immunity. preclinical sign of the disease and other diseases itself are significant progress has been made in unraveling the genetic cause of the type i diabetes as was mentioned just a few years ago we only had three genes we understood contributed to the risk of the disease. today due to the efforts of the type 1 diabetes consortium and other researchers, nearly 50 genes have been identified. but we know that there are likely factors that exist in the environment that interact with these genetics to turn disease risk and to disease reality. and because of the genetic risk for type deacons type 1 dalia visas well characterized we can identify those at risk and follow this. this has allowed us to embark on bold, longer-term systematic studies to identify these environmental factors. this study has enrolled over

8600 newborns with high genetic risks for the disease, and we plan to follow them for 15 years. we will be collecting biological samples and information about their lives, identification comfortable, of an infectious agent that triggers this auto immunity could lead to a vaccine to protect against this disorder. ..

is conducting trials of promising therapies in newly diagnosed patients. now, the third handoff continues along a spectrum of disease progression and this next age of disease research shown in green focus is on people with established type one diabetes. and a high priority for this stage is a development of new tools and technologies to help people improve their blood glucose control because they can reduce diabetes complications by up to 70%. this is certainly an artificial

pancreas that automatically links with close monitoring with insulin delivery to make a positive impact on people's health and their quality of life. and i.d. decay is supporting innovative, innovation and technology critical to the development of an artificial pancreas working closely with our partners at the fda. we are pursuing testing pancreas technology and ensure that they are safe and effective. in a recent advance scientist develop and are testing a by hormonal artificial pancreas. a counterbalancing hormone to more finally reproduced the activities of the human pancreas. another recent study cometh researchers looked at overnight closed loop insulin delivery country -- following two different real-life andrew scenarios, testing close loop technology in real-life situations.

it is really a key step toward moving this technology out of the clinic and into the real world. a major goal of research at the next stage shown in purple is to investigate ways to replace the destroyed data cells and restore and to eyelid transplantation. in a clinical islet transplantation contortion misconduct king trials. science is like those of a beta sale biology consortium are pursuing strategies to replace islet cells by either growing cells in laboratories or for transplantation into people or by expanding their remaining beta cells or by posting other types of cells in the pancreas to become beta cells. finally, tilt prevention of our cure for type one diabetes is possible research towards preventing, resting in reversing the complications of the disease is critically important.

shown on the far right of that graph, just recently we sell the saw the biggest advance in diabetes in 25 years. at landmark study from the retinopathy clinical research network found that patients who received a combination of a drug and standard laser therapy shows substantial visual improvement after one year. advances like these in diabetic complications also benefit patients who have type ii diabetes who were at risk of these complications as well. hundreds of thousands of individuals have participated in research supported by the special diabetes program irca remarkably, nearly 30 years after one pivotal study began, about 95% of the participants in the muslim arc trial showed that glucose control to radically continue to participate in a

follow-up study known as edict and as a result of their commitment as long-term investment in research continues to identify ways to improve the health of people with diabetes. i'm grateful for the opportunity to share with you just a few examples of the many recent advances in ongoing research in type 1 diabetes. we continue to be inspired by the dedicated efforts of the individuals affected by type 1 diabetes and by the organizations like jdr app that represent them. we look forward to continuing our partnership with the jdrf and her sister federal agencies on research to combat type 1 diabetes and competitions and we will continue to be diligent in our fight against type 1 diabetes to help all the children here and the many americans whom they represented a and we will strive to improve their quality of life with an ultimate goal of hearing this disease. thank you mr. chairman and senator collins for your

leadership and calling for this hearing to continue to bring attention to the importance of type 1 diabetes research and for your continued support of nih research. i will be pleased to answer any questions that you might have. [applause] >> thank you dr. rodgers. our last witness on this panel before we hear from the children is dr. charles zimliki. he is the chair of the food and drug administration, artificial pancreas critical path initiative. as you can see there is tremendous interest and excitement about this research and technology and i look forward to hearing your statement. >> i share that excitement as well. madam chairman and members of the committee, i am dr. chuck

zimliki located within the center for radiological health of the fda. i would like to think of the committee for the opportunity to discuss the artificial pancreas system and what fda is doing to assist in the development of these critically needed and potentially life-changing devices. as a person living with type 1 diabetes, i am personally committed and professionally committed to seeing this important novel medical device approved in the u.s.. i just want to go off-line and say mr. kline i furley support the postal and issuing guidance i believe the fda will submit guidance for all types of artificial pancreas before december of this year. [applause]

[applause] >> i still have six minutes ago here. [laughter] diabetes is a disease that affects the entire family, especially when a child is diagnosed. i know this because i was diagnosed with diabetes when i was 13 years old. when i was diagnosed the technology was a great deal different. they were just coming out with glucose meters and it took much longer than it does today to obtain a blood glucose measurement. technology has come a long way and i'm very grateful for that. but even now, today's technology, we still must prepare fingers to test for blood multiple times a day in overtime that can really hurt. i am sure you kids can attest to that. we must also calculate insulin

doses administered necessary insulin via syringes or infusion pumps to lower blood glucose and as always we have to be prepared for the inevitable lows and highs associated with diabetes. i admit, it is really tough being a diabetic. paul great strides have been made in diabetes management current treatment is consonant pervades all aspects of a persons life presenting a particularly arduous burden for children and their parents. an artificial pancreas system is an innovative device for treatment of type 1 diabetes that once fully developed will automatically monitor blood glucose and administer appropriate insulin doses. this life-changing technology will positively impact diabetic patients health and quality of life. as a person with diabetes i'm acutely aware of the benefits and artificial pancreas system will provide. i say well because i'm highly optimistic that industry, researchers and fda will bring this device to market.

