President Obama's General Motors bailout team ultimately made the decision to "top up" the pensions of United Auto Workers employees at General Delphi, GM's former chief parts supplier, but not the pensions of nonunion salaried workers --- leaving almost 20,000 workers short by as much as 70 percent of their retirement benefits.
"It was Treasury who made the decision on the collective bargaining agreement," Christy Romero, the special Inspector General for the Troubled Asset Relief Program, told a Congressional oversight panel Wednesday in a hearing examining the Treasury Department's role in the Delphi pension deal.
Romero said despite Treasury officials' previous assertions that they acted as advisers and not decision-makers, GM management testified to SIGTARP that they felt Treasury, as the purchaser, was in control.
GM could have topped off the pensions for both UAW and salaried employees, but members of the auto team told the House Oversight and Government Reform Subcommittee on Government Operations that doing so wouldn't have been a wise use of taxpayer money.
"Some people were unfairly treated, according to the [SIGTARP] report, and Treasury did have discretion to make a different decision," said Florida Republican John Mica, subcommittee chairman.
The auto team "spent a considerable amount of time" considering whether GM could contribute to salaried employees' retirement funds, but concluded it wasn't commercially viable, according to auto team leader, or "car czar," Steve Rattner.
Topping up UAW pensions, however, was mandatory because if GM decided not to fulfill its contract with the union, the ensuing strike could ruin the already-bankrupt company.
"Without honoring the contracts, there wouldn't be a workforce," said Harvey Miller, who served as lead restructuring counsel to GM.
The pension contract dates back to a 1999 agreement UAW Delphi employees made with GM. The agreement stipulated that GM would fully fund UAW pensions after Delphi's spinoff into a separate company. Salaried employees, whose pension fund was overfunded at the time, did not make an agreement with the company. But when GM went bankrupt, both union and nonunion employees' pensions were underfunded.
Auto team members told the committee they didn't get involved in GM's day-to-day decisions, helping only to make sure the company acted in the best interest of taxpayers.
But GM officials told SIGTARP they felt they were no longer in control, Romero said.
The auto team "may not have intended to have significant influence, and they may not believe they had it, but they did," she said.
Because Treasury was GM's buyer, they had strong financial interest in the company's decisions, she explained. The real problem is with the auto team's lack of transparency.
"Our point is, just be transparent," she said. "The point is, don't hide behind roles or try to downplay your involvement."