U.S. taxpayers and auto workers would have fared worse if President Barack Obama’s auto bailout hadn’t improved pensions of some Delphi (DLPH:US) Automotive Plc union retirees while cutting those of salaried workers, former members of the bailout task force said.
As part of U.S. assistance to General Motors Co. (GM:US) and Chrysler Group LLC in 2009, $1 billion of U.S. Treasury money was spent on a so-called top-off of pensions for hourly employees at auto-parts supplier Delphi, which GM spun off in 1999. Salaried Delphi retirees had their pensions cut as part of the agreement.
“I remain convinced today that it was the best course of action available at that time,” Matthew Feldman, a bankruptcy attorney who was on the task force, said at a U.S. House subcommittee hearing today. “I recognize that the restructuring process imposed painful but necessary actions on many of Delphi stakeholders.”
Feldman and fellow task force members Ron Bloom and Harry Wilson were called before a House Oversight and Government Reform hearing today after declining to be interviewed by the inspector general of the Treasury’s Troubled Asset Relief Program for an audit of the Delphi pension decision.
The three agreed today to answer questions from Inspector General Christy Romero, who told the panel her probe’s work has been “significantly protracted” by the trio’s lack of cooperation.
Today’s hearing was the panel’s third on Delphi’s pension and GM’s involvement in it.
The Government Accountability Office said in a report last year that three unions including the United Auto Workers secured agreements with GM, when it spun off Delphi, to provide supplemental retirement benefits to their members if their pension plans were frozen or terminated. Salaried workers and members of other unions didn’t have such agreements, the GAO said.
GM was honoring its contracts when it topped off the UAW pensions, Bloom said today.
“In a bankruptcy, all constituents try to use whatever leverage they have to get the best arrangements,” he said.
Delphi, based in Troy, Michigan, held an initial public offering in November after restructuring in bankruptcy court. Delphi, once the largest U.S. auto-parts supplier, exited bankruptcy in October 2009.
Lawmakers including Representative Frank Guinta, a New Jersey Republican, said members of Delphi unions including the UAW were treated better than other employees.
“I think it’s very clear that there was special preferential treatment given to one group over another,” Guinta said.
The task force members denied that union members at Delphi, which makes parts including fuel-injection systems, received a sweetheart deal.
“We negotiated the best possible deal we could with each of the constituencies,” said Wilson, a Republican.
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