and artificial pancreas system will allow people with diabetes, especially children, to live an active life without the constant need to address glucose levels. pauline know the potential benefits are enormous and artificial pancreas is a significant device many presents the potential for serious risk to the health, safety or welfare of the patient. if not properly design, use of an artificial pancreas device in an outpatient setting can place patients at significant risk because the device controls the administration of insulin. as such an investigation exemption or ide from fda is needed to allow the investigation device to be used in a clinical study. currently fda has approved over 17 clinical studies for artificial pancreas systems at various levels of development and we have seen promising results. fda is helping advance the

development of an artificial pancreas system by prioritizing their review of ide studies fostering the discourse and, shortening study began with the times and providing clear guidelines that passed the market for industry. in 2007 fda created artificial pancreas critical path initiative bringing together a multidisciplinary group assigned to clinicians from fda and nih. one of the major goals of this initiative is to identify roadblocks and possible solutions to streamline the regulatory process. a shining example of this effort was how fda worked with the developer of a software program so that researchers working on an artificial pancreas system could test control rhythms and use the results to support the regulatory submissions. this important software tool enables researchers to quickly test artificial pancreas control algorithms and is accepted in places of costly and time-consuming animal studies. this effort saved investigator six months to a year and

expedited the transition of human trials. fda also encourages researchers to contact the agency early to discuss clinical study lansing get an informal feedback to improve their studies and to facilitate the review process. this quick informal feedback and help investigators develop better and more complete study plans for fda review. when investigators submit their final study plans, fda gives the submissions these submissthem ay through the review process. questions in research challenges are resolved helping researchers start their studies and there. fda guidance and industry standards help manufacturers and researchers understand the minimum requirements for making a device that is safe and effective. this helps them make the best use of resources and streamlines the regulatory review process. we agree with jdrf another set guidance in the industry is

useful for product development. on june 22, fda issued draft guidance that will help advance development and approval of an artificial pancreas system to treat type 1 diabetes in the u.s.. this guidance documents an early version of an artificial pancreas system known as the algeo system. they'll just system can help reduce or lessen the severity of hypoglycemia by temporarily reducing or stopping the delivery of insulin. patients using the system still must test their glucose levels on a regular basis with the glucose metering. the draft guidance provides recommendations for those planning to develop and submit for fda approval an application for a system. fda is seeking input from industry researchers and clinical community on the draft bill specifically the agency is interested in feedback about the types of clinical studies that should be conducted and what their target outcome should need to demonstrate safety and

effectiveness. your input is very welcome. fda is also working on the second guidance as i had earlier discussed. fda has been working with research communities such as jdrf to expedite this guidance and we promised the publication of the draft guidance by the end of this year. early december. finally, fda is working with nih and other interested parties in developing the next artificial pancreas workshop which will focus on developing better technology for creation of a more accurate and reliable artificial pancreas system. these are assisting kids that -- you can put it on and not worry about it and i can't wait for that day. if he is fully committed to the development of an artificial pancreas to meet this critical help me. is the goal of the agency to provide a clear path for manufacturers to provide people with diabetes with innovative safe and effective medical devices to treat their disease. madam chairman this concludes my

formal remarks and i would be pleased to answer any questions the committee may have. [applause] >> thank you so much for your testimony. we are going to do a six minute round of questions so that we can get to the next panel. we could keep you here all day. dr. zimliki it is great news that you have given to us today and i saw the guidance on monday about the draft guidance. in early may, 59 of us wrote to you, signed a letter that i spearheaded, that encourage then encourage the fda to move forward with issuing guidance that would enable clinical trials for testing the artificial pancreas to move from inpatient to an outpatient

basis. does this guidance help us along to achieve that goal of moving to the outpatient guidance? >> yes, indeed it does. this is the complete package guidance. this will help investigations, get them approval for the clinical studies in the clinic and it outlines what type of information the fda needs to assure safety as we transition from the in clinic to the outpatient settings. >> and on a related question for you, i have heard, and there are some delegates from canada here today, that the low glucose suspense system technology is available now in canada and other parts of the world. could you explain to us, and i'm not trying to put you on the hot seat, though maybe i am trying to put you on the hot seat --

but, why isn't this available here if it is available next door in canada? >> well, it is hard to draw a comparison across the various regulatory agencies, actually across the world. the fda has to operate within u.s. law which states medical devices must be safe and effective. i will give you an example. the european union said medical devices need to be safe and perform. that might not sound like a big deal or a big difference but there is a significant difference between the two. i will use this as an example. this is going to be a long answer, i am sorry senator collins. to evaluate the performance, all you need to do was show that the insulin pump shuts off when the sensor reads low. now that is a perfect engineering question that can be tested on the bedside and it is an easy thing to do. fda agrees that type of

performance is needed. what the fda also need for effectiveness is to know what happens to the patient when the pump actually turns off. that information is critical because it allows the prescribing clinician to look at the information that is provided in that clinical study and determined whether or not their patient actually can use this device beneficially. so with regards to the deo system i will say medtronic and fda has been continually working together and and i believe the ongoing study right now provide sufficient safety data within the u.s. and it is the hope of the fda that the safety data will allow the transition to an outpatient and finally approval of that device. >> thank you. dr. rodgers, last year congress passed legislation extending the funding for the special diabetes program through september of 2013. how important is it for congress

to do multiple years as opposed to year-to-year renewals of funding? does that have an impact on the kinds of studies that you can fund? >> senator we were very pleased to see the multiyear renewal of special diabetes program grass through fiscal year 2013. the multiyear renewal greatly improves the planning process that goes on at idd k.. for example many clinical studies take multiple years to perform and it would be very difficult if not impossible to start such a multiyear clinical trial without knowledge of whether the funds will exist in future years to continue those types of funds. one area that we are absolutely looking at is to bring new people and new talent into this field. for example in the artificial pancreas, we have obviously very

dedicated and talented clinicians and we have people in the industry but what needs to link them to her as my colleague dr. kevin kline says to actually put it together are bioengineers. so with this multiyear funding where trying to put in training efforts to bring bioengineers into this field and training occurs over a long time horizon and there for multiyear funding is also critically important. one final thing that i would say is that, as we move towards artificial pancreas, clearly we would recognize that there might be some issues related to compliance so now we are trying to get people give people who have been previously engaged in behavioral science to tell us what particular challenges we might face. we are trying to get them involved in research in diabetes. so, training and bringing in new talent is critically important in multiyear funding greatly assists in that regard. >> thank you.

