagues be 
allowed to participate in today's hearing. Without objection, 
so ordered.
    Mr. Connolly. Thank you, Mr. Chairman.
    Mr. Mica. And our usual rule and procedure for those who 
have joined us would be we will recognize the members of the 
panel first and then we will go to you. I think what we are 
going to do, though, is if we have no further opening 
statements, is go right to our panel of witnesses. We are 
expecting votes shortly, as I said.
    So with that, let me introduce our panel of witnesses. We 
have the honorable Christy Romero.
    Before I do that let me say that, without objection, the 
record will also be open for additional statements to appear in 
the record at this point and throughout the proceedings to be 
fair to everyone who is now participating.
    Mr. Mica. Again, the panel of witnesses, the Honorable 
Christy Romero is the Special Inspector General for the 
Troubled Asset Relief Program. Ms. A. Nicole Clowers is 
director of the Financial Markets and Community Investments at 
the United States Government Accountability Office. Ms. Barbara 
Bovbjerg is managing director of Education, Workforce, and 
Income Security Issues at the Government Accountability Office.
    Mr. Matthew Feldman is a partner at the law firm of Wilkie 
Farr & Gallagher, and he served as legal adviser to the 
Treasury auto team. Mr. Steven Rattner is the chairman of 
Willett Advisors and served as the head of the Treasury auto 
team. And then we have Mr. Harry J. Wilson is the chairman, 
CEO, and founder of MAEVA Group and served as a member of the 
Treasury auto team.
    And finally, Mr. Harvey Miller is a partner at the law firm 
of Weil, Gotshal & Manges and served as lead counsel in the 
General Motors bankruptcy case and was the vice chairman and 
managing director of Greenhill & Co.
    So I welcome all of our witnesses. Let me say that this is 
an investigative panel, and it is our procedure to swear in all 
of our witnesses. So if you will stand now, all of the 
witnesses, raise your right hand. Do you solemnly swear or 
affirm that the testimony you're about to give before this 
subcommittee of Congress is the whole truth and nothing but the 
truth?
    All of the witnesses, the record will reflect, answered in 
the affirmative. Thank you.
    And let me just give you the ground rules here, too. We 
give you 5 minutes. If you have a lengthy statement, 
information you would like included in the record, just through 
the chair or a member, and ask consent, and we will include all 
of that in the record. So I would like you to summarize, try to 
keep it to 5.
    We will also go through the entire panel and then go to 
questions. We are going to try to get to as many as you can of 
you with the 5 minute. Then we will probably have to recess 
for, and the staff will tell us the amount of time the votes 
are--actually only one vote, so we will only recess for about 
15 minutes. Give you a chance to scoot out but be back. And 
then we will proceed immediately until we have heard from all 
of you. Then we will begin the questioning. So that is the 
order of business.
    So, again, thank you. Let me turn to our first witness, 
which is Christy Romero, and she is the Special Inspector 
General for the Troubled Asset Relief Program.
    Thank you for your work, and we recognize you now for your 
testimony.

                 STATEMENT OF CHRISTY L. ROMERO

    Ms. Romero. Chairman Mica, Ranking Member Connolly, and 
members of the committee, it is my honor to appear before you 
today.
    SIGTARP was created by Congress to conduct investigations 
and audits related to the TARP bailout. In our investigations 
we have--we are a law enforcement agency and we have authority 
to search, seize, and arrest. So far 151 people have been 
charged with crimes as a result of a SIGTARP investigation, 111 
of them have been convicted so far, while others await trial or 
a guilty plea, and of those that are convicted, so far 58 have 
been sentenced to prison while others await sentencing. And the 
average prison sentence for a SIGTARP investigated crime is 68 
months, which is nearly double the national average for white 
collar crime.
    We also conduct audits of decisions that were made related 
to TARP. And we issue these audits not to criticize for 
criticism's sake, but we issue them to ensure that our 
government functions at its best. We issue them to bring 
transparency, and we issue them so that we can learn from the 
past in case the government faces similar situations and 
decisions in the future.
    Our latest audit reviewed Treasury's role in the decision 
to top up, or make whole, certain unionized former GM employees 
who worked at Delphi. And Treasury's public statement that its 
role in that decision was advisory has caused unnecessary 
confusion. It's also inconsistent with Treasury's rights under 
the 2008 TARP loan agreement and as the purchaser of GM in 
bankruptcy.
    Under the TARP contract, there are certain big things, like 
the collective bargaining agreement with the union, where 
Treasury made the decision. And there are other things where 
Treasury could only advise GM. The top-up agreement and the 
collective bargaining agreement are not two separate things. 
The top-up is in the collective bargaining agreement. The UAW 
came to the negotiation with Treasury and GM with a priority 
list that included the top-up. There were no negotiations of 
the top-up. GM did not come to Treasury later to discuss it. It 
became a foregone conclusion that it would be included, with 
Mr. Rattner and Mr. Bloom of the auto team telling us that 
because it was on the UAW's list, it was clear that the UAW 
expected it to be part of the deal.
    As the purchaser, known as New GM, it was Treasury who made 
the decision on the collective bargaining agreement, because 
only the purchaser could define the relationship with the union 
and only the purchaser could determine which obligations to 
take on. Both GM officials and auto team officials told us that 
Treasury was the purchaser who made decisions on which 
obligations to take on. GM's lawyer, Mr. Miller, testified as 
to that today. Therefore the auto team's role could not be 
advisory. Who would they be advising?
    It would have been much better if Treasury had been 
transparent, saying that we had made the decision with GM to 
agree to the top-up because the UAW really wanted it and we are 
under time pressure. It would have been much better if Treasury 
had simply stated that we were concerned that in addition to 
the traditional strike leverage, that UAW had the leverage to 
prolong the bankruptcy, that they did not think that GM could 
survive a lengthy bankruptcy and that could hurt the auto 
industry. They should have explained their decision and trusted 
the American people to hear their reasoning. American taxpayers 
can either agree or disagree with what the auto team did, but 
they are entitled to full transparency, and that is why we put 
that report out.
    So what was the alternative? Well, one alternative would 
have been to actually raise and actually negotiate the top-up 
with the UAW. But Treasury conditioned the TARP funds on GM 
finishing the bankruptcy in 40 days--which had never been 
done--or else they would default. This severely limited the 
alternatives available to GM. GM's then-CEO told us they were 
under pressure to get the deal done, and that is why the top-up 
was not negotiated.
    But we found that the pressure came, in part, from the 40-
day time constraint, a timeframe that gave the UAW additional 
leverage. GM thought 40 days was unrealistic, that they needed 
60 to 90 days. No one will ever know if more time in the 
bankruptcy would have allowed for negotiation of the top-up, 
but Treasury should take accountability that their 40-day 
condition had the effect of limiting GM's options.
    Finally, there's an alternative still available today, 
which is for GM to consider topping-up, or contributing to, the 
Delphi salaried retirees today.
    Thank you again, and I'm happy to answer your questions.
    Mr. Mica. Thank you.
    [Prepared statement of Ms. Romero follows:]
    [GRAPHIC] [TIFF OMITTED] 85115.001
    
    [GRAPHIC] [TIFF OMITTED] 85115.002
    
    [GRAPHIC] [TIFF OMITTED] 85115.003
    
    [GRAPHIC] [TIFF OMITTED] 85115.004
    
    [GRAPHIC] [TIFF OMITTED] 85115.005
    
    [GRAPHIC] [TIFF OMITTED] 85115.006
    
    [GRAPHIC] [TIFF OMITTED] 85115.007
    
    [GRAPHIC] [TIFF OMITTED] 85115.008
    
    [GRAPHIC] [TIFF OMITTED] 85115.009
    
    [GRAPHIC] [TIFF OMITTED] 85115.010
    
    [GRAPHIC] [TIFF OMITTED] 85115.011
    
    [GRAPHIC] [TIFF OMITTED] 85115.012
    
    [GRAPHIC] [TIFF OMITTED] 85115.013
    
    [GRAPHIC] [TIFF OMITTED] 85115.014
    
    [GRAPHIC] [TIFF OMITTED] 85115.015
    
    [GRAPHIC] [TIFF OMITTED] 85115.016
    
    [GRAPHIC] [TIFF OMITTED] 85115.017
    
    [GRAPHIC] [TIFF OMITTED] 85115.018
    
    [GRAPHIC] [TIFF OMITTED] 85115.019
    
    [GRAPHIC] [TIFF OMITTED] 85115.020
    
    [GRAPHIC] [TIFF OMITTED] 85115.021
    
    [GRAPHIC] [TIFF OMITTED] 85115.022
    
    [GRAPHIC] [TIFF OMITTED] 85115.023
    
    [GRAPHIC] [TIFF OMITTED] 85115.024
    
    [GRAPHIC] [TIFF OMITTED] 85115.025
    
    [GRAPHIC] [TIFF OMITTED] 85115.026
    
    [GRAPHIC] [TIFF OMITTED] 85115.027
    
    [GRAPHIC] [TIFF OMITTED] 85115.028
    
    [GRAPHIC] [TIFF OMITTED] 85115.029
    
    [GRAPHIC] [TIFF OMITTED] 85115.030
    
    [GRAPHIC] [TIFF OMITTED] 85115.031
    
    [GRAPHIC] [TIFF OMITTED] 85115.032
    
    [GRAPHIC] [TIFF OMITTED] 85115.033
    
    [GRAPHIC] [TIFF OMITTED] 85115.034
    
    [GRAPHIC] [TIFF OMITTED] 85115.035
    
    [GRAPHIC] [TIFF OMITTED] 85115.036
    
    [GRAPHIC] [TIFF OMITTED] 85115.037
    
    [GRAPHIC] [TIFF OMITTED] 85115.038
    
    [GRAPHIC] [TIFF OMITTED] 85115.039
    
    [GRAPHIC] [TIFF OMITTED] 85115.040
    
    [GRAPHIC] [TIFF OMITTED] 85115.041
    
    [GRAPHIC] [TIFF OMITTED] 85115.042
    
    [GRAPHIC] [TIFF OMITTED] 85115.043
    
    [GRAPHIC] [TIFF OMITTED] 85115.044
    
    [GRAPHIC] [TIFF OMITTED] 85115.045
    
    [GRAPHIC] [TIFF OMITTED] 85115.046
    
    [GRAPHIC] [TIFF OMITTED] 85115.047
    
    [GRAPHIC] [TIFF OMITTED] 85115.048
    
    [GRAPHIC] [TIFF OMITTED] 85115.049
    
    [GRAPHIC] [TIFF OMITTED] 85115.050
    
    [GRAPHIC] [TIFF OMITTED] 85115.051
    
    [GRAPHIC] [TIFF OMITTED] 85115.052
    
    [GRAPHIC] [TIFF OMITTED] 85115.053
    
    [GRAPHIC] [TIFF OMITTED] 85115.054
    
    [GRAPHIC] [TIFF OMITTED] 85115.055
    
    [GRAPHIC] [TIFF OMITTED] 85115.056
    
    [GRAPHIC] [TIFF OMITTED] 85115.057
    
    [GRAPHIC] [TIFF OMITTED] 85115.058
    
    [GRAPHIC] [TIFF OMITTED] 85115.059
    
    Mr. Mica. And as I said, we will withhold questions.
    Now we have two GAO representatives, and we are going to 
recognize, I guess, Barbara Bovbjerg as the witness from GAO.
    So welcome, and you are recognized.

     STATEMENT OF BARBARA D. BOVBJERG AND A. NICOLE CLOWERS

    Ms. Bovbjerg. Thank you so much, Mr. Chairman, Mr. 
Connolly, members of the committee. Thank you for inviting me 
and my colleague, Nicole Clowers, here today to speak about the 
termination of the Delphi pension plans. Our testimony today 
will address the timeline of key events leading to the plan's 
termination and the role of Treasury in these activities. This 
information is drawn from our 2011 reports prepared for Mr. 
Turner and others and relies on publicly available documents.
    First, the pension plan terminations. In 1999, the Delphi 
Corporation, once part of GM, was spun off as an independent 
company, and as part of that arrangement GM was required to 
bargain with the unions affected by the spinoff. In those 
negotiations, GM agreed to provide top-ups to the unionized 
employees, meaning that if something went wrong with the 
pension plans for these employees under Delphi, GM would make 
good on their promised benefits. At the time of these 
agreements Delphi's hourly plan was not fully funded. In 
contrast, the salaried employees' plan was fully funded.
    So fast forward to October 2005 when Delphi filed for 
bankruptcy. All Delphi pension plans were underfunded, and 
Delphi was not planning to make any contributions to these 
plans during the bankruptcy process. Hence, the prospects for 
those plans, and for the participants' future benefits, got 
substantially worse.
    By the fall of 2008, Delphi was still in bankruptcy, and 
economic conditions had deteriorated throughout the auto 
industry. GM's losses led the company to seek assistance from 
the Federal Government. By April 2009, the Department of the 
Treasury was working with GM to develop a restructuring plan. 
And by June, GM, too, had filed for bankruptcy.
    In June, as part of an arrangement for GM to emerge from 
bankruptcy, GM and the UAW agreed to modify wages, benefits, 
and work rules to be more cost competitive and agreed that New 
GM would assume all employment-related obligations and 
liabilities for any employee benefit plan covered by collective 
bargaining agreements. This, in effect, maintained the benefit 
guarantees GM agreed to in 1999.
    Meanwhile, Delphi and PBGC began the process of what is 
called the distress termination of Delphi pension plans. In 
accordance with governing statutes, PBGC estimated that Delphi 
plans were $7 billion underfunded, with PBGC expected to bear 
$6 billion of that shortfall and Delphi plan participants the 
remaining billion. However, per the settlement agreement, GM 
provided top-up payments to all unionized workers. No such 
agreement pertained to salaried workers, and this is where the 
situation stands today.
    So let me turn to the role of Treasury in these decisions. 
As GM's primary lender, Treasury played a significant role in 
helping GM emerge from its bankruptcy, which included resolving 
the Delphi bankruptcy. However, with regard to GM decisions 
about the Delphi pension plans, the court filings and 
statements from GM and Treasury officials that we reviewed 
suggest that Treasury deferred to GM's business judgment.
    According to these records and to Treasury officials, 
Treasury agreed with GM's assessment that the company could not 
afford the potential costs of sponsoring the entire Delphi 
hourly plan itself upon emerging from bankruptcy. Treasury also 
agreed with GM's rationale not to assume the Delphi salaried 
plan since that plan had been fully funded when GM transferred 
it to Delphi in 1999.
    As for the top-ups, Treasury officials said that Treasury 
did not explicitly approve or disapprove of GM's proposal to 
honor previously negotiated top-up agreements with some unions. 
Treasury stated that its aim was to ensure that the New GM 
would only assume the liabilities of the old GM that were 
commercially necessary. Due to New GM's continued dependence on 
the UAW workforce and the workforce of the other unions, 
Treasury officials felt GM had solid commercial reasons to 
agree to the top-up pensions of those retirees.
    I'd like to conclude with a few thoughts about these 
pension terminations. Under pension insurance laws, when 
companies go bankrupt and leave their plans with large unfunded 
liabilities, some participants may not get the full benefits 
promised to them by their employer. This, unfortunately, is not 
unusual. What makes the Delphi terminations different is the 
linkage to the GM bankruptcy and GM's role as a pension benefit 
guarantor.
    Additionally, Treasury's multiple roles in this process, as 
SIGTARP just noted, have led to concerns about transparency to 
Congress and to the public. Although Treasury has established 
policies to separate its multiple interests, we believe the 
most effective means of addressing concerns about these 
different roles is for Treasury to be as transparent as 
possible about its activities.
    And that concludes our statement, Mr. Chairman. Ms. Clowers 
and I are happy to answer questions.
    Mr. Mica. Thank you.
    [Prepared statement of Ms. Bovbjerg and Ms. Clowers 
follows:]
[GRAPHIC] [TIFF OMITTED] 85115.060

