Former Auto Czar Admits Telling GM to Selectively Fund Pensions
According to the report, government officials led by Rattner were worried the UAW could stall GM’s reorganization and pressured the automaker to reach agreement quickly on its pension liabilities. The report stops short of criticizing Treasury but highlights the government’s controversial role of picking winners and losers during the financial crisis.
Rattner and other members of the auto task force told lawmakers their job was to ensure GM emerged from bankruptcy as a viable company while acting “as prudent custodians of taxpayers money.”
“To achieve these goals, we were guided by the principle that Treasury as GM's investor and partner in bankruptcy was entitled to set parameters and provide guidance to GM that was consistent with what would be commercially reasonable,” Rattner said.
Christy Romero, special inspector general for TARP and the author of the report, said her investigation did not find any evidence the decision was politically motivated.
“We did not find evidence that political clout of the UAW was a factor in GM and Treasury’s decision,” Romero said.
Romero, however, disputed the Treasury’s earlier assurances that it had only played an advisory role in the decision.
“The public statements Treasury made downplayed their involvement, downplayed their role,” she said. Romero said GM officials believed they “were not in control” during the bailout.
The Delphi pension payments have irked many Republicans, particularly Rep. Darrell Issa (R-Calif.), chairman of the House Oversight Committee. Issa subpoenaed U.S. Treasury Secretary Jack Lew in August, claiming that the department had only turned over a fraction of the requested documents regarding the GM bailout. During the election campaign in 2012, Republicans called the auto bailouts unfair, for helping unionized Delphi employees, while leaving other Delphi pensions underfunded.
“Unionized Delphi retirees were made whole, because they just happened to be a politically-favored group,” said the subcommittee’s chairman, John Mica (R-Fla.). “Unfortunately, the salaried non-unionized pensioners were left out in the cold.”
The panel’s top Democrat, Rep. Gerald Connolly (Va.), challenged claims that the decision to top-up union workers’ pensions was a government policy.
“The bottom line is that GM's refusal to top-up the pensions was a business decision,” Connolly said. “In a perfect world, perhaps GM would've prioritized the fairness over commercial interest and treated the pensions of all its former employees at Delphi equally. But bankruptcy's not a perfect world – it's an unfair and staggeringly difficult battle for survival itself.”