mr. kline, you mentioned in your statement that when there is a diagnosis of type 1 diabetes, it affects the whole family and involves involve the whole family. you also talked about the very different challenges at different ages. could you, having lived with this for quite some time now, elaborate on the impact on the family and the challenges of different ages from toddler to teenager? >> well, it affects the entire entire -- transforms the entire family and it changes with the vicissitudes of the degree of the age and the various vicissitudes that the disease can go through. suddenly in the teenage years, with the hormones being what they are, there is chaotic

glucose levels. >> people are agreeing. [laughter] >> and, as it is a vast improvisation of figuring out how you react to this. it is this the real high number? is this the hormones? not unlike life in that way, trying to find ways for the absolute cause for any particular symptom. but obviously when a child is diagnosed as six months, he can't tell you he is feeling low or feeling high. it is too horrible to imagine. it does get easier all things being relative and given our human nature and our marvelous adaptability. we can adapt to a surprising

number of things. and kids get more and more used to it. get more and more top of it depending on the nature of the child. there are are some type a personalities that are all over their diabetes and can really control them and there are others who are more in denial of that who don't want to be bothered with it, and those days of not having diabetes he spoke of earlier, just one day and sometimes they will take that day even though it is not an officially appointed day for such behavior. but they will take it upon themselves to. it gets easier and harder, but the thing i find most of all, it doesn't stop.

when your child gets over and goes -- older and goes off to college you are still calling incessantly. you were still checking out. you are still worried. you are still make him trips at strange hours of the night to deal with the insulin emergencies. it is moment to moment, hour-by-hour, day to day. it is ongoing which is i think dwight jdrf wants to stress the urgency and the need to keep the research going and gets the artificial pancreas done. i think is these marvelous children can attest, it atere sooner than we would like and we would like it to have it tomorrow or yesterday. >> thank you. senator brown.

>> that happens regularly with me. [laughter] it is a conspiracy. [laughter] >> you are not in massachusetts. >> i asked for that. use]hat was very dramatic, yes. >> that is what this button is. >> that was a good stage trick, mr. kline. [laughter] >> senator brown. >> that was perfect. certainly, -- everyone is awake now. >> how do you follow that? >> mr. kline thank you very much for coming and offering your star power to a cause for just this i think everybody i know has some type of experience whether it is in their own family or their friends, soap really thank you for taking time out of your schedule. i think we all respect you --

your acting ability and what you do with philanthropic causes the thank you. dr. zimliki i have 225 medical device companies in massachusetts and i visited medtronic's and others in the biggest challenge, and i've met with obviously director pam borg and you know my feelings on that. the fact that there is a tremendous amount of delay and inefficiency within the fda. i will say she recognizes that and she's make great efforts to try to streamlined, consolidate and eliminated a lot of duplication. the number one issue i find in massachusetts and i traveled throughout the country as you have a company trying to make a difference for people like this and marching along with a checklist in the middle of the checklist i have to go back to square one at tremendous cost. i look at those devices improving in ireland and canada and other parts of the country and they are saying to me as a u.s. senator senator why are we being approved here in

massachusetts and the united states? [applause] on the one hand, i've been very critical of the fda and its delay in the fact that it is costing. there needs to be consistency, stability and certainty in the process because it is putting at what lank it on development and the ability to find cures. on the other hand i've also been very public in saying thank you to her and the agency for finally realizing that there is a problem in trying to fix it. so i wanted to let you know that and i'm wondering how are you finding the new leadership and that new process? is it moving along as expeditiously as you would like? it is a softball. [laughter] >> i am due for a promotion too. [laughter]

absolutely. yes, absolutely. i believe we have a new leadership and dr. sher and has certainly said that there is room for improvement for the review process by increasing predictability, consistency and transparency and there is an entire action plan associated and didn't place regarding the improvements in the review process. my focus here today is about the artificial pancreas and i am very happy and pleased to know that doctor hamburg and dr. sher and give me the fullest support and we are going to make sure this device gets approved. we are hopeful that this guidance outlines or four improves the transparency so a company like you reference doesn't go halfway through the development process and have to start back at square one. >> that is a tremendous job killer in my state and brought the country. i think you stated that you want a device that performs precisely

and as a unit. what steps are you an taking to ensure the quality of the systems and the clinical trial in your face to guidance? >> just give me one second second here. >> okay. you thought you are going to get easy questions. >> well the face to guidance is really sort of adopting some of the information from jdrf. granted they're face to ideas which i will call the morgue vance artificial pancreas guidance is using some of the information that the clinical panel's recommendation by jdf submitted. is a three phased approach and the idea would be to understand the device and the clinic and then transition into a more realistic version of home life, except under mitigation or

supervision such as the diabetes can. i'm sure most of these people here up into a diabetes camp echo is that correct? thank you. i like you too. and then the last would be the transition, from the transition study to the outpatient and certainly that is the recommendation associated with some of the jdrf recommendations as well as most of the medical community. it is still under development and we will be finalizing finalizing that and you will see the publication december of this here. >> dr. rodgers what is the role in supporting the fda in this process? how do you foresee the role, nih's world changing in the current month and will you be facilitating the transition to clinical trials with the translational research? >> yes, under the auspices of the diabetes interregional chordata committee we have regularly meet with not only our colleagues at the fda and the

cdc and other federal agencies that other institutes within nih that have a role to play in diabetes research. we work very closely with dr. zimliki and his colleagues in an interagency artificial pancreas working group. in fact just a few months ago we held a meeting in conjunction with the jdrf and we are actually planning to have a follow-on meeting in the fall of this year to develop sort of a working understanding of what are some of the challenges, what are the other groups that we need to bring into the question, particularly bioengineers, mathematicians, theoreticians to try to assist us in moving more expeditiously along this pathway. so, we have an essential role we have been working very closely. this is not only with the fda and nih but the meeting in the

fall of this year will also involve a jdrf as is will. >> very well. madam chair, listen you surprise me more and more each day. i wasn't aware until this year that you were advocating for this cause the thank you for that. there will be an opportunity to submit questions to our panel members because i know a lot of folks are. >> absolutely. >> and i want to also say thank you to all the parents and kids they can. i'm going to be bouncing back and forth as i've done so trying to get back with the kids. >> thank you. senator shaheen. >> cannonmack been in chair and thank you to all of our panel is this afternoon. dr. zimliki, as you are aware i know, i share the frustration that both senator collins and senator graham have expressed about the pace at which the fda has moved on getting the guidance out on the artificial pancreas. i am pleased to hear you say that you expect that to happen