[GRAPHIC] [TIFF OMITTED] 85115.061

[GRAPHIC] [TIFF OMITTED] 85115.062

[GRAPHIC] [TIFF OMITTED] 85115.063

[GRAPHIC] [TIFF OMITTED] 85115.064

[GRAPHIC] [TIFF OMITTED] 85115.065

[GRAPHIC] [TIFF OMITTED] 85115.066

[GRAPHIC] [TIFF OMITTED] 85115.067

[GRAPHIC] [TIFF OMITTED] 85115.068

[GRAPHIC] [TIFF OMITTED] 85115.069

[GRAPHIC] [TIFF OMITTED] 85115.070

[GRAPHIC] [TIFF OMITTED] 85115.071

[GRAPHIC] [TIFF OMITTED] 85115.072

[GRAPHIC] [TIFF OMITTED] 85115.073

[GRAPHIC] [TIFF OMITTED] 85115.074

[GRAPHIC] [TIFF OMITTED] 85115.075

[GRAPHIC] [TIFF OMITTED] 85115.076

[GRAPHIC] [TIFF OMITTED] 85115.077

[GRAPHIC] [TIFF OMITTED] 85115.078

[GRAPHIC] [TIFF OMITTED] 85115.079

[GRAPHIC] [TIFF OMITTED] 85115.080

[GRAPHIC] [TIFF OMITTED] 85115.081

    Mr. Mica. And as I said, we will get to questions in a 
little while after we have heard from the others.
    Let's see. We have next Mr. Feldman. Matthew Feldman is a 
partner in Wilkie, Farr & Gallagher.
    Welcome, and you are recognized.

                STATEMENT OF MATTHEW A. FELDMAN

    Mr. Feldman. Thank you. Mr. Chairman and members of the 
committee, I understand that I have been invited to appear 
before you today to discuss my role with the Treasury 
Department's auto team, which I joined in March 2009 as legal 
adviser and on which I served until August 2009. The Treasury 
Department recruited me to join the auto team from my career as 
an attorney in private practice where I specialized in 
reorganizing and restructuring large businesses, not unlike the 
American automobile manufacturers that were in significant 
financial distress in 2009.
    I believe that the work of the auto team contributed to a 
successful effort to avert disastrous consequences to both the 
American automobile industry and the American economy as a 
whole. Now, just 4 years after emerging from bankruptcy, both 
General Motors and Chrysler are selling cars and adding jobs at 
a pace most thought unachievable. I remain proud of my service, 
and I'm prepared today to assist the committee in reaching a 
complete understanding of the auto team's work with respect to 
General Motors and in particular its relationship with its 
critical supplier, Delphi Corporation, during what was a 
difficult time and an unprecedented challenge for all involved.
    Although it is wonderful to see the dramatic recovery of 
the automobile manufacturers and the thousands of American jobs 
that were saved and have been created as a result of our work, 
I'm mindful that the restructurings that the auto team worked 
on required many Americans to make great personal sacrifices. 
As a result of the Delphi bankruptcy, for example, Delphi's 
lenders, some of which had purchased Delphi's debt at a steep 
discount, exerted significant influence over Delphi, and 
ultimately the PBGC, which forced the PBGC to terminate 
Delphi's pension plans. As a result of what occurred during the 
Delphi bankruptcy, there are Delphi retirees who, 
unfortunately, will collect less than their full pension 
benefits.
    As stated by the Special Inspector General for the Troubled 
Asset Relief Program in her August 15 report to Treasury 
Secretary Lew, in 1999, when General Motors spun out Delphi as 
a separate company, Delphi's pension plan for its salaried 
employees was significantly overfunded, but the pension plans 
for hourly workers were significantly underfunded. To garner 
support and consent from the UAW and other unions for the 
Delphi spinoff and to avoid having to make a significant 
payment in 1999, General Motors and the UAW entered into a top-
up agreement whereby General Motors agreed to make whole hourly 
employees being transferred to Delphi on their pension 
obligations in the unlikely but ultimately real event that 
Delphi defaulted on its pension obligations.
    Following years of mismanagement and malfeasance, Delphi 
was forced to file for bankruptcy in 2005 after having allowed 
both its salaried and hourly pension plans to become 
underfunded, a situation that ultimately led the PBGC to 
conclude it needed to take action to terminate both plans.
    As stated by the GAO in its March 30, 2011, report to 
Congress on the topic, the PBGC reached its own conclusion to 
terminate the Delphi pension plans, presumably after concluding 
that this was proper action to take under applicable law and 
that among the limited options available for these plans, the 
termination and takeover by the PBGC was the best choice 
available. While I can understand why all parties involved 
would have preferred if General Motors had assumed these Delphi 
pension plans, taking on these liabilities in full would have 
threatened GM's future success as it exited from its own 
bankruptcy. While General Motors was not willing to assume all 
of the pension plans, as the SIGTARP report makes clear, 
because GM viewed a well motivated workforce at its own 
facilities and at its largest supplier as critical to ensuring 
an uninterrupted supply chain, General Motors made the 
commercially reasonable and necessary decision to honor its 
legal obligation memorialized in the top-up agreement with the 
UAW.
    The decision to assume the UAW top-up agreement was 
bargained for by the UAW and agreed to by General Motors after 
having been extended by the parties once in 2007. As this 
committee is aware, unfortunately, many of Delphi's employees 
did not have similar top-up agreements with General Motors, and 
some of the employees will face a shortfall in their pension 
placements.
    The auto team agreed that honoring the top-up agreement was 
a prudent business decision. We believed that doing so would 
protect both General Motors' and the American taxpayers' 
collective investment in the company. The desire to limit 
General Motors' stay in bankruptcy was purely economic. Every 
week of bankruptcy where General Motors continued to carry all 
of its costs but generated little or no revenue would cost the 
American taxpayers $1 billion. The need for General Motors to 
complete a 363 sale in a short time period was intended, among 
other benefits, to limit the costs being borne by taxpayers.
    While I'm pleased that General Motors and other American 
automobile manufacturers have become successful, profitable 
contributors to our economy, I recognize that the restructuring 
process has resulted in painful but necessary sacrifices on 
many of Delphi's stakeholders. As a bankruptcy practitioner and 
restructuring specialist, I've seen similar circumstances all 
too often. It is without a doubt one of the most difficult, 
disheartening aspects of my job, and I have only the deepest 
sympathies for everyone affected. I'm here today and prepared 
to answer any of the questions of the committee.
    Mr. Mica. Well, thank you.
    [Prepared statement of Mr. Feldman follows:]
    [GRAPHIC] [TIFF OMITTED] 85115.082
    
    [GRAPHIC] [TIFF OMITTED] 85115.083
    
    [GRAPHIC] [TIFF OMITTED] 85115.084
    
    [GRAPHIC] [TIFF OMITTED] 85115.085
    
    [GRAPHIC] [TIFF OMITTED] 85115.086
    
    Mr. Mica. We have 4 minutes left before the vote, so what 
we are going to do is we will recess now. Now, I'm told there 
will be three votes, so this will be a little bit longer. It 
usually takes us 15 minutes, another 5 and 5, probably be back 
here about 10 minutes of, to 5--10 minutes of to the hour of 3 
o'clock, somewhere there, and we will come back.
    Mr. Rattner, you will be the first recognized, Mr. Wilson 
and Mr. Miller we will go through. And so you don't want to 
wander too far off.
    So with that, the committee stands in recess until after 
these votes.
    [Recess.]
    Mr. Mica. I'd like to call the subcommittee back to order. 
I appreciate everyone's patience in dealing with the votes. We 
ended up with--first they said one, then they said three, and 
we ended up with two. So we should have some other members 
returning, but we're going to go ahead and take off where--I'm 
sorry--take--continue as to where we left off, and I think we 
left off with Mr. Feldman and we're going to go to Mr. Rattner 
now.
    Mr. Steven Rattner is Chairman of the Willett Advisors. 
Welcome, sir, and you're recognized.

                  STATEMENT OF STEVEN RATTNER

    Mr. Rattner. Thank you, Mr. Chairman. It is sometimes 
difficult to recall that just 5 years ago the American auto 
industry was in a severe crisis that threatened its very 
existence and the broader American economy. It is 
incontrovertible that absent government intervention, both 
General Motors and Chrysler would have been forced to cease 
production, close their doors, and lay off virtually all their 
workers. These shutdowns would have reverberated through the 
entire auto sector, causing innumerable suppliers to almost 
immediately also stop operating. More than a million jobs would 
have been lost, at least for a time. Michigan and the entire 
industrial Midwest would have been devastated. Everything we 
did in the government at that time was driven by our profound 
desire to prevent such an economic calamity while honoring our 
responsibilities to the taxpayers, and by any objective 
measure, I believe our efforts were a success.
    Today, General Motors is once again profitable and healthy. 
It has gone from a company that was hemorrhaging money before 
the financial crisis to one that turned a $1.2 billion profit 
in its most recent quarter, driven by strong North American 
sales.
    The restructuring of GM's contract with the United Auto 
Workers provided the company with new flexibility to use its 
workforce efficiently and expanded its ability to hire new 
workers at considerably lower costs. And GM has vastly improved 
its product lineup so that it is once again selling the kinds 
of cars consumers want to buy, and demonstrating the power of 
American ingenuity, engineering and manufacturing. At the same 
time, the government is successfully winding down its ownership 
stake in GM and returning the company to private hands.
    Of the $51 billion that the taxpayers invested in GM, more 
than $34 billion has been repaid to the Treasury, and Treasury 
has stated that further GM stock sales are planned in the 
coming year. It makes clear that the government's actions were 
a necessary and prudent emergency measure to get GM back on its 
feet, not a permanent government takeover of private industry, 
as some at the time feared.
    This remarkable turnaround could not have occurred without 
significant restructuring at GM, a restructuring that 
regrettably but inevitably involved painful sacrifices from all 
of GM's stakeholders, but particularly its bond holders, 
dealers, suppliers, employees and retirees.
    It is not easy to make these kinds of decisions under any 
circumstances. It was particularly challenging in the crisis 
atmosphere that GM was facing at the time. No one wants to get 
cents on the dollar of their investment or have their 
dealership closed or see their incomes or benefits reduced. 
These are personal pocket book issues for those affected, and 
unfair almost by definition.
    To understand the decisions that were made, I believe it is 
important to appreciate that the Auto Task Force had two 
overriding goals: to restore a viable and thriving auto 
industry while acting as a prudent custodian of taxpayer funds. 
To achieve these goals, we were guided by the principle that 
Treasury, as GM's partner in bankruptcy, was entitled to set 
parameters and provide guidance to GM that was consistent with 
what would be commercially reasonable.
    In accordance with that principle, the Auto Task Force 
helped GM determine the broad strategic policies that would 
return the company to competitiveness at the least cost and 
risk to taxpayers. Day-to-day management remained the 
responsibility of GM.
    I know the subcommittee is interested in one of those 
decisions in particular, which was GM's decision to honor a 
pre-existing commitment to provide supplemental pension 
benefits, or top-ups, to certain hourly employees at Delphi, a 
critical GM parts supplier that was itself in bankruptcy. Other 
hourly employees and salaried employees at Delphi were not 
provided similar top-ups.
    Although I fully understand that it was painful for the 
salaried employees who saw their pensions cut and perhaps made 
more painful by the fact that some of their hourly colleagues 
did receive top-ups, I believe the Special Inspector General's 
report makes clear that GM's decision to honor its top-up 
agreement in bankruptcy was consistent with a commercially 
reasonable approach.
    The Delphi hourly employees who received top-ups were 
differently situated from the salaried employees who did not. 
For reasons that predated GM's bankruptcy and the work of the 
Auto Task Force, GM had fully funded the salaried employees' 
pensions, but not the hourly employees' pensions before the 
Delphi spin-off in 1999. At that time, the hourly employees 
negotiated for a top-up agreement from GM, but the salaried 
employees, who were fully funded, did not.
    As the Special Inspector General's report explains, GM was 
therefore under no obligation to top-up the salaried employees' 
pension, and indeed doing so on its own initiative would have 
been like paying for the pensions twice. Such an action, while 
generous, would not have been consistent with the goals of 
restoring the GM--of restoring GM to viability or protecting 
U.S. taxpayers' investment.
    It is certainly true that in bankruptcy GM had the option 
of refusing to honor its agreement to top up the hourly 
workers' pensions as well. Again, I think the Special Inspector 
General's report makes clear that its decision to honor the 
prior agreement was consistent with what was commercially 
reasonable.
    Those employees were represented by the UAW, the same union 
that represented 99--represents 99 percent of GM's unionized 
workforce. UAW is an absolutely critical party to bring to the 
negotiating table. They had the power to hold up the deal in 
bankruptcy or to strike, either of which could have been 
devastating to GM's efforts to get back on its feet, and in 
turn, to the U.S. economy. This disparity in bargaining 
leverage may not seem fair, but it was the reality. And as I 
mentioned earlier, GM extracted considerable concessions from 
the UAW in order to reduce GM's labor costs going forward and 
get it on a sustainable profitable path. Five years later, I 
think it is clear that the government's extraordinary 
intervention in the American auto industry has been a success.
    I deeply wish that the actions we took did not have to be 
taken, but I am proud that we avoided a devastating dissolution 
of this vital sector of the economy and gave the American auto 
industry the opportunity to once again lead and succeed. Thank 
you.
    Mr. Mica. Thank you.
    [Prepared statement of Mr. Rattner follows:]
    [GRAPHIC] [TIFF OMITTED] 85115.087
    
    [GRAPHIC] [TIFF OMITTED] 85115.088
    
    [GRAPHIC] [TIFF OMITTED] 85115.089
    
    Mr. Mica. We will recognize now Mr. Harry Wilson, Chairman 
and CEO of the MAEVA Group. Welcome, and you're recognized.

