GM Right to Add to Pensions During Bailout, Rattner SaysAngela Greiling Keane
The U.S. auto bailout’s leader challenged a watchdog’s conclusion that Treasury Department officials pressured General Motors Co. to increase unionized workers’ pensions to secure support for its reorganization.
Steven Rattner, who was President Barack Obama’s auto czar and is now chairman of Willet Advisors LLC, today told U.S. lawmakers his task force did what would be expected of advisers to a corporate restructuring.
His portrayal differed from that of Christy Romero, the special inspector general for the Troubled Asset Relief Program, who said at a House hearing that GM officials believed “they were not in control” during the 2009 bailout.
“The public statements Treasury made downplayed their involvement, downplayed their role,” Romero said today at a hearing held by the House Oversight and Government Reform Subcommittee on Government Operations.
Four years after Obama’s administration bailed out GM and Chrysler Group LLC, the panel is looking at how the Treasury Department handled the process, which improved pensions for union-represented hourly employees at auto supplier Delphi Automotive Plc while cutting them for about 23,000 salaried workers and retirees.
Rattner and two other members of the auto recovery task force testified today in Washington about their involvement in the decision to give a so-called top-off of pensions for the United Auto Workers-represented employees at Delphi, which GM spun off in 1999.
“We had no involvement in the day-to-day running of General Motors,” Rattner, who wrote a book about the process, told the panel, saying GM was left to decide which models to sell and which dealerships to close. He said he insisted that GM replace its chief executive officer as part of the deal.
Rattner’s firm is the investment arm for New York City Mayor Michael Bloomberg, founder of and majority owner of Bloomberg LP, the parent company of Bloomberg News.
He said GM managers, not U.S. Treasury officials, decided to boost pensions of hourly workers to help secure an agreement critical to GM’s bailout.
He defended that decision as the right one in hindsight, saying the UAW insisted on it.
“The UAW was an absolutely critical party to bring to the negotiating table,” Rattner said in his testimony. “They had the power to hold up a deal in bankruptcy or to strike, either of which could have been devastating to GM’s efforts to get back on its feet and in turn, to the U.S. economy.”
The decision was made by GM with union input, and not by government officials, Rattner said.
Romero said in an August report that government officials led by Rattner were worried the UAW could stall GM’s bankruptcy reorganization and pressured the automaker to reach agreement quickly on its pension liabilities.
GM employees thought they weren’t in control of what was going on, Romero said.
“It may be that the auto team went into their job not intending to get so involved in the operations of the company,” she said. “But ultimately the only one who can say whether they felt that influence is the company themself.”
GM was facing default when the government, concerned that it would impact the automaker’s supply chain and the U.S. economy, agreed to intervene in late 2008.
In exchange for about $50 billion in investments, the Treasury became GM’s majority owner with a 61 percent stake in the company that emerged from bankruptcy in July 2009, according to the report.
As of June 5, the government’s share was 13.7 percent, according to data compiled by Bloomberg.
The department said it had recovered about $35 billion of its GM investment as of July 31.