by december but i wonder if you could then outlined what the next steps are once that happens on the way to getting approval for the artificial pancreas? >> can you clarify which artificial pancreas type system you are asking about? >> i would think -- i know there are a number of those systems in development and i am interested in seeing something that can be commercially available on the market that will be approved by the fda and be safe and available to my family on all the families who were here. i don't particularly care who the producer of that system is. >> i was just asking for clarification on the thai. the artificial pancreas have lots of different types. we talk about the deo system which the agency believes is a type of artificial pancreas and

that one by far should be on the market sooner than later and i would fully support that. >> i appreciate that. i guess i think for many of the people in this audience, they don't see that as the artificial pancreas that we are really hoping will be on the market. i agree that is a step in the right direction, but as has been pointed out that device is available on the market and other countries and we would like to see not only that available here, but to go to the next step to have a continuous system available for people. >> and so is the question that you would like to know the timeline? >> i would like to know what steps the fda seized that it is going to require in order to move forward. so you said you expect to see draft guidance on that by december. so then what happens? if you can just outline the steps. >> the draft guidance is out for

public comment for anywhere between 60 and 90 days and we look forward to all the comments in the scientific community to help shape and modify that guidance in the hopes of making a final, so it becomes sort of like the guideline to an approval package. now, the timing and the ability to get get a device approved depends upon a lot of people. it really depends upon fda being transparent and setting this guidance out there so that industry can follow this and actually conduct the studies. that takes time and it takes people like you out here in the blue shirts to volunteer and any part of these studies. so the process is that i probably made to next year it will be finalized and even when it is not finalized, but when it is published in december, industry can start developing their process and getting to an outpatient study and a pivotal bold study that will lead to an

approval. in november of 2010 i believe, one of the jdrf investigators that are artificial pancreas workshop estimated anywhere between 2013 and 2014 getting to a pivotal study. there's a lot of information and needs to be built up to get to that final stage for product approval and it is contingent on the research for glucose sensing. when he better sensors. we absolutely need more reliable, continuous glucose monitor sensors and when he do research to really find out how to make that happen. >> dr. rodgers, you talked about the role that nih has with the fda. can you talk about how nih can be helpful in moving the process forward? >> well senator, in addition to working on a collaborative and coordinating basis, some of the

vital research that dr. zimliki is mentioning is something that we see as our major contribution in moving the process forward. and making it a reliable and practical step. just recently, as i mentioned, for example and they closed loop system not only using insulin but to try to more closely replicate what the pancreas does and scientists who we funded used to hormones, both insulin and a counter regulatory hormone look at gone to see whether one could be more precise blip -- let glucose control over time but again these are done sort of in a clinical setting, ultimately for this to be effective in a row the real world. we have to try to replicate and that is why this more recent study is actually looking at two different meal scenarios particularly at night.

that would be a critical step and we could use this closed loop system so you don't have to get up in the middle of the night and the parents to check your blood glucose. that would really be an enormous benefit. for example these two scenarios, one lesson ian scenario in which 18 ate a modest medium-sized meal to see how well the closed loop system could look at the various levels of the close control and how that occurred over the setting. another was the sort of a second scenario, and eat out, see you caught on replicate a larger meal that you would have if you would go out dining and how well were you able to maintain that level of glucose control? these are kind of both barry and basic investigations we were hoping to do but then in addition and bar practical real-life scenario and in moving this research forward in the clinic to the bedside. >> madam chairwoman my time is up but i wonder if he would

allow me to just ask mr. kline one question? thank you area much mr. kline for being here and for being willing to testify on what we need to do. if you had one comment that you could leave with policymakers after today's hearing, what would it be? what would you like us to take away from this hearing? >> i love the question you were posing because you are asking in simple language to explain what are the steps because so many things get lost along the way in the byzantine labyrinth hallways of bureaucracy. i love that you are asking for a timetable and four really simple explanation of when will this happen and what needs to happen in order to get the artificial

pancreas for example that we have been talking about, the one that we have described, that will alleviate for these children and for type 1 diabetics around the world the constant burden of self monitoring, something that will effectively work as a pancreas works and doles out the appropriate amounts of insulin and glucagon and takes the worry out of the constant vigilance that type 1 diabetics have to practice. >> thank you all very much. >> thank you. senator pryor. >> thank you very chair and i would like to start with you if i could dr. zimliki. you know, great news on the artificial pancreas and some of the really positive encouraging things you have said and the other panels have said about it. but another question that i don't think i've heard yet or an answer i have not heard yet is,

but would be affordable for the average household? so tell us what your anticipation, what your with your expectation is on cost? >> i wish i could tell you that answer. fda or my role within fda does not focus on the cost. we worry about getting the product approved. i will say that we are in collaboration with cms for reimbursement and the hope is one day not only will this study provide approval for marketing within the u.s. but also for reimbursement. >> and you said there are several models that are out there that may be headed to the marketplace? >> several types of artificial pancreas systems? yes. >> and you anticipate they will be approximately the same cost or will there be a big cost disparity? >> again i would have to defer to industry who sets these prices so i apologize that i

can't answer that. >> part of your process though you don't fully look at the cost? >> part of my ross as i look for the safety and effectiveness of the device. >> well we will have to work through the cost may be in another setting the thank you for the answer. dr. rodgers, let me ask you if i may, how does the united states compared to other countries when it comes to diabetes research and treatment? are we leading the world? are we behind? how do we rank out there? >> i believe the research that is conducted in the united states really does -- i think we can be proud in particular nih sponsored research as well as research that has sponsored public groups and diabetes in particular with making great strides in not only understanding the genetic susceptibility as i mentioned in

type 1 diabetes. a few years ago we had three genes analogous up to 50 and they know that among these 50 for example there are a small number of genes that contribute a great, a large amount of the genetic risk and there is a large number of genes that have only a small component. in this country, for the first time and as a direct result of the special statutory funding, we are beginning to see now that diabetes incidence of this disease is increasing and it is increasing at an earlier age. we have to assume over this period of period of time it really isn't genes that are changing but it is actually something in the environment and that is what it is important to undertake bold studies to determine what the czar and the environment that are contributing to accentuating or initiating that autoimmune attack. this is why this study that i