                  STATEMENT OF HARRY J. WILSON

    Mr. Wilson. Thank you. Mr. Chairman, Ranking Member 
Connolly, and members of the subcommittee, thank you for the 
opportunity to testify before you today on this somber 
anniversary of the attacks on 9/11.
    I'm here to report, at your request, on the 2009 auto 
rescues and the recent SIGTARP report on Delphi pensions. I'd 
like to make several comments on the report. First, I believe 
the value of the report makes clear that General Motors' 
management acted in a commercially reasonable manner in 
determining how they would treat various groups of Delphi 
retirees.
    As the report makes clear, General Motors had a choice: 
Option A, they could choose to not provide any funding at all 
for Delphi's underfunded pension plan; option B, they could 
choose to fully fund, top-up or even assume all of Delphi's 
underfunded pension plans at great cost; or option C, they 
could choose to fund or top-up only the plans they needed to 
preserve the viability of GM's own reorganization process.
    As the SIGTARP report clearly shows, Option A was not a 
viable option. GM's CEO at the time, Fritz Henderson, indicated 
that if the pension guaranty of the UAW was not assumed by New 
GM, there would have been a strike, and thus it was: mission 
impossible.
    On Option B, GM management believed there was no commercial 
justification for it, which would have involved assuming the 
pensions of nearly 70,000 salaried and hourly pensioners, a 
majority of whom GM had never committed to support after the 
1999 Delphi spin-off, a group that included 20,000 salaried 
employees, 18,675 hourly employees and 2,000 other employees.
    At Delphi itself, none of the prospective investors in 
Delphi had indicated any willingness to maintain Delphi's 
pension funds, so unfortunately there was just no contractual 
or market-based support for Option B.
    And that left only Option C, the path GM ultimately 
pursued, where they agreed to assume existing top-up agreements 
only in cases where they felt they needed to in order to 
successfully emerge from bankruptcy and operate successfully 
thereafter.
    The record clearly supports these facts; however, I do need 
to disagree with and correct for the record several 
characterizations made in the summary and conclusions sections 
of the SIGTARP report. First, the report makes several points 
criticizing the commercial approach which the auto team was 
tasked to utilize. For example, SIGTARP implies the auto team 
worked too closely with GM management in developing a viable 
plan for GM's restructuring; however, the facts at the time and 
the results since repudiate this criticism.
    When the auto team was first formed, GM had already failed 
multiple times to develop a viable plan on its own, and the 
Treasury, and thus the American taxpayer, was funding multi-
billion-dollar monthly losses with no end in sight. Time was of 
the essence. And in that spirit, the auto team worked closely 
with GM management as they developed their revised viability 
plan, offering real time feedback and helping speed along a 
process that would normally take months and would have costs 
tens of billions of dollars more than it ultimately did.
    This was exactly the type of work which the auto team had 
been created to do: to determine if there was a path to 
viability for General Motors, and if so, work with management 
to achieve that path.
    The commercial success of General Motors since this work 
was completed is beyond dispute. Just last week, a Bloomberg 
article on the resurgence of the American auto industry stated, 
``Detroit has come full circle, from bankruptcy to boom.'' 
Those fatter profits come from trimmer companies that radically 
restructured operations, shed debts, and overhauled their 
lineups.
    SIGTARP also argues that Treasury inadvertently created a 
negotiating leverage for the UAW due to its aggressive time 
line for the restructuring process. Nothing could be further 
from the truth. The UAW had enormous leverage because they 
represented nearly 100 percent of the GM hourly workers with 
the skills to manufacture cars, and they are prepared to use 
that clout to press certain key issues. Nothing else in the 
restructuring process provided them any additional leverage, 
nor did they need more.
    Furthermore, the SIGTARP report is silent on what viable 
alternatives, if any, there might have been for the path GM 
pursued.
    Like all choices in the real world, all the difficult 
decisions that were made during the auto rescues were about a 
series of trade-offs of bad and less bad options. For example, 
SIGTARP implies the auto team should not have established such 
an aggressive restructuring time line; however, all industry 
commentators, GM management and the auto team itself, in fact, 
not a single contrary voice that I'm aware of were convinced 
that GM could not survive a prolonged bankruptcy. As a result, 
there was no viable procedure or alternative to a very rapid 
Section 363 sale. Moreover, Section 363 sales like this have 
been done at times in the past for exactly these reasons. So in 
reality, neither GM management nor Treasury had a practical 
alternative, unfortunately, to the course that was followed. 
This is not to say that these choices were at all satisfactory. 
Sadly, the costs inherent in a restructuring as difficult as 
General Motors' are massive and tragic. In a better world, none 
of these difficult and painful actions would have been 
necessary; however, it is equally clear that for General 
Motors, there was not a viable alternative path available to 
it, and far greater costs and tragedies were avoided as a 
result of the work that was done by both companies, their many 
advisers, and the Bush and Obama administrations.
    I look forward to discussing these issues with you today. 
Thank you.
    Mr. Mica. Thank you.
    [Prepared statement of Mr. Wilson follows:]
    [GRAPHIC] [TIFF OMITTED] 85115.090
    
    [GRAPHIC] [TIFF OMITTED] 85115.091
    
    [GRAPHIC] [TIFF OMITTED] 85115.092
    
    [GRAPHIC] [TIFF OMITTED] 85115.093
    
    Mr. Mica. And we will now turn to our last witness, Mr. 
Miller. And Mr. Miller is a senior member of an international 
law firm. And welcome, and you're recognized.

                 STATEMENT OF HARVEY R. MILLER

    Mr. Miller. Thank you, Mr. Chairman, Mr. Connolly, and 
members of the committee for the opportunity to participate in 
this hearing.
    I acted as the lead attorney for General Motors in 
connection with its restructuring under Chapter 11 of the 
Bankruptcy Code via a sale pursuant to Section 363 to an entity 
sponsored and financed by the U.S. Treasury and the governments 
of Canada and Ontario through its Export Development Canada.
    During the period preceding the commencement of the Chapter 
11 case, General Motors was subjected to substantial adverse 
circumstances, beginning in 2007, as the subprime mortgage 
crisis began to surface and affect auto and truck sales. That 
was compounded by a surge in oil prices in the summer of 2008 
and further diminished--that further diminished consumer demand 
and caused sales to erode. As a result, GM's liquidity began to 
dry up. Conditions worsened with the financial crisis ignited 
by the conservatorships for Fannie Mae and Freddie Mac and 
ultimately the bankruptcy of Lehman Brothers. The future of the 
automotive industry looked bleak and the parts supplier 
industry had supplies which were beginning to fail.
    President Bush recognized the potential calamity, and 
directed the U.S. Treasury to enter into a financing agreement 
with General Motors that resulted in the secured loan agreement 
to avoid the consequences to the American automotive industry 
and the loss of hundreds of thousands of jobs then at stake.
    Unfortunately in 2009, conditions continued to erode. The 
Obama administration inherited the administration of the 
secured loan agreement, and GM needed additional financing. The 
auto team was appointed and got involved in the negotiations as 
to additional financing.
    Central to those negotiations was the protection of 
taxpayer monies, and therefore the requirement that GM submit a 
feasible business plan that provided the prospect of restored 
viability and recovery of monies advanced.
    The auto team conducted intensive due diligence in 
discharging its functions. The important point is that the auto 
team and the government at all times acted in the same manner 
as a private secured lender attempting to protect its loan, but 
also complicated by the desire to retain an American automotive 
industry.
    In that context and in the face of the deepening global 
economic crisis, it became obvious that without radical 
surgery, restructuring its finances and operations, GM would 
fail, and that would cause a chain reaction throughout the 
automotive industry.
    That led to the exploration of alternative issues and 
possible solutions. That led to the direction of conducting a 
Section 363 sale under the Bankruptcy Code, a process which was 
not at least at that point totally novel, and had been used in 
many other similar situations.
    As it became evident that there was no access to credit for 
General Motors and the large amount of debt outstanding to the 
United States, the only source of financing and investment was 
the U.S. Treasury and the Export Development of Canada.
    Integral to the process, as amply described in my written 
testimony, was that the end result would be an operating 
efficient company capable to compete in its own marketplaces 
with a prospect of returning to the purchase of all or a good 
portion of its loans and investments. Incidentally, that is the 
same objective that ultimately was the objective of the 
Unsecured Creditors Committee that was appointed in the Chapter 
11 cases to recover some return on claims of unsecured 
creditors, which I might say included salaried employees of 
both GM and ultimately through Delphi's own Chapter 11 case.
    This is the normal process in Chapter 11 cases involving 
Section 363 sales, private lenders and investors, and a process 
that was used basically in the Bethlehem Steel case. In Section 
363 situations, the purchaser is an active participant in the 
structuring of the sale and often selects the assets which are 
to be purchased and the executory contracts which should be 
assumed and leases and along those avenues.
    In connection with a 363 sale that anticipates a 
operating--an ongoing operations, labor unions have a level of 
leverage that other participants don't have. A sale is not 
going to be successful if you cannot operate the plant, and to 
operate the plant, you have to have workers and labor piece, 
and that was what--one of the main objectives in connection 
with the Section 363 sale and the restructuring of General 
Motors.
    As I set forth in the written testimony, the relationship 
with Delphi Corporation was very complex. Delphi was a major 
supplier to GM, and without those supplies, it would have been 
impossible for GM to continue to operate its plant. 60 percent 
of steering parts came from Delphi.
    The two Chapter 11 cases in some respects were joined at 
the hip. It turned out to be a very successful operation. GM is 
successful, Delphi is successful, and I think the government 
and the GM management did a great job in coming up with a 
feasible plan.
    Thank you for this opportunity.
    Mr. Mica. Thank you.
    [Prepared statement of Mr. Miller follows:]
    [GRAPHIC] [TIFF OMITTED] 85115.094
    
