Watchdog: Accountability

Obama's car czar pressured GM to accept union pension demand

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Mark Tapscott,Watchdog,Autos,President,Treasury,Federal Bailouts,Corruption,Accountability

President Obama's General Motors bailout team used unprecedented pressure to force the crippled automaker to "top-up" retirement benefits for union members who worked for Delphi, its former chief parts supplier, according to a report released today by the Special Inspector General for the Troubled Asset Recovery Program.

No such pressure was exerted on GM by the government, however, to do the same thing for thousands of former Delphi managers and salaried employees who were not union members, according to the report. Nearly 20,000 of the salaried employees lost as much as 70 percent of their retirement benefits as a result of that decision.

Steven Rattner, Obama's "car czar," oversaw the Treasury Department's management of GM's bankruptcy and insisted on completing the process in only 40 days, something which had never been done before with a corporation as large as the automaker.

Treasury's insistence on the 40-day process put GM negotiators in an impossible position because it gave them only a couple of weeks to bargain with the United Auto Workers before their contract ran out.

Without a quick agreement, the union could either prolong negotiations or in the worst case, strike, which GM managers feared would end any chance of saving the company.

"GM only had a couple of weeks to come to agreement with the UAW, and if they did not come to agreement, GM risked the UAW objecting to and prolonging the bankruptcy beyond 40 days, which GM believed would lead to liquidation," according to the SIGTARP report released today.

One of GM's lawyers told Rattner that the 40-day bankruptcy process demanded by the government was "impossibly aggressive" and "has never been done before," according to SIGTARP.

"The Auto Team's role in the decision to top-up the pensions of Delphi's UAW workers was not advisory," SIGTARP said. "Consistent with the Auto Team's practice, it would have been

Treasury's decision as the buyer to assume or reject the top-up liability.

"Although the top-up was previously a separate written agreement, the top-up was now included as one of the obligations in the overall new collective bargaining agreement with the UAW, which was included in the Master Sale and Purchase Agreement selling assets to the New GM."

The final bankruptcy agreement did not include topping-up the other Delphi employees' pensions because, according to SIGTARP, because none of them were active GM employees "and therefore had no leverage to hold up GM's bankruptcy."

In addition to the salaried employees involved, others were excluded who were hourly wage employees and members of International Union of Electronic, Electrical, Salaried, Machine and Furniture Workers, and the United Steelwworkers of America.

Mark Tapscott is executive editor of the Washington Examiner.

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