referenced in my comments really is going to provide us with a lot of information. early on they beer using new technologies, for example the human microbiome in which we are looking at the samples that we are collecting from these children over time and it is already giving us information about potential viruses or bacteria or other agents we are exposed to. type ii diabetes although we are not focusing on this, type two diabetes the story is quite similar. just a few years ago we just had a few number of genes and now we are up to 60 or 70. that explains the type ii diabetes. we are understanding a lot more about type 1 diabetes contributing to prevention and potentially treatment of type ii diabetes as well as contributes to that 174 billion-dollar annual cost that senator collins referenced in her earlier statement. >> the united states, as we do

research we are sharing that with the world and others are benefiting from that research as well. >> yes. certainly our investigators work that is performed and funded through the nih is being publicly available so that others can potentially mined the data and ask other promising questions. this is how one can really leverage the investments to get the greatest return on one's investment. >> and haven't we designated a certain amount of funding or a percentage of funding to nih specifically for diabetes research? >> well obviously the special statutory funding is exclusively for that but over and above that, regularly appropriated funds also go to diabetes research. >> and you can see the results of that statutory funding? >> oh, absolutely. i listed just a few highlights to give you just a glimpse of that but over it period of time

in which this funding has occurred, we have really made major steps by leaps and bounds both in terms of our understanding but moving forward eventually at all steps in the progression of the disease. >> the number of cases of diabetes has gone up in this country. are you saying that all around the world? >> the number of cases that have been followed largely, the highest prevalence are in scandinavian countries. finland for example has the highest incidence rate of the disease. the lowest incidence by comparison is venezuela and there are a number of -- so this clearly may be related to racial ethnic differences, perhaps exposure and the environment to factors and diet. maybe sunlight exposure are other things but for the first time as a direct result of the special statutory funding, we have developed a program in collaboration with the cdc to begin to search for the

incidence and certain places around the country to begin to determine whether our incidence rate is static or whether it is increasing. we are beginning to see the same thing that is occurring over in the scandinavian countries that not only over time is the incidence increasing but it is occurring at a much earlier age. >> one last thing if i may add a chair on. you are seeing that same disparity geographically in this country? i think in my state we have a few counties where the incidence rate is over 10% and not true in other counties. it is a more concentrated in the southeast part of of the united states? >> i'm not aware of any predilection and the united states although i would say the search and study with in conjunction with the cda is looking at particular clusters where they may exist. when one sees clustering of the best that has a high possibility or opens a possibility that there might be all environmental

factors and that is something we are now poised to be able to look at as the cdc does for other types of clusters of disease. >> thank you. thank you very chair. >> thank you very much senator pryor. senator begich, welcome. >> thank you very much madam chair one. i know you have a bill on the floor. i know senator lieberman, you are playing tag teams so thank you very much. i want too a statement and then i want to ask a couple questions if i could to dr. zimliki. first first i'm pleased to be am pleased to get the update on the current research and hear from so many folks and also from these young people. i have to tell you, you have been very patient or all of our presentations and discussions. for young people here, we could take a lot of lessons from them so thank you very much.

[laughter] mr. pryor just whispered, if only the senate could do that. i agree with him. we have come truly a long way in managing type 1 on a day-to-day basis. is a matter of fact spent some time with two alaskans, part of the children's congressional delegates somewhere whenever there. we actually went and watched the nationals, the mariners and we are seattle fans. we felt we were winning until the bottom of the ninth and depending -- if anyone watch that game, if you want to see a baseball game that is the one that was well worth it so we had -- they are nodding their heads yes. but we also had a chance to talk reef and we will talk later today but i i know their attendance and their parents, karen and steve, can we want to thank all the families that are here in the children that are here to help us understand better. but it's exciting, particularly exciting to see the development of the artificial pancreas and i

can truly transform lives. i understand that we must continue to invest in the tools and help better manage the disease but i also know we all are really in want and need of investment of research to help find a cure. to this and we must continue to force public partnerships to find a cure. diabetes is common and growing in the state that i represent, alaska. in 2009 nearly 7% of alaska's population has been diagnosed with diabetes. in 2007 the direct and indirect cause -- costs were state was approximately 419 million. we can talk about the caw systems up when you look the other impact, the human impact, the families and the burden of the disease and what families have to do it is significant. this is why and very glad to have so many people here today to deliver the impactful and memorable message. two years ago when i first got here an alaskan team came to visit to me me to advocate on

behalf of the special diabetes program. she brought me a photo book of her life and what she has been doing to deal with type 1. and it was very amazing because you can talk about it but when you see the photos and her life unfold from day one as she went through it, it was pretty impactful and a booklet i still keep in my office to remind me of the impact in stories all around this issue. again i want to think of the parents and the kids that are here. thank you for your advocacy. doctor of i can ask a couple of? questions. i want to swell up on senator pryor real quick. you mentioned cms reimbursement. you said you are working through that and no disrespect but always on a federal folks in frenemy it is always soon, maybe we are working on it and i'm going to ask a very specific, what you think the timetable is for cms to actually respond and resolve the issue of how it is going to be paid for?

>> i can speak on behalf of cms but i will tell you the following, is that the first priority is to develop the appropriate clinical studies necessary for product approval and archiving within the u.s.. we are hopeful that we can -- we have contacted our cms affiliates and they would like to make sure the clinical study proposed can actually kill two birds with one stone don't so to speak so we cannot only have the clinical data necessary for product approval but also reimbursement and we are hopeful that we can work with them. we have also communicated. >> let me pause you there for a second. when you think you will have that? when do you think that will get some results to say we have partners and we are ready to roll? >> i think we need to finalize the draft guidance first. >> so from december to win them? i hate to do this. i do this to every committee. you are not alone. and a christie, they have these

common phrases and i recognize it as a former mayor who administrators and local city council. we use the same phrases so i know that. what i'm saying is after december you are working through this now, but give me a sense. >> i apologize for interrupting but in developing and publishing this guidance it is not a trivial task. this is a huge monumental effort that the agency is putting forward and i would like to say that we would have that information available at the same time as the publication of guidance but i simply cannot guarantee that data and i apologize for that. >> based on your experience for something of this magnitude, is it for cms to say yes we can do this? it will be two years, three years? >> i don't have the experience or the luxury of knowing how long that would take. i will talk to my commissioner.