    [GRAPHIC] [TIFF OMITTED] 85115.095
    
    [GRAPHIC] [TIFF OMITTED] 85115.096
    
    [GRAPHIC] [TIFF OMITTED] 85115.097
    
    [GRAPHIC] [TIFF OMITTED] 85115.098
    
    [GRAPHIC] [TIFF OMITTED] 85115.099
    
    [GRAPHIC] [TIFF OMITTED] 85115.100
    
    [GRAPHIC] [TIFF OMITTED] 85115.101
    
    [GRAPHIC] [TIFF OMITTED] 85115.102
    
    [GRAPHIC] [TIFF OMITTED] 85115.103
    
    [GRAPHIC] [TIFF OMITTED] 85115.104
    
    [GRAPHIC] [TIFF OMITTED] 85115.105
    
    [GRAPHIC] [TIFF OMITTED] 85115.106
    
    [GRAPHIC] [TIFF OMITTED] 85115.107
    
    [GRAPHIC] [TIFF OMITTED] 85115.108
    
    [GRAPHIC] [TIFF OMITTED] 85115.109
    
    [GRAPHIC] [TIFF OMITTED] 85115.110
    
    [GRAPHIC] [TIFF OMITTED] 85115.111
    
    [GRAPHIC] [TIFF OMITTED] 85115.112
    
    [GRAPHIC] [TIFF OMITTED] 85115.113
    
    [GRAPHIC] [TIFF OMITTED] 85115.114
    
    [GRAPHIC] [TIFF OMITTED] 85115.115
    
    [GRAPHIC] [TIFF OMITTED] 85115.116
    
    [GRAPHIC] [TIFF OMITTED] 85115.117
    
    [GRAPHIC] [TIFF OMITTED] 85115.118
    
    [GRAPHIC] [TIFF OMITTED] 85115.119
    
    [GRAPHIC] [TIFF OMITTED] 85115.120
    
    [GRAPHIC] [TIFF OMITTED] 85115.121
    
    [GRAPHIC] [TIFF OMITTED] 85115.122
    
    [GRAPHIC] [TIFF OMITTED] 85115.123
    
    [GRAPHIC] [TIFF OMITTED] 85115.124
    
    [GRAPHIC] [TIFF OMITTED] 85115.125
    
    [GRAPHIC] [TIFF OMITTED] 85115.126
    
    [GRAPHIC] [TIFF OMITTED] 85115.127
    
    [GRAPHIC] [TIFF OMITTED] 85115.128
    
    [GRAPHIC] [TIFF OMITTED] 85115.129
    
    [GRAPHIC] [TIFF OMITTED] 85115.130
    
    [GRAPHIC] [TIFF OMITTED] 85115.131
    
    [GRAPHIC] [TIFF OMITTED] 85115.132
    
    Mr. Mica. And I thank all of our witnesses for their 
testimony, and we will turn to questions now.
    First I want to talk to the Special Inspector General, Ms. 
Romero. I just about fell out of my chair when you cited the 
number of convictions and also the people charged with stealing 
from TARP. Could you repeat that again for the record?
    Ms. Romero. Absolutely. I really appreciate you raising 
this. So SIGTARP's a law enforcement agency, so we conduct 
criminal investigations. As a result of our investigations so 
far, 151 people have been charged with crimes and 111 of them 
have been convicted so far. The others are waiting trial or----
    Mr. Mica. 111 convicted.
    Ms. Romero. Yep. 58 of those----
    Mr. Mica. Let me just say, good work. I don't think any of 
the American people--I mean, TARP is always touted as such a 
success and everything, but it looks like when you open the 
cupboard, the rats find their way to the cheese and steal a lot 
of it.
    When we talk about this whole topping-up of pensions, this 
isn't--this wasn't a normal bankruptcy. It would have been 
handled quite differently, wouldn't it, Ms. Bovbjerg, if this 
was a regular bankruptcy?
    Ms. Bovbjerg. Normally in bankruptcy when plans are being 
terminated--and just to be clear, usually PBGC is terminating 
plans because there is no viable sponsor and they're 
underfunded.
    Mr. Mica. But the whole bankruptcy was--it wasn't handled 
like a normal bankruptcy, right?
    Ms. Bovbjerg. From a PBGC perspective----
    Mr. Mica. What's the difference--what was the difference in 
this, in how this was handled?
    Ms. Bovbjerg. What made these terminations unique was the 
presence of GM.
    Mr. Mica. Yeah. But, again, the whole difference in what 
was done here is the topping-up, and, again, what took place 
was that they were using what? That's the question. Can you 
answer that? Anyone know? Taxpayer money? Is that the truth?
    Ms. Bovbjerg. It's a little unclear, because it's all 
fungible. I mean, we were not--we were not looking to track 
that, but----
    Mr. Mica. I know, but where the hell did the money come 
from? Excuse the expression. It came from the taxpayers. Even 
Mr. Miller, the minority witness, just said that it was--it was 
taxpayer money, and most of it's deficit money, $0.40 on the 
dollar, but that's the difference. I have been in business, and 
you file bankruptcy and you go through a court proceedings. And 
there may be some protection of pensions through a Pension 
Guarantee Fund if you're a participant, et cetera, but the 
difference here is that taxpayer money was making up the 
difference.
    Now, some of you all participated in a--it was the 
presidential--President's Auto Task Force. Raise your hand if 
you participated. Okay. Three here. Okay. Did you all 
participate in the Poughkeepsie meeting? Did you participate in 
the Poughkeepsie meeting, Feldman? No?
    Mr. Feldman. Not familiar.
    Mr. Mica. You weren't there. Were you there, Rattner.
    Mr. Rattner. I----
    Mr. Mica. Were you there, Wilson.
    Mr. Wilson. Do you mean the Poughkeepsie Delphi mediation?
    Mr. Mica. Yeah.
    Mr. Wilson. Yes.
    Mr. Mica. But the other two were not. So you're the only 
one at the table that was there, right?
    Mr. Wilson. I think that's correct.
    Mr. Mica. Okay. And I understand there were union 
representatives at that meeting, and that was the basis of a 
lot of discussion that was taken prior to making a final 
decision as to how this was going to all play out, but there 
was no one--not--no one from the non-salaried side of the 
equation, was there?
    Mr. Wilson. Sir, I don't recall that. The primary 
participants were representatives of GM and Delphi.
    Mr. Mica. But were there union representatives? I was told 
there was a union representative. Does anyone know?
    Mr. Wilson. There were dozens of people there. I don't know 
for sure.
    Mr. Mica. Do you know, Ms. Romero, if there were.
    There were dozens of union representatives.
    Mr. Wilson. No. There were dozens of people. I can't tell 
you for sure----
    Mr. Mica. Well, I'm told there was no one representing the 
non-salaried where a lot of the decisions were made, which 
seems a little bit unfair. And, again, I think----
    Mr. Wilson. Can I ask you who--who you think was 
representing the unions, because I don't recall anyone there 
who did.
    Mr. Mica. I was told that there was representation.
    Mr. Wilson. Was it by a source that was there as----
    Mr. Mica. No. By my staff, and they're usually fairly 
reliable. Today's only Wednesday. Okay.
    Mr. Rattner, to you. You talked about this being a success 
and GM and Chrysler wouldn't make it without it, but others 
made it without it, Ford and a whole host of others. Isn't that 
correct, too?
    Mr. Rattner. That's correct.
    Mr. Mica. Yeah. And they made good decisions. I mean, I was 
in business. I would have loved to have somebody fund me when I 
had losses or wasn't making money or was on the verge of 
bankruptcy, but here again, I think the principal difference is 
that we used taxpayer money for the bailout.
    Does anyone have any idea, Ms. Bovbjerg, of how much money 
was used for--I heard there was some resolution of liability 
for healthcare debt.
    Ms. Bovbjerg. We did not look at the VEBA, is I think what 
you're asking about, the retiree health.
    Mr. Mica. Yeah.
    Ms. Bovbjerg. I know that there had been some provision, 
perhaps in the settlement.
    Mr. Mica. But I was told that that was--that was also part 
of the bailout.
    Ms. Bovbjerg. It--we did not look at that.
    Mr. Mica. You don't know. Do you know, Ms. Romero?
    Ms. Romero. I don't know the exact amount.
    Mr. Mica. But what I'm trying to do is figure----
    Ms. Romero. It's clearly part of the bailout.
    Mr. Mica. --figure out how much of the pension top-up cost 
and the healthcare, any of the money that probably will not be 
paid back to the taxpayers. It won't be paid back as opposed to 
some of the other money. Is that correct?
    Ms. Romero. The estimated amount--this is what GM and 
Treasury were working with at the time for the top-up of the 
union employees, this would be all the unions, was $1 billion 
to $1.5 billion.
    Mr. Mica. And that won't be paid back. There's no mechanism 
for that.
    Ms. Romero. No. It's not a--it's not separate than the TARP 
funds that have to be paid back anyway where Treasury expects a 
loss.
    Mr. Mica. All right. And, again, we only have one person 
that was at the Poughkeepsie meeting, so we will try to find 
out exactly who was there.
    My last question is, I've only chaired this with--and Mr. 
Connolly as my ranking member since the beginning of the year, 
however, the inquiry into this matter has gone on for at least 
2 years previous. You've been involved for how long, Ms. 
Romero?
    Ms. Romero. 3 years.
    Mr. Mica. And how would you describe the folks from TARP 
and Treasury, all the government folks that were involved, 
Pension Guarantee, as their cooperation as your investigation 
has gone forward?
    Ms. Romero. Well, this audit was very much delayed by the 
refusal of four auto team members to be interviewed, yes.
    Mr. Mica. Well, I made one pledge when I became chairman to 
Mr. Turner that all hell would break loose if we did not get a 
response. I did think at the beginning that they'd finally 
become responsive, but I will not tolerate, as chair of a 
subcommittee or participating in this committee, with non-
responsiveness from any of the agencies. And there will be--and 
I think Mr. Connolly shares this, too. We expect and demand the 
information. I know that's been turned over, it's been late, 
and I know that they did everything to delay to keep 
information from you. And I think that's a sad commentary, 
because the story does need to be told and I think that it's 
our responsibility to look into how this unfolded and how 
taxpayer money was used and if people were treated fairly with 
taxpayer money.
    So, again, I thank you for your perseverance and the good 
job you did, and I wish you good luck on the conviction of the 
balance of those folks that stole out of the cookie jar.
    Comment.
    Ms. Romero. Thank you. We'll get them.
    Mr. Mica. All right. Thank you.
    Mr. Connolly. You go get them.
    Thank you, Mr. Chairman.
    By the way, just to clear up something, Mr. Wilson, you're 
under oath, your testimony is you do not recall any union reps 
at that Poughkeepsie meeting. Is that correct.
    Mr. Wilson. That's correct.
    Mr. Connolly. Thank you.
    Mr. Wilson. I don't recall that.
    Mr. Connolly. Just want to make--get it in the record, 
since you were the only one at the table who was there.
    Ms. Bovbjerg, you--I think I heard you characterize the 
bankruptcy as unusual. Is that correct?
    Ms. Bovbjerg. From the perspective of plan termination and 
the PBGC, it was unusual. PBG's--PBGC's role in it was as it 
has been with other terminations. We were asked to look at the 
perspective of PBGC and we looked at the 10 largest 
terminations. And, you know, every one, of course, has it's 
different twists and turns, but they were all pretty much the 
same. PBGC is mainly governed by ERISA, so most of what they do 
is in statute.
    What was different here were the top-ups and the presence 
of GM. If Delphi had emerged from bankruptcy and tried to top-
up the plans, PBGC would have given the plans back.
    Mr. Connolly. Gotcha.
    Ms. Bovbjerg. Because if they can do that----
    Mr. Connolly. Right.
    Ms. Bovbjerg. --any employer can do that.
    Mr. Connolly. If I may, because I want to explore the 
narrative here that some are trying to establish, let's go 
back. The top-off GM negotiated at the time of the spin-off of 
Delphi was with the unions. Is that correct.
    Ms. Bovbjerg. Yes.
    Mr. Connolly. At the time, the union workers being 
represented, their pensions weren't fully funded. Is that 
correct?
    Ms. Bovbjerg. Correct.
    Mr. Connolly. The salaried workers who now are complaining 
about the fact that they didn't get topped off, unlike the 
union workers, in fact they were fully funded at the time of 
the spin-off. Is that correct?
    Ms. Bovbjerg. Yes. Their plan was overfunded.
    Mr. Connolly. Subsequently something happened, so they--
okay. So they were fully funded, the union folks weren't. The 
union folks negotiated a contract to try to correct that and 
get a top-off, salaried workers didn't. No taxpayer dollars 
yet. And, of course, no one thinks Delphi goes under, but it 
does.
    Mr. Turner. [Presiding.] Mr. Connolly.
    Mr. Connolly. And----
    Mr. Turner. Can I interrupt for just a moment.
    Mr. Connolly. I'm sorry?
    Mr. Turner. I'm sorry, Mr. Connolly. If I could--if I could 
interrupt for just a moment, and I'll give you additional time.
    As you're having this discussion, that's not necessarily 
the--a complete characterization of what the issue is. As Ms. 
Bovbjerg knows, the issue also is on the termination and on the 
funding itself----
    Mr. Connolly. Right.
    Mr. Turner. --and on the dispute of the assets. So we're on 
the top-up, and I just want to make certain that her answers 
are understood to be limited to just this----
    Mr. Connolly. Yes.
    Mr. Turner. --issue of the top-up.
    Mr. Connolly. Thank you.
    Mr. Turner. There are multiple other issues leading up to 
termination----
    Mr. Connolly. Yeah.
    Mr. Turner. --that are at risk.
    Mr. Connolly. I thank the chair. Yeah. I'm just trying to 
key off on the narrative here to make sure I understand what 
happened and when, but you're--obviously there were other 
issues that we have to--you're quite correct in addressing.
    So subsequently, subsequent to the spin-off, things went 
south.
    Ms. Bovbjerg. Yes.
    Mr. Connolly. And the salaried workers who had not 
negotiated a top-off, so there was no contractual obligation to 
give them one, sued to try to get one. Is that correct?
    Ms. Bovbjerg. Yes.
    Mr. Connolly. And what happened to that lawsuit?
    Ms. Bovbjerg. They're still in court.
    Mr. Connolly. I'm sorry?
    Ms. Bovbjerg. They're still in court.
    Mr. Connolly. Are you sure about that? They're still in 
court? Suit's still pending.
    Ms. Bovbjerg. Yes.
    Mr. Connolly. Okay. So they can pursue the route of 
litigation. But if you're suing GM to get a top-off from a 
new--I mean, from a court point of view if you're in 
bankruptcy, why would a court--I'm just--I'm talking about, you 
know, in theory. Why would a court approve a new obligation.
    Mr. Turner. Would you mind if I hop in for a moment again?
    Mr. Connolly. Yeah.
    Mr. Turner. I'll give you additional time. I just want to 
take time out of my time to clear that up.
    That's an isolated case. The issue is not a suit for top-
up. The issue is one of valuing asset, the termination of the 
pension plan to begin with. The issue of going south, that 
actually is in dispute as to whether or not there were 
sufficient assets within the plan prior to termination and 
whether or not these gentlemen exerted influence on the 
termination, and so it's not really just an issue of we're 
going to court to get a top-up.
    The process of the top-ups was really the discussion of 
determining, post Treasury's denial, that they were not 
involved or were they involved. And here from the report we 
have, they were.
    Mr. Connolly. I want to be clear, Ms. Bovbjerg. There were 
multiple lawsuits, and the one against GM was thrown out. It's 
not pending. Is that correct?
    Ms. Bovbjerg. That's correct.
    Mr. Connolly. All right. Just because it's a little 
misleading to say it's still pending. The GM suit is not. And 
that's what I'm getting at. Is there, was there any kind of 
implied commitment, certainly there was no contractual 
commitment, but was there some implied commitment to keep these 
folks whole by GM 9 years after the separation from Delphi?
    Ms. Bovbjerg. I'm sorry. I didn't understand your question 
completely. Can you--that there was an implied commitment?
    Mr. Connolly. Well, that--in some of the conversation, 
there seems to be some idea that either GM or the taxpayers 
have an obligation to folks who found themselves not whole in 
their pensions, but that population is a population that was 
not covered under the contractual agreement with the unions, 
it's 9 years later, GM is in bankruptcy. They pursued, you 
know, their legal route against GM, and that was thrown out.
    And what I was going to get at is what court in the land, 
bankruptcy court would look at this situation and say even 
though this is, you know, one of the largest bankruptcies ever, 
it's the largest automotive manufacturer in the world, 900,000 
jobs are at stake, and we're looking at is there a plan we can 
salvage the company with or do we liquidate--thank God we 
didn't go to the route of liquidation, but it was an option--
while we're doing all that, let's take on a new obligation, 
that is to say one that you are not contractually obligated to 
it right now, topping-off or making whole these--this category 
of pensioners.
    Mr. Turner. Mr. Connolly----
    Ms. Bovbjerg. No. I can't really speak to the intent of the 
bankruptcy court.
    Mr. Turner. And if I could hop in for just one moment 
again.
    Mr. Connolly. Yeah.
    Mr. Turner. Because I know--and you've been, you know, 
incredibly kind and diligent, I know, in the manner of looking 
at this. This is one where there are unfortunately members 
who've been working on it for 4 years, so the distinctions I 
know that you're struggling with, perhaps you can help with.
    The issue of contractual obligations, there are no 
contractual obligations post bankruptcy. There was a labor 
agreement, and, of course, salaried retirees--salaried 
employees don't have a labor agreement, so they have no 
contractual obligation. So it's the distinction in how they sit 
as to whether or not there was a prior agreement, but entering 
into bankruptcy, they all sit equally, because bankruptcy voids 
all the agreements, they have to be redone, it's--they have to 
be renegotiated. So it's not fair to say they didn't have one 
and they did. It's how are they treated as they go through the 
bankruptcy process. And then--and that is in her report for the 
GAO.
    Mr. Connolly. Yeah. Well, whether it's fair or not is a 
different issue. That's a subjective judgment, but your 
distinction is fair. There is a distinction. But I do note for 
the record one had a contractual--a contract, one did not. One 
was whole at the time of separation, one was not. And there's 
no evidence, but correct me if I'm wrong, that somebody from 
Treasury or the administration politically decided help this 
group, not that group, or is there, Ms. Bovbjerg?
    Ms. Bovbjerg. We reviewed public documents. We in fact 
separated a bit, and I guess I would ask Nicki to talk about--
--
    Mr. Connolly. Yeah. I----
    Ms. Bovbjerg. --the methodology.
    Mr. Connolly. Fair enough. I'll turn to Ms. Romero. I'm 
just asking whether you--if GAO encountered--encountered 
anything.
    Ms. Romero.
    Ms. Romero. I'm a little bit lost. What was the question?
    Mr. Connolly. Well, I'm trying to lead us up through this 
narrative, with the help of my good friend----
    Mr. Turner. Can I reask your question.
    Mr. Connolly. Sure.
    Ms. Bovbjerg. Excuse me, Mr.----
    Mr. Turner. His question was with respect to the top-up. Is 
there evidence that you uncovered that established that it was 
solely politically motivated.
    Mr. Connolly. Or at all politically motivated.
    Ms. Romero. Well, just so you know, all of our audits we 
look at everything, so what we were interested in is what were 
all the reasons, all the factors and considerations that went 
in to the decision that GM and Treasury made on the top-up. So 
we didn't exclude one factor or focus on one factor, and we did 
not find evidence that political clout of the UAW was a factor 
in GM and Treasury's decision.
    Mr. Connolly. Thank you. Mr. Chairman, I think fairly my 
time is probably up, and I thank you for your guidance.
    Mr. Mica. [Presiding.] Thank the gentleman, and recognize 
now Mr. Turner.
    Mr. Turner. Thank you, Mr. Chairman.
    First off, thank all of you for your participation in this, 
because what we're doing is recreating what occurred so we can 
find out whether or not what occurred was proper and how to 
address it.
    Ms. Romero, there were a number of people who threw 
political accusations when this first started, and I wanted to 
ask you a question I think should help us in dissolving the 
political tension, and that is, you are a President Obama 
appointee, are you not?
    Ms. Romero. I am.
    Mr. Turner. Thank you.
    Mr. Rattner, according to the SEC website, November 18th, 
2012, the Securities and Exchange Commission charged you--
charged former Quadrangle Group principal, Steven Rattner, 
yourself, with participating in a widespread kickback scheme to 
obtain investments from New York's largest pension fund.
    I'm going to ask consent that the portions of the SEC 
website concerning those charges be entered into the record and 
the full text of the complaint on the kickback scheme in the 
pension fund.
    Mr. Mica. Without objection, so ordered.
    Mr. Turner. Mr. Rattner, did you pay a settlement in that 
matter?
    Mr. Rattner. Yes.
    Mr. Turner. What was the amount of that settlement.
    Mr. Rattner. It was about a little over $6 million.
    Mr. Turner. I think it's, according to the website, $6.2 
million that you paid to settle that claim of a kickback scheme 
with respect to a pension fund.
    Mr. Rattner, you indicated that the decisions that were 
applied with respect to the pensions were those of commercially 
reasonable. Could you define commercially reasonable for me?
    Mr. Rattner. Commercially reasonable, in our minds, would 
be decisions that you would--that a private actor would make in 
order to ensure in this particular case that money that was 
being invested was being invested wisely.
