Sep 12, 2013 (Menafn - Dayton Daily News - McClatchy-Tribune Information Services via COMTEX) --WASHINGTON, D.C. -- Washington, D.C. --
General Motors leaders felt "pressured" to make whole the pensions of union-represented Delphi retirees as the federal government guided the automaker out of bankruptcy four years ago, an investigator told a U.S. House committee Wednesday.
Retirees represented by the United Auto Workers had "leverage" to lengthen GM's stay in bankruptcy, while salaried retirees lacked that leverage, said Christy Romero, the special inspector general for the federal government's Troubled Asset Relief Program (SIGTARP). Romero is a law enforcement officer.
"It was clear that the UAW expected it (a "top-up" of union retiree pensions) to become part of the deal," Romero said.
She also said that she did not find evidence that "political clout was a factor" in making the union pensions whole.
Delphi salaried retirees, including hundreds in the Dayton area, saw their pensions cut by 30 to 70 percent when Delphi, then in bankruptcy protection, released its pension obligations to the Pension Benefit Guaranty Corp. (PBGC) in the summer of 2009.
GM-- which once owned Delphi -- chose to bolster the pension payments of union-represented Delphi retirees during its own stint in bankruptcy. Salaried retirees have argued that this was done because union retirees had leverage they didn't have. Romero's report, released last month, appears to support that view.
"These decisions were made on the basis of politics and not prudence," said Rep. John Mica, R-Fla., chair of the Committee on Oversight and Government Reform.
Not all committee members agreed. Rep. Elijah Cummings, D-Md., said union-represented retirees only "insisted" that GM honor previously negotiated contracts to top up their pensions if those pensions were one day surrendered to the PBGC.
Said Cummings, "SIGTARP's report makes clear that high-ranking GM officials made that decision (to top up pensions), not the (Obama) administration."
"I feel bad for the Delphi employees who did not receive top-ups," Cummings said. "There will be hard days ahead for them."
Rep. Mike Turner, R-Dayton, sharply disagreed with Cummings, reading from the SIGTARP report, saying that the government's oversight of the decision to top up the union pensions "was not advisory."
A core argument for salaried retirees and their supporters was that the Obama administration "picked winners and losers."
"They determined who had leverage and who did not -- some political and some not," Turner said, adding a few minutes later: "This is not over."
In an exchange with Matthew Feldman, who worked as a bankruptcy attorney for the federal Auto Task Force in 2009, Turner asked if Feldman "advocated" any particular treatment of Delphi pensions when he worked for the task force.
When Feldman initially said he didn't recall, Turner then read an email from Feldman to a PBGC official. Reading aloud from Feldman's email into the committee's hearing record, Turner said: "I've been advocating hard for our deal. I believe that will be the conclusion."
Feldman protested that Turner's take on the email was too "narrow."
"I'm only using your word," Turner told Feldman.
Earlier in the hearing, Rep. Gerry Connolly, D-Va., warned Turner to "watch (his) characterizations." Connolly dismissed what he called "the fifth hearing to rehash some hackneyed assertions of the past." He argued that the government's guidance of GM through bankruptcy helped strengthen the domestic auto industry.
Delphi salaried retirees are suing the PBGC in Detroit's federal court for restoration of their pensions. Recently, the court ordered the PBGC to cooperate in turning documents over to retirees. The PBGC has said it is paying those retirees what it is permitted to pay under the law.
myDaytonDailyNews.com
More online: Read past stories from our in-depth Delphi coverage at MyDaytonDailyNews.com.
General Motors leaders felt "pressured" to make whole the pensions of union-represented Delphi retirees as the federal government guided the automaker out of bankruptcy four years ago, an investigator told a U.S. House committee Wednesday.
Retirees represented by the United Auto Workers had "leverage" to lengthen GM's stay in bankruptcy, while salaried retirees lacked that leverage, said Christy Romero, the special inspector general for the federal government's Troubled Asset Relief Program (SIGTARP). Romero is a law enforcement officer.
"It was clear that the UAW expected it (a "top-up" of union retiree pensions) to become part of the deal," Romero said.
She also said that she did not find evidence that "political clout was a factor" in making the union pensions whole.
Delphi salaried retirees, including hundreds in the Dayton area, saw their pensions cut by 30 to 70 percent when Delphi, then in bankruptcy protection, released its pension obligations to the Pension Benefit Guaranty Corp. (PBGC) in the summer of 2009.
GM-- which once owned Delphi -- chose to bolster the pension payments of union-represented Delphi retirees during its own stint in bankruptcy. Salaried retirees have argued that this was done because union retirees had leverage they didn't have. Romero's report, released last month, appears to support that view.
"These decisions were made on the basis of politics and not prudence," said Rep. John Mica, R-Fla., chair of the Committee on Oversight and Government Reform.
Not all committee members agreed. Rep. Elijah Cummings, D-Md., said union-represented retirees only "insisted" that GM honor previously negotiated contracts to top up their pensions if those pensions were one day surrendered to the PBGC.
Said Cummings, "SIGTARP's report makes clear that high-ranking GM officials made that decision (to top up pensions), not the (Obama) administration."
"I feel bad for the Delphi employees who did not receive top-ups," Cummings said. "There will be hard days ahead for them."
Rep. Mike Turner, R-Dayton, sharply disagreed with Cummings, reading from the SIGTARP report, saying that the government's oversight of the decision to top up the union pensions "was not advisory."
A core argument for salaried retirees and their supporters was that the Obama administration "picked winners and losers."
"They determined who had leverage and who did not -- some political and some not," Turner said, adding a few minutes later: "This is not over."
In an exchange with Matthew Feldman, who worked as a bankruptcy attorney for the federal Auto Task Force in 2009, Turner asked if Feldman "advocated" any particular treatment of Delphi pensions when he worked for the task force.
When Feldman initially said he didn't recall, Turner then read an email from Feldman to a PBGC official. Reading aloud from Feldman's email into the committee's hearing record, Turner said: "I've been advocating hard for our deal. I believe that will be the conclusion."
Feldman protested that Turner's take on the email was too "narrow."
"I'm only using your word," Turner told Feldman.
Earlier in the hearing, Rep. Gerry Connolly, D-Va., warned Turner to "watch (his) characterizations." Connolly dismissed what he called "the fifth hearing to rehash some hackneyed assertions of the past." He argued that the government's guidance of GM through bankruptcy helped strengthen the domestic auto industry.
Delphi salaried retirees are suing the PBGC in Detroit's federal court for restoration of their pensions. Recently, the court ordered the PBGC to cooperate in turning documents over to retirees. The PBGC has said it is paying those retirees what it is permitted to pay under the law.
myDaytonDailyNews.com
More online: Read past stories from our in-depth Delphi coverage at MyDaytonDailyNews.com.