>> and then maybe you can, on issues of this magnitude maybe you can give me whoever would be the person at the fda experiences of the past and how long it's at. if the think that would be important. the last thing i i will ask very quickly and i apologize, have to depart. how many do you think clinical locations do you anticipate for the trial? do you have a sense of that get? >> it really depends upon how quickly industry wants to do it and how much variability they want to introduce in their clinical study design. certainly it is more than one. but it really is dependent. we have introduced enough flexibility to allow industry to sort of dictate how many sites they need to study and where they would like to study. >> thank you very much and i appreciate the comments and i look forward to what you can do. >> thank you very much. i want to thank this panel of

witnesses for excellent and highly encouraging testimony this morning. we will continue to work closely with all of you. thank you. [applause] [applause] our next panel of witnesses consists of children who know first-hand the burdens of living with diabetes. our witnesses are caroline jacobs from maine, jack schmittlein from connecticut, and kerry carry morgan from virginia and jonathan platt of california. each of these children are jdrf children's congress delegates and we are very very happy to have them here today.

[inaudible conversations] caroline, since you are from my home state, you get to go first. [laughter] >> okay. good afternoon chairwoman collins and members of the committee, thank you for asking me to testify before you today. my name is caroline jacobs. i am 14 years old. i'm from the great state of maine where we stayed maine is the way life should be. i am here as a children's congress delegate to talk about living with diabetes. the importance of technology for me and other kids, with diabetes

and my cure. i was diagnosed with diabetes when i was 10 years old. a change my life forever. with this disease i must always think and be aware of how i am feeling. and i've had to grow up fast. i feel the burden on my friends and my family who are always worried about me, always asking me questions about my blood sugar. so i'm getting but i can to make a difference in finding a cure for children of diabetes. i brought a school walk to the cure firm my family swat team for a cure in portland. i also make jewelry and bags to benefit jdrf. i do all of these things so we can continue research to find a cure for diabetes. while we wait for a cure, hope to see that more tech allergies are made available for kids like me. one of the delegates here is from canada and has the kind of insulin pump continuous glucose monitoring system that protects

against episodes of hypoglycemia when the patient is ignoring the dropping sugar levels. with this ability to stop insulin delivery, and detect low blood sugar this pump could lighten the burden and the worry for me and those around me. this technology is approved in canada and in other countries but not here in the united states. it is hard for me to understand how a device like that can't be available in a place just over the border from me. >> because i will be driving in the next two years, it would be important for me to have access to a technology that could help prevent my blood sugar from dropping. having diabetes can make your blood glucose levels too high or too low and make me feel sleepy, dizzy, confused, or have blurred vision, making it too dangerous to drive. i would like congress to encourage the fda to move

forward on next steps relating to the artificial pancreas, and an insulin pump and software that communicates. the device creates highs and lows, especially at night when that can be most dangerous, but it will also keep control of my sugars while i'm driving as well. i hope we will not have to wait too long about waiting for the device. that way i don't have to worry about others worrying about me. my family will have less of a burden and my friends won't always have to adjust around me. and i hope i will have the opportunity to travel and enjoy the world and those who live on it. afterall, isn't that the way life should be? thank you members of the committee, especially my home state senator, senator collins.

>> thank you. [applause] [applause] >> that was terrific. you sound like a pro. that was great. jack, we're glad to hear from you next. >> all right. thank you, senator collins, senator lieberman, and members of the committee for inviting me to testify. my name is jack schmittlein, i'm 13 and i've had diabetes for over six years. on october 4, 2004, my life changed before with the diagnosis. instead of being a carefree kindergarten, i was sticking my fingers six times and counting. managing diabetes lasts 24 hours a day every day. last year my friend had been diagnosed with type i diabetes.

he kept me company and helped me check. he and his family learned everything that i could to come over. peter's diabetes is one more reason to work to raise awareness about type i and one more reason why i'm here today. important research is happening all over the nation, even at yale university in my home state of connecticut. to better understand the causes and ways to prevent it. i'm grateful that congress passed legislation to ignore the special diagnosis program. the program is central to helping find the cure. the special diabetes program has led to the artificial pancreas. an artificial pancreas would help from blood sugar levels from dropping and live me insulin if the rate gets too high. right now i have to get up in the middle of the night to check. it would make participating in

activities easier. i enjoy playing football and basketball, but i have to come out to test during the game. i want to feel like a kid again, not a kid with diabetes. despite the technology, we need to do everything we can to find a cure. i'm doing my part to help push life-saving research forward. i have organized a walk, organized a walk in my school to benefit jkrf, i've spoken at two walks, assembly, and as an ambassador. it's my home that congress will continue to support research at nih. i really believe we will find a cure for diabetes. the artificial pancreas is a strong relate. i look forward to the day i can say i used to have diabetes. until then, an artificial pancreas can improve my life,

and other kids that have type i. i know that congress and jkrf are doing everything to make it possible. just think, if we can improve the lives of millions of children and adults around the world, why wouldn't we? research being conducted is bringing us closer to the cure and the development of the artificial pancreas can keep us healthy while we wait. thank you senator collins and members of the committee for providing me an opportunity to get a glimpse of what my life would be like without diabetes. i look forward to answers any questions that you may have. >> thank you. [applause] [applause] >> thank you, jack. you did a great job. kerry, we'll hear from you next. >> good afternoon, senator collins, senator lieberman, and members of the committee. thank you for inviting me to testify. i'm kerry morgan from glen allen, virginia, i was diagnosed when i was 4, 13 years ago.

unfortunately, diabetes wasn't new to my, my older sister was diabetessed when she was 4 too. shortly after, i was enrolled in a trial with first degree relatives of type i to see if they were at risk. on the trial i received daily insulin in hopes to avoid or delay development of diabetes. but it didn't work. sometimes clinical trials don't. i was formerly diagnosed with type i later. then in a flash ten years. ten years and thousands of insulin objections, finger sticks, tubing changes, carb counting and worry. ten years of toting around an awful green fanny pack with the vital necessities for everyday life. even with my best effort, i still have days with high and low blood sugar. just like the millions of the people impacted for the disease for a better way to control.