    Mr. Turner. When you considered that private actor, would 
you consider a private actor that was involved in a kickback 
scheme for pension funds or those that had not been? You don't 
have to answer that, Mr. Rattner.
    Mr. Rattner. Thank you.
    Mr. Turner. Ms. Bovbjerg, you were in Dayton and you did an 
excellent job describing the GAO report, and I greatly 
appreciate your distinction that your report is not, as Ms. 
Romero's is, a detailed analysis of documents and records 
requested from the government and the Treasury Department and 
reviewed.
    You did in your report specifically dedicate a section to, 
I believe it is on page 9, the issue of Treasury's multiple 
roles. When I did my opening, I indicated that part of the 
concern in all this is that Treasury through TARP became 
multiple people. I mean, that Treasury's on the board of the 
PBGC, Treasury became new GM, Treasury became the bond holders 
and, you know, some of the equity holders.
    And you indicated this: You said in previous reports, we 
also have examined the challenges posed to Treasury due to its 
multiple roles as a private pension regulator and a GM 
shareholder as well as having its secretary serve on the PBGC 
board.
    Now, you testified earlier, which is why I want to clarify 
this, you said, well, PBGC viewed this normally. Now, you have 
not reviewed all the emails that we have and that Ms. Romero 
has, so the word ``normally'' I'm a little concerned about. So 
let's just go back to what I recall you having said in Dayton 
and end it with this. In Dayton, you said those Treasury's 
multiple roles did have the appearance of a conflict of 
interest, from which you were concerned and noted in your 
report.
    Is that still accurate today?
    Ms. Bovbjerg. Yes. And I'd like to ask Ms. Clowers to jump 
in, because she leads our auto work at GAO and was--probably in 
her report was the first place that----
    Mr. Turner. Okay. We'll get to that in a minute, because I 
only have 5 minutes and I have to get back to Ms. Romero, but 
we'll take your answer for the record.
    Ms. Romero, in the GAO report they state this sentence 
when--their testimony today, they say, as we reported in 2011, 
Treasury officials said, which is why the distinction of GAO 
looked at public documents, that while Treasury did not 
explicitly approve or disapprove of GM's agreeing to honor 
previously negotiated top-up agreements with some unions, it 
agreed that GM had solid commercial reasons, which is that 
distinction that Mr. Rattner tried to explain to us of what the 
definition of commercially reasonable is.
    In your written testimony today, I believe on page 44, you 
state that the auto team made it clear--no. That was another 
provision--that they specifically did approve them and played a 
role. And could you talk about those two roles? In your report 
you talk about two things: one, that as the purchaser, they had 
a construct in the agreement that required that issues that 
were over $100 million and that related to pensions must be 
approved by them; and secondly, from the dialogue that you 
reviewed, that you understand that they were involved.
    So could you explain those two issues to me as to how that 
statement that GAO looked at the public reports is not 
accurate.
    Ms. Romero. So, yeah, let me talk about what we found. This 
is what I opened with in my opening statement. There was no way 
for Treasury's role to be advisory. The TARP loan agreement 
from 2008 sets up basically two roles for Treasury. For the big 
things, like things over $100 million or big decisions like the 
collective bargaining agreement, Treasury has the approval 
rights. They are the decider. There's other things where 
Treasury would just give advice to GM.
    The top-up only appears in the collective bargaining 
agreement. It's not some separate agreement. And the discussion 
of the top-up has been confusing so far, because it's been as 
if the top-up was somehow a separate agreement that was 
separately negotiated and GM made a decision on it and came to 
the auto team and said, we'd like to do this. None of those 
facts are what we found to have actually happened. It appears 
in the collective bargaining agreement.
    The other part of this, not just the collective--not just 
Treasury's rights to approve the collective bargaining 
agreement, Treasury became the purchaser in bankruptcy, and 
that changed everything as well. Mr. Miller in his written 
testimony, and he was GM's bankruptcy lawyer, says that the 
U.S. Treasury acted in the same manner as other secured 
creditors would act in selecting the assets it would purchase 
and liabilities it would assume. And that's what Mr. Wilson 
told us and that's what GM officials told us. GM officials told 
us we weren't in control. We could make recommendations, but 
it's ultimately up to the purchaser. An obligation that would 
be assumed would be the collective bargaining agreement and all 
of the obligations that were in it; therefore, it was 
Treasury's role, direct role, to make that decision as the 
purchaser, just like they did with any other obligation that 
the purchaser took on.
    Mr. Turner. Thank you for the additional time. I see my 
time has expired. I look forward to the second round.
    Mr. Mica. I recognize now Mr. Ryan. Mr. Ryan.
    Mr. Ryan. Thank you, Mr. Chairman. Thank you for holding 
this hearing, and I appreciate everyone's participation here.
    This is obviously for me, representing Ohio, northeast 
Ohio, is a bittersweet moment, which is why I'm thankful to be 
able to sit here and be able to be on this committee, which I 
don't normally sit, because Ohio has benefited greatly from 
what has happened in the auto industry in the past couple 
years. One in every eight jobs in Ohio is related to the auto 
industry, and that makes its way down through the supply chain, 
as you all know.
    On the other end of this is a group of people who live in 
my congressional district primarily, and Mr. Turner's as well 
and some in Columbus that are Delphi salaried, who have been 
devastated, families devastated. And I think Mr. Feldman 
mentioned, you go through this a lot. We go through it a lot 
too for those of us who represent older industrial areas. And I 
hope as we talk about bankruptcy--this is one or two 
bankruptcies that we're talking about, and I hope I get as much 
enthusiasm from my friends on the other side about reforming 
bankruptcy laws for all Americans, because for me and my 
congressional district, this has been going on for a long, long 
time. That's not what this hearing is about, but these are 
people who have been not made whole and who have been harmed, 
and we're here to try to figure out how to help those people, 
but there's a broader issue that I'll set on the side about 
bankruptcy laws, and I'll be looking forward to support from 
the other side of the aisle to reform those laws, like the 
Delphi salary folks who sat in my office the other day said 
they would be willing to help us make those changes.
    To sit in a meeting with these folks, who didn't do 
anything wrong, paid money in, had a pension, were ready to go, 
worked hard their whole lives, and sit here and hear the 
stories as I heard the other day, I walk into a room, you know, 
two or three of the eight people sitting there, I call coach, 
because they were a former coach or a coach in our community. 
These aren't people who make, you know, a kagillion dollars 
just because they happen to be white collar; these are 
hardworking people who, in my estimation, got a raw deal, and 
we're trying to figure out how to make this whole.
    I want to make one other point as well. There's a lot of 
splinter unions that were involved here. We talk a lot about 
Delphi salaried, but there is a list of splinter unions: the 
machinists, electrical workers, Michigan Regional Council of 
Carpenters, Local 687 and Interior Systems, International 
Brotherhoods of Painters and Allied Trade, Sign and Display 
Union, Teamsters, boilermakers, operating engineers, catering, 
restaurant, bar and hotel workers. Lots of other splinter 
unions are in the same position, so I don't want us to forget 
anybody as we go through this process.
    I also would like to say that the people responsible for 
the bankruptcy of a company like Delphi that's having a ripple 
effect throughout our community are the ones losing their 
pension over this whole thing, and clearly something is 
terribly wrong with the bankruptcy system, but let me just say 
these guys can't go back. These men and women can't go back 25 
years and say, okay, this is what our portfolio's going to look 
like because of the bankruptcy. They can't go back and do that.
    And I want to say very clearly that I do not believe that 
Congress or the retirees still have a complete picture of what 
happened in this situation. And if it's determined by--through 
the evidence produced here or in the court in the lawsuit that 
Delphi salaried retirees and the splinter unions were unjustly 
harmed due to politics or favoritism, that they must be made 
whole. And I will continue to pursue that.
    So let me get to some questions here. First a question is 
going to go to Ms. Bovbjerg, who testified a little bit about 
the GAO report in 2011. Do you feel that the PBGC was 
forthcoming with the documents for the GAO report in 2011?
    Ms. Bovbjerg. I did. We had no reason to believe they were 
not.
    Mr. Ryan. So recently the court has ordered PBGC to turn 
over additional documents as well, and communications. And is 
it of your opinion that those new documents or that new 
communication would somehow influence the 2011 report?
    Ms. Bovbjerg. No, because when we approached that report, 
we were very clear that there were a number of questions that 
the requesters asked, and we took the ones that we could deal 
with in public documents. And, you know, we might talk to PBGC, 
people at Treasury, people for clarification of a public 
document. We did not interview the auto team. We did not look 
at emails. That was a question that was about whether Treasury 
had exerted political pressure in this process, and GAO did not 
feel that we could do that work, that that was more appropriate 
for an IG office, hence the split between our methodologies.
    Mr. Ryan. If I could take an extra minute here, Mr. 
Chairman.
    Mr. Mica. Go right ahead.
    Mr. Ryan. One of the things I want to ask you is about the 
range of recovery ratios with regard to the terminated plans. 
And did you feel that the PBGC in any way left monies on the 
table with the--with those plans that maybe could have bumped 
the value of the plan assets? There's some discrepancy between 
the Delphi salary folks. Maybe, Nicole, if you'd like to touch 
upon this as well, whoever can answer it best. There's some 
discrepancy where our folks, salaried folks are saying, well, 
we think we could have gotten a lot more revenue for the plan.
    Do you believe, in your participation in this case, that 
there were monies left on--possibly left on the table?
    Ms. Bovbjerg. We did not see that. We saw that out of $7 
billion owed on these plans, PBGC got $700 million in 
recoveries. That's not really outside the range of what they've 
gotten in the 10 largest terminations. They did better with 
airlines. They got up to 38 percent. But on some they got 
nothing. They tried to do what they can.
    So we did not--we didn't evaluate a particular, you know, 
foreign lien or something like that, but we did look at the 
process and whether they followed it, and what we saw was that 
they followed the process as they have with other terminations. 
And most of it is required by ERISA, by the pension law.
    Mr. Ryan. I know I'm way, way over my time, so I yield 
back, Mr. Chairman.
    Mr. Turner. Mr. Chairman, could I have just----
    Mr. Mica. Yes. In fact, I'll----
    Mr. Turner. Ms.----
    Mr. Mica. --my time for----
    Mr. Turner. Ms. Bovbjerg, I'm just going to take this and 
pass it back, because I think what Mr. Ryan is asking is 
incredibly important.
    I think the reason why several people are struggling with 
your answers today as opposed to the answers that you gave in 
Dayton is that they're--you're not giving answers that are in 
the context of what you did. I mean, you're--you looked at 
public documents, and you were not given the issue of the 
influence and how it occurred, but yet your statements today 
appear to be a little stronger, and I just want to assist you 
in the confines of what I know your report says.
    You did not find that PBGC did everything according to 
their rules and regulations. You--you don't--you had no 
information of that, you had no emails, you had public 
documents, you did not interview those who were involved in the 
GM bankruptcy. So to state that conclusion, which actually is 
the subject matter of ongoing litigation, is far more expansive 
than I think you intend, and I think that's how the panel's 
hearing it. So I want to give you a chance to confine your 
answer back to, I did not find anything that would indicate 
those in the things that we--in the documents that we reviewed. 
It's not that you can conclusively say that everything was 
hunky dory, correct?
    Ms. Bovbjerg. We did not do a compliance review.
    Mr. Turner. Thank you.
    Ms. Bovbjerg. You are correct. What we did look at was how 
might this termination have been different from others, and 
we----
    Mr. Turner. And you found nothing that told you different 
in the public domain, but you----
    Ms. Bovbjerg. Right.
    Mr. Turner. --had no access to the others, and that's why 
you were helpful to us, but you can't give a conclusion beyond 
that, and I think that's what we've kind of struggled with.
    Ms. Bovbjerg. And we can't talk about motivations----
    Mr. Turner. Right.
    Ms. Bovbjerg. --of people.
    Mr. Turner. Right.
    Ms. Bovbjerg. That's what we don't know.
    Mr. Turner. So I appreciated your work, I appreciate your 
dedication through your statements. I just want to make clear 
its limitations for today for today's purposes.
    Thank you, Mr. Chairman.
    Mr. Mica. Mr. Turner, if you want to take an additional 3 
minutes, you can just continue and then I'll take----
    Mr. Turner. Thank you.
    Mr. Mica. I'll yield to Mr.--back to this side and then 
myself, so we will do a second round.
    Mr. Turner. Mr. Feldman, I believe--and let's hold for a 
moment. I believe that--you know, you're under oath and we have 
met before in this format.
    Mr. Feldman. Yes.
    Mr. Turner. And I struggle on the issue of the Auto Task 
Force involvement. As you know, GAO does a report that says 
Treasury says that they weren't involved in the top-up. Ms. 
Romero's report says conclusively that obviously Treasury was 
involved in it extensively, because of one, by the terms of 
TARP, you were required to be at Treasury, and two, you 
actually were, because she looked at the documents and the 
like.
    I have previously asked you, and I--I'm not saying that you 
have misrepresented anything to us, but I have previously asked 
you and struggled with an understanding of your role in the 
discussion of your role on the termination of pension plans, 
because I believe that it's been unclear to people trying to 
determine what occurred that you were involved in discussions 
with respect to the termination or non-termination of pension 
plans of old GM as they went through the bankruptcy process.
    Now, you don't deny that, right? You don't deny that you 
were involved in discussions with respect to the termination or 
non-termination of pension plans from old GM as they went 
through the bankruptcy process; is that correct?
    Mr. Feldman. Congressman, just to be clear, of old GM? 
Old----
    Mr. Turner. Well, of GM that's going through the 
bankruptcy, of the existing plans as it went--as it went 
through with respect to going forward with the bankruptcy and 
the new GM.
    Mr. Feldman. In contrast to----
    Mr. Turner. Let me shorten it.
    Mr. Feldman. Sure.
    Mr. Turner. Were you involved in discussions with respect 
to termination or non-termination of pension plans in the GM 
bankruptcy.
    Mr. Feldman. Of General Motors as opposed to Delphi? That 
was the distinction I was asking you.
    Mr. Turner. I see. Give me the distinction if there is one, 
then.
    Mr. Feldman. Sure. I don't recall being involved in 
discussions of termination of pension plans of General Motors. 
I don't recall being part of those discussions, to the extent 
that there were discussions about that.
    With respect to Delphi, certainly I spoke with Joe House 
from the PBGC, who communicated to me what the PBGC's thinking 
was with respect to the Delphi pension plans both on the hourly 
side and the salary side.
    Mr. Turner. Okay. Let's stop there. And, yeah. I said mine 
was broad pension plans, because I wanted you to give me the--
to walk me here.
    So in that speaking with Joe House of PBGC with respect to 
termination or non-termination, did you ever advocate or have a 
position?
    Mr. Feldman. Not that I recall, no.
    Mr. Turner. Okay. Well, I'm going to hand you your June 
18th email to Joe House, and maybe it'll help you recall. I'll 
give you a moment to read it.
    Because the question I asked you is specifically structured 
with respect to your own email.
    Let me reask you the question.
    Mr. Feldman, did you advocate with respect to the issue of 
termination or non-termination with respect to issues relating 
to Delphi pension plans?
    Mr. Feldman. I recognize what the email says. I still 
would----
    Mr. Turner. Okay. Pause----
    Mr. Feldman. --disagree with the----
    Mr. Turner. --because if you're not going to answer yes, I 
will just read it for the record. This is Matt Feldman on June 
18th in response to Joe House. He says, Thanks. I'll call you 
later today or tomorrow. We'll enter this into the record.
    Mr. Turner. We are having a sit-down in the de-hourly plan 
in the a.m. There is a split as to what should happen. There 
are some wanting to see it terminate. I've--that's you--been 
advocating, the next word is ``hard''--I have been advocating 
hard for our deal, emphasis on our deal, because that would 
include you, and I believe that will be the conclusion, meaning 
I've been advocating hard for our deal and I believe that I'm 
going to win, I believe that will be the conclusion, but wanted 
to give you a heads-up.
    Mr. Feldman, you didn't say you didn't do this. You said 
you didn't recall it. The email speaks for itself. I'm going to 
ask you the question again. Did you advocate with respect to 
the termination or non-termination of a Delphi pension plan? 
Were----
    Mr. Feldman. As part of our broader understanding with the 
PBGC, obviously I did. That's what the email says, but it's 
very narrow and, frankly, misleading to just say, did you 
advocate for a position on the pension plan, which is----
    Mr. Turner. I had terminate. I said terminate.
    Mr. Feldman. I'd like to put it into a broader context.
    Mr. Turner. Mr. Feldman, I'm only using your word, which is 
``terminate.'' I'm putting nothing else behind it. So for the 
record your answer is, yes, this is your email, and, yes, you 
did advocate, as this says, ``hard'' with respect to the issue 
of termination or nontermination. I'll yield my time and come 
back to Ms. Romero.
    Mr. Mica. And to be fair, I yielded you the balance of the 
time, so you had the full 5 minutes, and then I had given Mr. 
Connolly some extra time. So the other side has about 30, 45 
seconds extra coming.
    Let me yield to the ranking member, who has arrived. So you 
have 6 minutes Mr. Ranking Member.
    Mr. Cummings. Can you hold on for a second? Just real 
quick, I've been watching this clock. Can you explain that 
timing again to me, because I have seen----
    Mr. Mica. Well----
    Mr. Cummings. I have counted about almost 10 minutes just 
since I've been sitting here, and I came in when you gave him 3 
minutes.
    Mr. Mica. I gave him my----
    Mr. Cummings. An additional 3 minutes. Oh, I see.
    Mr. Mica. I gave him my time.
    Mr. Cummings. Okay. Okay.
    Mr. Mica. We are in the second round and I gave him my 
time.
    Mr. Cummings. I see. Okay. All right.
    Mr. Mica. Then he took some of it, and I said, well, go 
ahead and take the balance of your time.
    Mr. Cummings. Okay. I got you.
    Mr. Mica. And then he went over. I keep this pretty good, 
Mr. Cummings.
    Mr. Cummings. I just want to make sure that----
    Mr. Mica. So right now you have 6 minutes.
    Mr. Cummings. Thank you.
    Mr. Mica. And if you want 10----
    Mr. Cummings. Very well.
    Mr. Mica. --then I will give him more time.
    Mr. Cummings. Very well. Thank you, Mr. Chairman. I know 
you to be a fair man. That's why I have always admired you. And 
I really mean that.
    Ms. Romero, I want to thank you for your thorough audit. I, 
for one, I do sympathize with the Delphi salaried workers whose 
pensions will not be what they thought and planned on. That is 
a very sad situation, a very unfortunate situation. I was 
surprised to learn from your report that the Delphi salaried 
workers' pensions had been fully funded at the time Delphi spun 
off from GM in 1999. Is that right? Is that correct?
    Ms. Romero. Yes.
    Mr. Cummings. Those pensions were fully funded when Delphi 
started as an independent company. Is that right?
    Ms. Romero. Yes.
    Mr. Cummings. All right. Now, Ms. Bovbjerg and Ms. Clowers, 
it is my understanding that the salaried pensions actually 
overfunded at the time of the spinoff, they were overfunded at 
the time of the spinoff. Do you know the exact figure?
    Ms. Bovbjerg. It was close to 120 percent.
    Mr. Cummings. So they were overfunded.