i was 14 when i enrolled in the continue trial for a glucose monitoring system. this division, which i named my buddy, gave me instant knowledge about my blood sugar and where it was going. while on trial, the a1c dropped from an 8 to a 7. it not only made it easier, but gave me hope it was truly possible to manage diabetes better. it wasn't a cure, but it was more than i had before. living with diabetes is a data struggle. it creates the cloud of fear and doubt. thoughts of blood sugars and carbs are always on my mind. i'm constantly asking myself, am i okaysome -- okay? i always have to remember snacks because things can get scary quickly. i've had my pump stop while working out of drop. i don't just worry about now, i worry about my future. diabetes never takes a break, so

neither can i or my family. then last october, i enrolled in a clinical trial testing artificial pancreas technology. for two days i was submitted into a hospital where they tested the artificial system. after participating in clinical research since i was 3 years old, i can honestly say the trial was the most amazing experience of my life and holds so much promise for people live, the disease. for two days, i had perfect control of the blood sugar. two days of live, the technology provided me with a vision of what life could be like. life with far less complications. creation of an artificial pancreas is within reach. i know it. i will do everything to get it into the hands of people living with diabetes. i hope you will too. so on the day the artificial pancreas is finally approved and released, people with diabetes can say, diabetes, there's an app for that.

[laughter] [applause] [applause] >> thank you, members of the committee for all you do for those living with diabetes and working to make the artificial pancreas technology available to all of those living with disease. >> thank you very much, kerry. you were great. [applause] >> jonathan, you are up. >> good evening, chairwoman and members of the committee. thank you for inviting me to testify. i'm jonathan platt, i'm from tarzana, california, i'm 7 years old. i was diagnosed with juvenile dice at age six, i have been losing weight, wetting the bed at night, and have extreme

thirst. i was always very tired and emotional. my mom and dad thought i was adjusting to a new school and kindergarten. my blood sugar was over 650 when i was diagnosed with juvenile diabetes. i will never forget the day i was diagnosed. we found out where in the redheaded girl who rode in the elevator with us was diagnosed with juvenile diabetes also. that had never happened in the doctors office, two kids diagnosed at the same time. i was thinking how did i get this disease? i didn't know what it was. i was very scared and nervous. i'm here as a children's congress delegate to tell you i manage my disease, but i do not let it control my life. with this disease i'm able to swim, play basketball, and build legos. but i am different. unlike other kids, i have to check my blood sugar eight-ten times a day. everything i eat is measured and

every carbohydrate counted. my blood sugar kit with trips filled for me whenever i go. it is hard when i go to summer camp or to a sleepover or even go to a friends' house. too much exercise or not eating all of my food can be very dangerous. i think i'm too young to have to worry about all of this stuff. my parents have had to adjust their life because of my diabetes. i say we all have it, not just me. managing diabetes is a 24-hour job. we are doing our part to help find a cure by raising money for the jdrf walk. i'm here to ask you to continue to do your part and find research to find a cure. a cure for diabetes means i can go to any summer camp, have

sleepovers whenever and be a kid again. please help me make this possible. my life depends on it. thank you. [applause] >> you did a great job. [applause] [applause] [applause] [applause] >> jonathan, you did a wonderful job. i think this entire panel deserves another round of applause. [applause] [applause] >> now i know that the children here have been sitting a very

long time. and that many of them could use a snack or water or need to test themselves or so i'm going to ask the panel to each just ask one question. and then we'll just wrap up the hearing. because i know it's been a long afternoon, particularly for some of the younger delegates who are here. first of all, thank you all for just wonderful testimony. you really have put a human face on what it's like to have diabetes. and that's far more powerful than statistics or than our being advocated for more funding. you are the best advocates that we could possibly have. so caroline, my question is going to be for you. you were diagnosed in the summer. and you had some time with your family to get used to be -- used

to the idea of having diabetes and in order what to do to manage your disease. i'd like you to share with us what it was like when you went back to school in the fall. >> well, i had a lot of -- we had to -- i was going to a new school at the time. so i was teaching my teachers how to deal with having a kid with diabetes and teaching my new friends how to, like, carb count and all of that stuff. even at like lunch, we all try to figure out how many carbs my food was together. so it was kind of -- i had a lot of support from friends and teachers and my family, of course. >> i'm sure that made a real difference. >> yeah. >> i just wanted to to to to tor

begich referred to the book because i've learned so much more about the disease and about you. i want to thank you especially for being here, but all of our delegates. senator brown. >> thanks, madam chair again for holding this. looking out this, i think i'm in the academy awards, kevin kline then i come back to reality and i see we're here to discuss something very serious that affects everybody in the room. each day -- the wonderful part of being a united states senator, you can learn and grow and understand new and different things. if you don't understand them, you always have an opportunity to find out thenses a. -- out the answers. my question is jonathan, i agree with you. you are too little to have to worry about this stuff. that being said, what is the biggest challenge been for you since you recently found out?

what is the most difficult part of everything that you are going through right now? >> well, -- >> is it keeping, you know, the daily requirements, worrying about what happens if you don't do it right? what's the biggest challenge do you think? >> hmm. >> let me -- you think about it for a minute. i'm going to ask jack. jack, what's your biggest? he was smiling. nice try. >> probably my biggest challenge with diabetes is, like, maybe at school when all of our friends go to lunch, i have to go to the nurse and go through my lunch and stuff. sometimes if we are in class and doing something fun my blood sugar might be too high or high low. i'll miss out on all of the fun.