    Hello? Are you talking? Are you saying something?
    Ms. Bovbjerg. Yes.
    Mr. Cummings. Okay.
    Ms. Bovbjerg. Yes. Overfunded.
    Mr. Cummings. So something happened between 1999 and 2009 
that caused the fully funded pensions of Delphi salaried 
workers to become underfunded by 2009.
    Ms. Romero, what happened and who is responsible?
    Ms. Romero. Who is responsible for the plan being----
    Mr. Cummings. Yeah.
    Ms. Romero. --fully funded? That would be Delphi.
    Mr. Cummings. Yeah. And so it was Delphi management who did 
not continue to make pension payments, and their failure to 
make payments resulted in Delphi's salaried workers with 
underfunded pensions. Is that a fair statement?
    Ms. Romero. That is correct.
    Mr. Cummings. All right. Now, Ms. Romero, your audit probed 
the decision about what to do about those underfunded pensions. 
The question came up in the context of GM's bankruptcy in 2009 
during which the United States Government provided a loan and 
then a debtor in possession financing to enable GM to survive 
as a domestic automaker. Is that correct?
    Ms. Romero. That is correct.
    Mr. Cummings. Now, the SIGTARP report identifies the 
reasons GM officials did not want to top-up the pensions of the 
Delphi salaried employees in 2009. Let me read from your 
report, Ms. Romero. It says, ``GM's CEO told SIGTARP that Mr. 
Borst''--that's GM's treasurer--``had explained that if GM 
found a way to fund the top-up during GM's bankruptcy, it would 
be as if GM had funded the plan twice. As CEO Henderson 
explained, GM had already fully funded Delphi's salaried 
pensions at the time of Delphi's spinoff, and there was no 
basis to do so again.''
    That is part of your report. Is that right?
    Ms. Romero. That is correct. That is what GM's CEO told us.
    Mr. Cummings. Well, do you stand by that finding?
    Ms. Romero. Well, it is not a finding, it is just what a 
witness told us in our audit.
    Mr. Cummings. Okay. So according to this, had GM commercial 
business reasons not to top-up the Delphi salaried pensions--
well, let me go back. Did you find anything that contradicted 
the statement that I just read?
    Ms. Romero. No, I did not find anything that contradicted 
it. There is a bigger context, which is included in the report.
    Mr. Cummings. All right. So GM had commercial business 
reasons not to top-up the Delphi salaried pensions in 2009. 
Those were not the Treasury Department's reasons, those were 
not the Obama administration's reasons, those were GM's 
reasons. Is that right?
    Ms. Romero. Well, this is where I need to add a little 
context. So the earlier page of my report right before the 
statement talks about had GM taken the position that it was 
prohibited under the TARP loan agreement from increasing the--
giving the top-up to the salaried workers without Treasury's 
consent. So GM alone took the position that they alone could 
not do the top-up, and GM's CEO Mr. Henderson at the time told 
us that Treasury's consent would have been necessary, that 
Treasury ultimately had to agree under the TARP loan agreement.
    So what happened was that Mr. Henderson went to Mr. 
Rattner. And according to both of them, according to Mr. 
Rattner, he says that GM came to them because: ``GM wanted to 
do something for the salaried retirees. Mr. Rattner discussed 
it with the CEO, and although he didn't remember the specifics 
of the conversation, he told SIGTARP there was nothing 
defensible from a commercial standpoint. He says, this is from 
Mr. Rattner: ``We didn't think there was anything defensible. 
We felt bad, but we didn't think it was justifiable.''
    What happened then is Mr. Rattner sends an email to the 
rest of the auto team saying that he had spoken to Mr. 
Henderson and he wrote in his email with respect to the Delphi 
retirees, Walter Borst, who was the treasurer, is apparently 
preparing some kind of proposal for how to do something for 
them that is defensible.
    Mr. Cummings. Well, let me ask you this.
    Ms. Romero. Right.
    Mr. Cummings. Now, the quote I gave you a little earlier, 
Borst had said that it would be like funding it twice. Is that 
right?
    Ms. Romero. Right. So I'm putting it in context. So Mr. 
Henderson talks to Mr. Rattner, goes to him and says, we'd like 
to do something for the salaried retirees. Mr. Rattner says 
something to Mr. Henderson, we don't know the exact specifics, 
but says basically we don't think there is anything 
commercially defensible. Then Mr. Borst, who is the treasurer 
for GM, goes to look to see if there is something defensible. 
He is trying to see if there is something defensible. And he 
and Mr. Henderson--because that is the standard that Treasury, 
the auto team had given them. It is not necessarily GM's 
standard. The commercially reasonable standard is the standard 
that the auto team had given, and remember GM took the position 
that Treasury had to make the decision on the salaried, that 
they did not have authority. So then Mr. Borst goes to try to 
prepare something that would fit into Treasury's standard, the 
commercially defensible standard, and comes back, and he and 
Mr. Henderson can't come up with anything.
    Mr. Cummings. Now, explain that commercially, the standard 
that you just talked about. Explain that to me.
    Ms. Romero. Sure. The commercially reasonable standard 
doesn't exist other than through the auto team and through 
TARP. It's the marching orders that the auto task force, 
through Mr. Summers and Mr. Geithner, give to the auto team as 
to how they should be making decisions. And so there is no 
definition of it or standard, it is just interpreted, and it is 
interpreted by the auto team that that means to act like a 
private investor, is essentially how they take it.
    They tried to do that every time. What we found in our 
audit was they made some decisions that were not what a private 
investor would make. So, for example, deciding not to move the 
headquarters of GM through Detroit, which would save money. 
These are other governmental concerns that come into play that 
a private investor wouldn't have. And so that commercially 
reasonable standard, commercially defensible, is the auto team 
standard. It's not necessarily GM's standard, it is the auto 
team's standard. And so that's what they were looking for.
    Mr. Cummings. Right. Let me just--I see I'm running out of 
time--let me just get to Mr. Miller. GM's treasurer and CEO 
made an assessment, GM had already fully funded the salary of 
the retiree pensions 10 years earlier when Delphi was spun off 
from GM. They got the money, but they had no contractual 
agreement that obligated GM to further top-up those pensions, 
as I understand it.
    Mr. Miller, isn't that how you read the report? Is that how 
you read it.
    Mr. Miller. Yes, sir.
    Mr. Cummings. I can't hear you I'm sorry.
    Mr. Miller. Yes, sir.
    Mr. Cummings. Mr. Rattner Mr. Feldman, and Mr. Wilson, is 
that finding by the SIGTARP about GM's actions and reasons for 
not giving Delphi's salaried retirees a top-up consistent with 
your memory? Mr. Rattner first.
    Mr. Rattner. The reason being that it was not commercially 
reasonable?
    Mr. Cummings. Right.
    Mr. Rattner. Yes, that is my memory.
    Mr. Cummings. Mr. Feldman?
    Mr. Feldman. My memory as well, sir.
    Mr. Cummings. Mr. Wilson?
    Mr. Wilson. Yes, sir.
    Mr. Mica. Okay. I calculate I have approximately 2 minutes 
left in this round. I've not asked any questions. I gave my 5 
to him. And then Mr. Ryan would be next.
    Do you want to go first, Mr. Ryan, and I'll save my 2 
minutes?
    Mr. Ryan. Thank you, Mr. Chairman.
    Mr. Rattner, there were some discussions about terminating 
the plan. Can you talk to us about how those discussions went? 
I mean, a lot of this stuff, there's still a lawsuit and things 
going on with documents being released. But from your vantage 
point, can you enlighten us about what those discussions were 
when it came to we want to terminate the plan?
    Mr. Rattner. When you say terminate, you're referring to 
the salaried plan?
    Mr. Ryan. Yes.
    Mr. Rattner. The discussions were very much I think along 
the lines of what you've heard the last few minutes, which is 
that we understood that the failure to provide any financial 
support to the salaried plan would leave those retirees with 
reduced benefits. We were not happy about that. We didn't think 
it was obviously a very good outcome for them. We spent a 
considerable amount of time thinking about whether there was 
anything that we could recommend be done for them, and we 
concluded that it was not commercially reasonable or defensible 
as a matter of normal bankruptcy procedures.
    Mr. Ryan. You said to SIGTARP in my reading of it that GM 
officials had been too generous in the past and the auto team 
had to dial that back a little bit, that was in the SIGTARP 
report, and that you guys needed to press General Motors to be 
less generous in relation to the Delphi and the pensions. Now, 
to what extent did the auto team press that issue? And did that 
adversely affect even the possibility of the top-ups?
    Mr. Rattner. Among the problems at General Motors was that 
they did not act in a way that one would call commercially 
reasonable at all times. In fact, they often didn't act in a 
way that was commercially reasonable, which was a good part of 
why they were in bankruptcy or insolvent and Ford, for example, 
wasn't. So there were any number of places and times when 
General Motors would recommend or suggest doing something that 
we did not feel was commercially reasonable, and this was one 
of them.
    Mr. Ryan. Ms. Romero, you mentioned that at times the 
commercially reasonable standard was used and then at times it 
was not used. You mentioned one example. Were there other 
examples where the auto team did not follow that standard?
    Ms. Romero. So let me be very clear here. I think what our 
report talks about, and this is what we found, they tried to 
use the commercially reasonable standard and act as a private 
investor. But in the end, they were still the government. So 
there were broader concerns that a private investor would not 
have. I will give you a few of them. One, to invest in GM in 
the first place when no private investor was investing in GM, 
according to what GM's CFO told us. That was done out of 
concern about saving GM because of the impact a GM failure 
could have on the broader auto industry. A private investor 
wouldn't necessarily have those same concerns.
    Two, deciding not to move GM's headquarters out of Detroit 
for reasons about how it would impact the city of Detroit. Mr. 
Rattner talks about this in his book. Those are not 
considerations that a private investor would normally have. 
Another one was deciding when they made the additional TARP 
injection as a loan to fund the bankruptcy, rather than take it 
as debt, which is what it would be, they were worried about too 
much debt being on GM's books, so they decided to convert that 
to an equity interest, an ownership interest in the new 
company. That has lower priority in bankruptcy. That had bigger 
concerns, broader concerns than a private investor.
    And finally on what they decided to pay for GM as the 
purchaser, there was information in the bankruptcy court, CEO 
Henderson, GM CEO Henderson talked to us about that, that 
Treasury ended up paying more than the enterprise value--I 
believe this is in Mr. Rattner's book--more than GM's 
enterprise value.
    All of these decisions are just some examples where the 
auto team had to consider other things, other than just dollars 
and cents, and not act as just a private investor would. And, 
frankly, they shouldn't have, they're the government, and 
that's one of the lessons learned out of this.
    Mr. Ryan. Well, I guess as my time is winding down I'm 
going to argue on behalf of my constituents and these Delphi 
salaried folks that they should have been included in some of 
these. If we are not following that standard all the way 
through, if that is not a hard line standard, and I understand 
this is a very, very unique situation, that that should be 
considered. We have $57 million a year getting pulled out of 
our local economy because of the pensions, and these Delphi 
salaried were concentrated in areas like mine, like Mr. 
Turner's and others, that that should have been considered as 
the whole bankruptcy proceeding was going on, as the 
headquarters was, which I think is a good move. But there were 
other moves that could have been made, in my opinion, that 
could have topped these folks off, and in my estimation if 
you're not going to follow that hard line rule when it comes to 
commercially reasonable, then there's others who lose out 
because of that. And that's ultimately why we're here.
    And my time is out, and I just would like to make one final 
pitch to my colleagues on the other side, that this happens all 
the time. The distinction here is that the government was 
involved. But there are bankruptcies every single day in this 
country, and we need bankruptcy reform because these workers 
that we're talking about are unique to this particular 
circumstance, and we're going to advocate as hard as we can for 
them, but there are thousands and thousands and thousands of 
other workers across this country who end up on the short end 
of the stick, who are last in line when it comes to getting 
made whole, and they get screwed. In Youngstown, Ohio, in 
Akron, Ohio, in Cleveland, Ohio, in Pittsburgh, and all through 
the industrial Midwest we have seen this for 30 years. And so I 
hope that we get the enthusiasm from the other side when it 
comes to bankruptcy reform as well.
    Mr. Chairman, I'm very thankful for this hearing.
    Mr. Turner, thank you for your work and cooperation on this 
as well. And I hope this leads to some situation where these 
men and women could be made whole.
    Thank you very much.
    Mr. Mica. Thank you. I've got about 1 minute and a half, 
and my 2 minutes, it is about 3-1/2 minutes, I guess, left from 
this side, which I'll take since I've asked no questions in the 
second round and yielded my 5.
    First of all, Ms. Romero, in the '99 spinoff, you keep 
talking about topping-up employees. Was that just salaried 
employees or nonsalaried employees, one or both?
    Ms. Romero. The discussions in 1999 were an agreement to 
top-up the hourly employees, not the salaried employees. The 
salaried employees weren't represented at that time and their 
pension plan was fully funded.
    Mr. Mica. Okay. I just wasn't clear as to what took place, 
which was some years previous. But the final decision, I mean, 
when you just cut to the chase, there may be problems in 
bankruptcy and we may need to do bankruptcy reform, this was 
not a typical bankruptcy in a civil proceeding, was it?
    Ms. Romero. No. And this wasn't even typical for a TARP 
program.
    Mr. Mica. Yeah.
    Ms. Romero. This is the only situation in TARP where you 
have members of Treasury, Treasury officials being so deeply 
and significantly involved in the company.
    Mr. Mica. Exactly. And again you said it was ultimately 
Treasury's decision as the buyer to assume or reject the top-up 
liability. Treasury, last time I checked, was the United States 
of America public, using public money. I thought Mr. Ryan said, 
used the term I try not to use, ``screwed,'' because it gets my 
wife upset, but basically that's what happened, some people got 
screwed here in this proceeding. And the unfairness is that 
those people had also paid their taxes, et cetera, into the 
Treasury of the United States and should have been treated 
fairly.
    Now, probably some of this would never have occurred if 
everyone would have cooperated. But before I became the chair, 
for 2 years we couldn't even get the documentation nor the 
cooperation. Mr. Turner turned to me when I became chair, we 
did the hearing in June, and I demanded the documentation, and 
you finished your report, and I think you did an admirable job. 
You're just reporting the facts. And again this isn't the 
typical situation. Mr. Rattner had talked about commercially 
acceptable or reasonable process, and I guess they were trying 
to cover their bases in all of this.
    But, Mr. Wilson, you testified last summer that unions did 
not receive special treatment. Is that correct?
    Mr. Wilson. I believe so, yes.
    Mr. Mica. You did?
    And, Ms. Romero, did you say and your report find that 
unions received special treatment in the GM bailout and the 
bankruptcy proceedings.
    Ms. Romero. Well, Treasury gave additional leverage to 
certain stakeholders and those were two, the UAW and the 
bondholders.
    Mr. Mica. But they gave, again, something special to the 
union folks, right?
    Ms. Romero. They established the hierarchy of who would get 
a deal cut prior to the bankruptcy, and those were the two 
groups that the auto team picked.
    Mr. Mica. Mr. Wilson, any change in light of their 
findings?
    Mr. Wilson. No, that is just not correct. The UAW and the 
bondholders had enormous leverage because they are critical 
components of a potential restructuring transaction. That's why 
they had leverage and that's why they were important to the 
deal. It wasn't because of anything that Treasury did, as I 
described both in my written and verbal testimony.
    Mr. Mica. And what were the nonunion employees? Chopped 
liver?
    Mr. Wilson. Unfortunately, anyone who----
    Mr. Mica. They were just dumped overboard.
    Mr. Wilson. No. That's not----
    Mr. Mica. But again, the union side, maybe they were 
entitled to this, the top-up, and I have no problem with that. 
But what I have a problem with is thousands of people left 
behind, and we're using taxpayer money for the top-up. And we 
also had a testimony today of a billion dollars that won't be 
returned to the Treasury. So I don't view that as fair for all.
    And Mr. Ryan, Mr. Turner have to go back and face these 
people. I faced some of them at the hearing we held in June. 
Mrs. Brooks isn't here. She told me one person that she ran 
into this week is basically homeless, who was one of these 
employees that she talked to this past week.
    And we will leave the record open. Some of the Members 
weren't able to return after the votes, and she's one of them, 
to cite in the record what this is, how this has affected 
folks.
    So, again, we're dealing with Federal taxpayer funds and 
how they were distributed, and some people were unfairly 
treated, according to the report. And Treasury did have the 
discretion to make a different decision, wouldn't that be 
correct, Ms. Romero?
    Ms. Romero. Absolutely it was their decision.
    Mr. Mica. Okay. Let me----
    Mr. Ryan. Mr. Chairman, if I could just----
    Mr. Mica. Go right ahead.
    Mr. Ryan. I just want to make a point, that there were 
eight or nine other unions. I just don't want to leave anybody 
out. So it was the salary, but that list of union members that 
I gave were also on, we can't forget them as we're advocating 
for this, that there were other, seven, eight, nine unions that 
were also included that had been left out. We talk about the 
Delphi salary, but it is also these splinter unions as well.
    Mr. Mica. And, Mr. Ryan, I think every one of them should 
have been treated fairly.
    Mr. Ryan. Yeah. Agreed.
    Mr. Mica. Again, it is taxpayer money. I've been involved 
in business and I have seen bankruptcies and I have seen how 
they're settled and there is a lot of unfairness. There are 
things that we could do to correct that. This was not a civil 
or commercial bankruptcy in any sense of the normal way these 
things are conducted. Again----
    Mr. Ryan. That's why I'm sitting here with you, Mr. 
Chairman.
    Mr. Mica. That's my beef. And if there were some way, in a 
bipartisan manner, to make people whole, I mean TARP is still 
not done. I don't know if legislatively that can be done or 
however. But I think it is a great injustice to thousands of 
people. And our job is to, again, try to be fair to those 
folks. I'd be glad to work with you and others, both sides of 
the aisle, to see what we could do.
    Mr. Ryan. Well, Mr. Turner and I have been working on this 
for a long time and we welcome that opportunity, as well as the 
HCTC extension for the next year, because a lot of these folks 
are having huge, huge healthcare costs as well. So I appreciate 
that, Mr. Chairman, and let's make something happen.
    Mr. Mica. Okay. Any additional questions?
    Mr. Ryan. No. Just thank you.
    Mr. Mica. Mr. Turner, additional questions?
    Mr. Turner. Thank you. I have three. And I do want to 
acknowledge Mr. Ryan's dedication and just hard work on this. 
This has been really a team ball project here and a bipartisan 
project. Rob Andrews is being another, of course on the other 
side of the aisle, and certainly in the Senate there are a 
couple others. And a follow-up to my congratulations to Mr. 
Ryan, thanks to Mr. Ryan, I unfortunately had to step out, and 
while I was gone Mr. Ryan asked a question to Mr. Rattner. And 
so I'm going to paraphrase, not having been in the room, your 
answer, and I'm going to ask you to say it again and elaborate 
on it so that I could understand it.
    He was discussing with you the termination of the salaried 
pension plan, and you indicated that you had had considerable 
discussion on the termination of the salaried plan. Is that a 
correct characterization of what occurred when I was not in the 
room?
    Mr. Rattner. I'm not sure with whom you are thinking we had 
discussions.
    Mr. Turner. Well, first off, did you have any discussions 
with respect to the termination of the salaried pension plan?
    Mr. Rattner. Yes.
    Mr. Turner. And those discussions occurred prior to its 
termination?
    Mr. Rattner. Correct.
    Mr. Turner. Who did you have those discussions with?
    Mr. Rattner. I had one or more discussions with Fritz 
Henderson, who was then the CEO of General Motors, and we had a 
number of discussions among the auto team members.
    Mr. Turner. So you spoke to Mr. Feldman?
    Mr. Rattner. I believe so.
    Mr. Turner. So when I asked Mr. Feldman whether or not he'd 
had any discussions and he didn't recall it, you do recall 
having had a conversation with Mr. Feldman with respect to 
terminating the salaried pension plan.
    Mr. Rattner. I thought your question to Mr. Feldman was in 
the context of the PBGC.
    Mr. Turner. Did you recall having discussions with PBGC 
with respect to termination of the plan?
    Mr. Rattner. I don't recall.
    Mr. Turner. Would you deny that you did?
    Mr. Rattner. I said I didn't recall.
    Mr. Turner. So you don't recall whether or not you did or 
didn't, right? You could have.
    Mr. Rattner. I could have, but I don't recall.
    Mr. Turner. Well, luckily, with the subpoenas that have 
been issued, we're going to get even more of the information 
because Mr. Feldman had no recollection of his discussion with 
respect to termination of the pension plans until I handed him 
his own email. And, Mr. Rattner, I look forward to addressing 
that issue with you again with perhaps your own emails.
    Mr. Wilson, one of the issues in the GAO report is this 
concept of the conflicts of interests, the multiple roles of 
Treasury, is I think the heading in the report. And we talk 
about Treasury having a--the Treasurer on the board of PBGC, we 
have Treasury as TARP, purchaser of GM, we have auto task force 
Treasury, we have many of those. You've left the auto task 
force, you've left any role at Treasury. But it's my 
understanding you were subsequently appointed to the PBGC 
advisory committee. Is that correct?
    Mr. Wilson. I was recommended by Senator Mitch McConnell's 
staff to the White House that ultimately decided to appoint me 
as a representative of the people at large.
    Mr. Turner. So was that a yes? I didn't understand it.
    Mr. Wilson. Yes.
    Mr. Turner. Are you still on the PBGC advisory committee?
    Mr. Wilson. Yes.
    Mr. Turner. Okay.
    Ms. Romero, thank you for the clarity of your answers among 
what at times becomes a heated and an obtuse, I don't know, 
where the answers here are not always the clearest.
    On your report, on page 29, you state that the audit--in 
the audit you state that after the decision was made to not 
make the salaried retirees whole, Dr. Summers prepared a 
briefing memo for President Obama in August of 2009. Can you 
tell us who Dr. Summers is?
    Ms. Romero. Larry Summers was one of the heads, with 
Secretary Geithner, of the auto task force.
    Mr. Turner. I know it's in the report. I just wanted for 
the clarity of the record for it to be stated. Was this memo 
provided to you or your staff?
    Ms. Romero. We were provided access, but we were not given 
the memo.
    Mr. Turner. So you've seen the memo?
    Ms. Romero. No, I have not seen the memo.
    Mr. Turner. Someone on your team did see the memo?
    Ms. Romero. I should say this. Someone on my team saw a 
draft of an email that contained the memo.
    Mr. Turner. Do you know what was in the memo?
    Ms. Romero. Yes.
    Mr. Turner. Could you tell us please?
    Ms. Romero. Sure. A Delphi salaried retiree had written a 
letter to the President to describe his personal situation. The 
President had asked his advisers for information about the 
situation. The memo discussed how this person would receive 
less benefits on their pension, it describes the 1999 
agreement, the spinoff of Delphi. It describes discussions 
between the UAW and GM in 1999. It then discusses how, as part 
of GM's bankruptcy, the top-up for the UAW retirees would be 
given, but not for the salaried employees. It discusses that 
the salaried retirees did not have leverage because they did 
not have current workers at GM. And it also discussed how the 
salaried plan was fully funded by GM in 1999.
    Mr. Turner. Do you know who briefed the President from that 
memo?
    Ms. Romero. The memo came from Mr. Summers. I don't know if 
there was any verbal briefing to the President.
    Mr. Turner. And no action to reverse the decision came from 
the President or the White House that you are aware of after 
the memo informing the President that the salaried retirees 
lacked the leverage of UAW?
    Ms. Romero. That's correct. We did not see any change or 
any action taken after the memo to the President.
    Mr. Turner. Ms. Romero, I'm going to read something from 
your written statement that I would like you to elaborate on 
because I think it really goes to the issue of the power and 
authority that Treasury exerted here. You say, ``An Auto Team 
official told SIGTARP that the Auto Team's approach with GM was 
to 'push them' and to 'question them.' And another one said we 
pushed GM toward making the changes necessary to becoming a 
viable company.''
    And when asked how is it that this was done, at the bottom 
of the paragraph on page 12, which is the third paragraph down, 
the auto team official said, ``Well, they could, but then they 
couldn't exist. I mean, as I said, as the lender, we had a fair 
amount of leverage.''
    Now, that's a constant theme throughout your report. Could 
you elaborate on that just a moment? Because that is, I mean, 
that is fairly ``but for'' GM goes away if they don't do what 
Treasury says.
    Ms. Romero. Well, I think this goes to the bigger issue and 
I think the best way to discuss this is to tell what you the 
auto team told us and tell you what GM told us.
    So Mr. Bloom told us, from the auto team, that Treasury did 
not want to start running the company but when dealing with 
taxpayer resources, we, the government, were ultimately holding 
the purse strings and we reserve the right to tell GM we would 
not back them. So when we asked Mr. Bloom how the auto team 
conveyed its preferences or nudged GM to see things the way the 
auto team did, given that ultimately GM could do its own thing, 
that's when he said, ``Well, they could, but then they couldn't 
exist. I mean, as I said, as the lender we had a fair amount of 
leverage.''
    GM officials told us, there's a just a couple statements, 
one, ultimately it is that GM is not in control and GM is 
totally dependent. The auto team replacing the CEO was an early 
indicator that Treasury as the main investor would have 
significant influence over GM's decisions and operations. GM 
officials told us the auto team was pushing GM to be tougher 
and take more significant actions other than what we would have 
done on our own volition, that GM put forward recommendations, 
but ultimately the purchaser made decisions, which was 
Treasury.
    So there were a lot of situations that we found where the 
auto team can take the position that they did not intend to 
have significant influence on GM's decisions and operations. 
But we have GM officials telling us that they felt that they 
were not in control and that the auto team did have significant 
influence on GM's decisions and operations.
    So the auto team may not have intended to have significant 
influence, and they may not believe that they had it, but they 
did. And if I can just take 2 seconds I want to read one part 
in Mr. Rattner's book, which is very much on point. This is 
quoting from Mr. Rattner's book, ``Larry''--meaning Mr. 
Summers--``Larry had pushed us from the start to play down team 
auto's role and keep the emphasis on GM and Chrysler managing 
their own affairs. That ended up being partly true of GM in the 
sense that Harry''--meaning Mr. Wilson--``and his team tried to 
set parameters and assumptions for its executives in the hope 
that they then could produce the specifics of a restructuring 
plan.''
    And he goes on to say, ``In reality the talent and 
determination of Harry''--and then he named David and Sadiq, 
who were on the auto team--``were what really drove the 
process. As we drafted press statements and fact sheets I would 
constantly force myself to write that GM had done such and 
such. Just once I would have liked to write 'we' instead.'' And 
that is what Mr. Rattner wrote, that's consistent with what we 
found, that the public statements Treasury made downplayed 
their influence, downplayed their role.
    Mr. Turner. Thank you.
    Mr. Mica. Thank you.
    Mr. Connolly, I yield you 10 minutes.
    Mr. Connolly. Thank you, Mr. Chairman. I want to come back 
to that in a minute.
    But, Mr. Wilson, you objected that Ms. Romero was 
inaccurate when she said Treasury gave leverage to the union 
and bondholders. You weren't really allowed to explain your 
objection. Please do so now.
    Mr. Wilson. Sure. There is no doubt that UAW and the 
bondholders had a lot of leverage, but it was not in any part 
as a result of Treasury actions or anyone else's actions. They 
had a lot of leverage because they were critical actors in the 
restructuring. We needed the UAW to manufacture cars and 
therefore they were critical for that, and they would always be 
critical. And the bondholders were critical because they were a 
large stakeholder. Even though they had no ongoing involvement, 
they were critical because they could object and hold up the 
proceedings and cost the taxpayers lots of--billions of dollars 
in a prolonged bankruptcy that would also imperil the potential 
viability of General Motors.
    Mr. Connolly. So good point you're making here, that the 
leverage they had was self-created by virtue of their power 
over many years, it wasn't something conferred upon them by 
Larry Summers or Mr. Rattner?
    Mr. Wilson. That's correct.
    Mr. Connolly. Mr. Miller, Mr. Rattner, Mr. Wilson, Mr. 
Feldman, any and all of you, but here's GM facing bankruptcy. 
Why would they choose to honor these union contracts? Could 
there be a good business reason to do that or is it just 
because somebody somewhere said take care of the unions? Is it 
at all conceivable there could be a business reason, if you 
want to save the industry and save GM through the bankruptcy 
process and have them come out whole, that you might want to 
honor that contract?
    Mr. Miller. The issue is that without honoring the 
contracts, there wouldn't be any workforce. And the last time 
that GM, I forget the year, allowed a strike to go on, it was 
exceedingly expensive and almost destroyed the company.
    To operate and become feasible, you must have the workers 
who produce the product. And that was a prevailing theme, even 
though the negotiations were very difficult with the union in 
trying to get concessions. But it's a long history going back 
to Walter Reuther of a lot of adversity. But without a labor 
force, there is no feasibility.
    And as far as the GM management was concerned, if the 
United States of America wanted to pay everybody and GM not 
file a bankruptcy petition, that would have been perfectly 
fine. But from my observation what the auto team was concerned 
about is how do you protect taxpayer money? If you're just 
going to open up the door and everybody is going to be paid, 
well, then you don't need the bankruptcy.
    But bankruptcy is a zero-sum game. There's only so much 
value, and the fight is who's going to share in that value, and 
there are priorities that are commanded by the bankruptcy code 
and there are business reasons why, unfortunately, from my 
perspective, unions have a lot of leverage. And the question 
is, how much money are you going to put in? From my 
perspective, again, United States and Canada operated as if 
they were secured lenders. They were trying to protect their 
investment.
    And after all, you're talking about a company which, as 
people have described here, prior to bankruptcy was too lax, 
they took on too much credit, they gave out too much money. 
Well, what this task force was trying to do was to make sure 
that GM stayed within the line of what would be feasible to get 
to a viable company.
    Mr. Connolly. And, in retrospect, and, again, I'd invite 
others, would it be fair to say looking back that actually that 
kind of worked out?
    Mr. Miller. Yes.
    Mr. Connolly. That it was a wise business decision not to 
vitiate the contract or ignore it?
    Mr. Miller. From my perspective yes.
    Mr. Connolly. Mr. Rattner, Ms. Romero quoted from your book 
a conversation you had with Larry Summers. Would you comment on 
her comment?
    Mr. Rattner. Yes. Ms. Romero I don't think fully 
understands the difference between being involved in day-to- 
day operations and being involved in a restructuring. And she 
has sort of tossed those back and forth without making the 
right distinction.
    We had no involvement in the day-to-day running of General 
Motors. We did not decide what kind of cars they were going to 
make. We did not decide which plants were going to function. We 
did not decide how much they were going to discount their new 
model, we didn't pick new models, we didn't pick executives. We 
didn't do any of the things that one would associate with the: 
``day-to-day running of the company.''
    The section she read from my book pertains entirely to the 
efforts that we made to effect the restructuring of General 
Motors in which we were heavily involved. We were investing 
ultimately a total of $50 billion, I think $12 billion of it 
under the Bush administration, into the company, and we had a 
responsibility to the taxpayer to be sure that money was 
invested wisely. And if we had not been involved in those 
restructuring plans, if we had not pushed back on General 
Motors, if we had not insisted on a viable restructuring plan 
then I would be relatively confident in saying we would be 
sitting here in front of you having a different discussion, 
which is, why were you not watching over the taxpayer money? 
Why were you not involved in this restructuring? Why did you 
not insist that it was being done in commercially reasonable 
terms?
    Mr. Connolly. Ms. Romero, you have heard Mr. Rattner's 
explanation, and from his point of view you perhaps misread 
what the nature of that conversation was, namely it was focused 
on restructuring, not on day-to-day management and operational 
decisions.
    Ms. Romero. So earlier when I talked about the actions of 
what Treasury's influence was, what I did was I read quotes 
from Mr. Bloom, who is not here, on the auto team, and I also 
read quotes from GM officials. And I think this is what's 
important. This is what I was saying earlier. It may be that 
the auto team went into their job not intending to get so 
involved or have such significant influence on the decisions 
and operations of the company. And it may be that as they sit 
there today and look back at what they did that they don't 
think that they had that influence. But ultimately the only one 
who can say whether they felt that influence was the company 
itself. And what the company officials told us in interview 
after interview after interview after interview was that they 
were not in control, that the leverage was held by Treasury.
    And when they talk about we weren't involved in the 
selection of executives, one of the first things they did was 
Mr. Rattner went to GM and asked the CEO to resign and then put 
in his own replacement, his own pick of the CEO. And that CEO 
told us that GM's board was very upset by that and said that 
the auto team had usurped their authority. And he said to us 
that was an early indicator that Treasury as the investor would 
have a significant influence on our decisions and operations. 
Those are his words.
    So when Mr. Rattner talks about our interpretation is 
wrong, we aren't interpreting, we are laying out for the public 
all of the things that the auto team told us and all the things 
that GM officials told us.
    Mr. Connolly. All right, Ms. Romero, let me just posit a 
little devil's advocate.
    Ms. Romero. Sure.
    Mr. Connolly. The U.S. taxpayer is pumping tens of billions 
of dollars to save this company and try to make sure we don't 
lose all those jobs and the whole industrial core of our 
economy. And it's not entirely unexpected that the existing GM 
management team watching this thinks what a pain in the butt, 
who needs their interference, I'll take your money, and keep 
your opinion to yourself, thank you very much, because we 
really have done nothing wrong, we actually know what we're 
doing and you people don't. And they're going to resent any 
intrusion, any second guessing, any kind of new leadership 
change. That's kind of human nature. And as a taxpayer and as 
somebody who oversees taxpayer investments, I'm not entirely 
unsympathetic to Mr. Rattner and his team trying to protect my 
interests.
    Now, maybe from someone's point of view it went too far. 
But the fact that you're relying on GM interviews, while I'm 
not entirely surprised having mucked it to up to a fare thee 
well and forced the taxpayer to bail them or let them go under, 
that they resent our exercising some oversight 
responsibilities. Couldn't that be the case, Ms. Romero?
    Ms. Romero. I think it absolutely could be the case. I do 
want to point out it's not just we are relying on interviews of 
GM. We interviewed 84 people. We are also relying on the 
interviews of the auto team officials who sat here today and 
another auto team official, Mr. Bloom, who did not, and the 
statements they've said.
    But I think you raise a really good point, Ranking Member 
Connolly, which is maybe that's in the taxpayer's best interest 
and we're okay with that. Our point is just be transparent. 
Just say it and let the American people judge, like yourselves, 
and all of us who funded the bailout, do we agree or disagree. 
But the point is don't hide behind roles or don't try to 
downplay your involvement. Just tell the truth. Because you 
know what? The American people are pretty smart. We know there 
was a crisis. We know something had to be done with GM. And we 
understand that their role was monumental and that they had to 
do something to restructure GM.
    If you'd just be transparent and tell the truth, then the 
American people will decide. And that's what we've done. What 
we did in our report, as you'll see, there is not a lot of 
judgments in our report on this. What there is, is we just told 
it like a story, a chronological story, put the facts out 
there, so that the American people and all of you can decide 
whether you agree or disagree.
    Mr. Connolly. Thank you. It's a fascinating story. I know 
we will return to it.
    And, Mr. Chairman, thank you so much for allowing me to----
    Mr. Mica. You have 30 seconds.
    Mr. Turner. Okay. Great. Mr. Connolly----
    Mr. Mica. You went over your 30 seconds.
    Mr. Turner. As usual.
    Mr. Mica. I'm going to give him the 30 seconds and then 
we'll be exactly even. So reset the clock, give Mr. Turner 30 
seconds.
    Mr. Turner. Maybe it's the Federal Express deliveryman here 
on the 30-second speaking. Could I start while you're setting 
it?
    What I'm going to say, Mr. Connolly, Ms. Romero once again 
has been incredibly articulate about what her position is and 
what she has done. And you are absolutely right and you're both 
right that she does not conflict with your conclusions or 
opinions. What she conflicts with is the public statements that 
have been made and the statements by Treasury, and that's the 
part that is disturbing, I think, to all taxpayers, is that 
there's one story being told and there's one that's being 
reality. And it's not as if they relied on interviews. They had 
papers and emails.
    Mr. Rattner, I want to give you one opportunity because we 
all know that your statement about picking executives is not 
accurate. Do you want to amend that? Because you're under oath. 
And we know when people are speaking sometimes they get a 
little carried away. If you'd like to recharacterize that, I 
think everybody here would be very pleased.
    Mr. Rattner. I was referring to picking executives below 
the CEO level. We did, obviously, it's public record, we did 
obviously make a decision that there needed to be a new CEO. It 
was in the context of a commercially reasonable investment 
decision.
    Mr. Turner. Great, because I didn't want you to be subject 
to perjury for saying something that was wasn't accurate or 
truthful.
    Thank you.
    Mr. Mica. I think everyone's had ample opportunity. I know 
we could go on. And there are additional questions. There are 
questions from members that are not here that will be 
submitted. And with concurrence of the minority, we're going to 
leave the record open for a period of 2 weeks. And I will 
advise the witnesses, too, that they may submit questions to 
you to respond which will be part of the record, made part of 
the record.
    Mr. Mica. So we have completed this hearing. I thank the 
witnesses for their participation. I thank the members for 
their involvement. I think it is an important issue. I'm sorry 
that it was not resolved before Mr. Connolly and I took over 
the subcommittee, but, again, we now have the report of the 
Special Inspector General, we have additional information. If 
we need additional hearings to resolve pending issues we'll 
conduct that. But I promised a field hearing, which we 
conducted, and a Washington hearing as we completed and got the 
SIGTARP report.
    So I thank all of you for your participation. There being 
no further business before the Government Operations 
Subcommittee this hearing is adjourned.
    [Whereupon, at 4:47 p.m., the subcommittee was adjourned.]


                                APPENDIX

                              ----------                              


               Material Submitted for the Hearing Record

[GRAPHIC] [TIFF OMITTED] 85115.133

[GRAPHIC] [TIFF OMITTED] 85115.134

[GRAPHIC] [TIFF OMITTED] 85115.135

[GRAPHIC] [TIFF OMITTED] 85115.136

[GRAPHIC] [TIFF OMITTED] 85115.137

[GRAPHIC] [TIFF OMITTED] 85115.138

[GRAPHIC] [TIFF OMITTED] 85115.139

[GRAPHIC] [TIFF OMITTED] 85115.140

[GRAPHIC] [TIFF OMITTED] 85115.141

[GRAPHIC] [TIFF OMITTED] 85115.142

[GRAPHIC] [TIFF OMITTED] 85115.143

[GRAPHIC] [TIFF OMITTED] 85115.144

[GRAPHIC] [TIFF OMITTED] 85115.145

[GRAPHIC] [TIFF OMITTED] 85115.146

[GRAPHIC] [TIFF OMITTED] 85115.147

[GRAPHIC] [TIFF OMITTED] 85115.148

[GRAPHIC] [TIFF OMITTED] 85115.149

[GRAPHIC] [TIFF OMITTED] 85115.150

[GRAPHIC] [TIFF OMITTED] 85115.151

[GRAPHIC] [TIFF OMITTED] 85115.152

[GRAPHIC] [TIFF OMITTED] 85115.153

[GRAPHIC] [TIFF OMITTED] 85115.154

[GRAPHIC] [TIFF OMITTED] 85115.155

[GRAPHIC] [TIFF OMITTED] 85115.156

[GRAPHIC] [TIFF OMITTED] 85115.157

[GRAPHIC] [TIFF OMITTED] 85115.158

[GRAPHIC] [TIFF OMITTED] 85115.159

[GRAPHIC] [TIFF OMITTED] 85115.160

[GRAPHIC] [TIFF OMITTED] 85115.161

[GRAPHIC] [TIFF OMITTED] 85115.162

[GRAPHIC] [TIFF OMITTED] 85115.163

[GRAPHIC] [TIFF OMITTED] 85115.164

[GRAPHIC] [TIFF OMITTED] 85115.165

                                 