it's hard for me. it's not hard to miss out on things that you want to do with your friends. that's one of the things that's challenging for me. >> i noticed jonathan you said 650. you just conveyed to me, i learned something a day, the average is 100 or below. i find that amazing that you are able to function and still that obviously address it. have you thought of something that's challenging yet for you? >> yes. every time i feel, well, there's no nurse at the school and while i'm in the library when there's something fun if i feel low, i have to go back to the class and check my blood sugar with the teachers. >> so you are missing out on some things. >> yeah. >> thank you for that. thank you, madam chair. >> thank you, senator brown. senator sheheen. >> thank you for your testimony. you are great advocates for the need to do more to address research. kerry, since you haven't asked a

question, my question is -- answered a question, my question is for you. we still have dr. zinlicky and rogers. there's been a lot of discussion, since you participated in one of those trials, is there anything that you would like to tell them about the trial as you hope they will bear in mind as they go back to the nih and fda and continue work on trying to get an artificial pancreas that can be available to people. >> first of all, i'm going to say it's awesome. keep that in mind. being on the artificial pancreas was so different than living every day with diabetes. for that time, i didn't have to worry or think about it. that a new experience. i've had this since i was young, i don't know anything else. having that was a weight all of my shoulders.

i think everyone here could use that. i think we need it, and we need it soon. keep working, keep funding, keep researching, hopefully it it'll be out soon. >> thank you very much. [applause] >> and thank you, madam chair for folding the hearing and the diabetes caucus. as we can see, it is making a difference. >> kerry, i think your final words sum up why we are here and what our purpose is. but i do want to take this opportunity to thank everyone for coming to this hearing. the wonderful witnesses that we had, the delegates who were chosen to testify, all of the delegates who are sitting in the well and around the room, and their families.

because diabetes truly is a disease that affects the entire family. i wanted to thank the juvenile diabetes research foundation for working so closely with us. mary tyler moore sent a letter and some testimony that we're going to put into the record. and we'll have the record open for an additional 15 days in case anyone else has any words of wisdom for us for additional questions. but most of all, i want to thank the children who are here today. when you come to washington and you meet with your senators and members of congress, you make such a difference. it's because you are willing to come here and tell your personal stories that we've been successful in tripling the

funding for research that goes for diabetes. and i know that with your help we will one day soon have better treatments, the artificial pancreas that we've talked about today, but also ultimately, the goal of all of us here and that is a cure. so i thank you all for coming to washington, for being here with us, and for being such great advocates. this hearing is now adjourned. [applause] [applause] [applause] [applause] [inaudible conversations] [inaudible conversations]

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>> several live events today to tell you about on 10 a.m. eastern on c-span3, secretary of state hillary clinton will testify before the senate foreign relations about the goals and process being made in afghanistan and pakistan. later, general david petraeus coming for his confirmation hearing to replace leon panetta has cia director. that's at 2:30 eastern. >> this weekend on c-span2's

booktv on "afterwords." >> the white house advisor that guided the government bailout of general motors testified wednesday before a house oversight subcommittee. the federal government has recooped about half of the $80 billion devoted to saving the u.s. auto industry. mr. bloom acknowledged the government does not expect to recover all of the money.

he suggested the financial losses from gm and chrysler would have been greater than any amount lost during the bailout. >> i would thank our witnesses. i apologize for getting started late. we'll be as quick as i can. my opening statement. i just saw daryl. american auto companies have made our country strong and prosperous. generations have work for general motors and chrysler should be proud because in 2008 they took extraordinary actions among firms that were bailed out with general motors, which received roughly $6 billion. this decision and it's aftermath fundamentally made the way our government interacts with the private sector. dangerous precedent have been established in understanding the consequence of the government's action, leading up to the path

forward. taxpayers will wind up billions of dollars short. it's far from clear that the bailout has succeeded in the goal of revitalizing the company. megan of "the atlantic" has found we could have given every employee of gm $20,000 and still come out on top. what may have seemed expedient at the time, in the end, the auto company set a precedent that will make it more difficult for other companies to go to bankruptcy proceeding in the future, resulting in serious moral hazard after congress failed to press legislation forward for the bailout. however, tarp was designed to purchase troubled assets from any financial institution on such terms and conditions determined by the secretary.

todd zywicki has pointed occupy t.a.r.p. did not forget the funds to bailout auto makers. the companies were not financial institutions. we are pleased to be join by mr. ronald bloom who led the task force in 2009. mr. bloom stated from the beginning, the president gave to be treated in a commercial manner that received no more or less than if the government wasn't involved. the second is the day-to-day management. we believe both of those directives were faulted. the committee believe there's evidence made by the administration handling the gm b.i.d. bailout that were politically motivated and many government chose winners and losers. the treatment is picking of winners and losers that

occurred, one group is still receiving their full pension, another group is receiving just a portion of their pensions as a result of decisions made in the treasury-orchestrated bankruptcy process. the american people have a right to know their money was not used to advance political ends and every dollar was on the intention of getting gm on a sustainable course. with that, i'll yield back the time. let's go to mr. kumming -- cummings while we wait for mr. kucinich. >> without question, the most lasting implications to general motors, hundreds of thousands of jobs saved and the hundreds of american communities spared in the further suffering. july 5th, 2009, the united states bankruptcy court for the 7th strict of new york issued a decision concluding that if the

federal government had not come to gm's aid, the firm would have liquidated. there are no americaer partners, acquirers, or investors able and will be, other than the u.s. treasury and the credit agency. there are no lenders willing and able to finance gm's continued operation. end of quote. gm liquidation would have been a significant loss to the country and would have been devastating to every community that's home to a gm plant or a gm part supplier or a gm dealer. faced with this crisis, the bush administration extended $4 billion to gm in december 2008 and an additional $5.4 billion in 2009. when the obama administration took over, they required that gm

and chrysler implement viable demands and compete in the changed auto industry. after the restructuring, the new gm quickly exited bankruptcy in july 2009. the results of our nation's investments are now becoming clear, the first quarter of 2011 was gm's 5th consecutive profitable quarter. according to the economist with the economic policy institute, and i quote, federal, state, and local government save between $10 and $78 for every dollar invested in the auto industry restructuring plan, end of quote. the value of our investment in the auto industry becomes even clearer when we consider the cost, according to the center for automated research, even a 50% reduction in the operations could have reduced personal income by more than $275 billion over three years, resulting in a loss of more than $100 billion

in state and federal tax revenues. the federal government investment saved hundreds of thousands of jobs and gave them a new lease on life. the committee will hear today from one of the principal architects for our investment, mr. ron bloom. i welcome his testimony. i also welcome the testimony of our other witnesses, former congressman vince snowbarger, dan ikenson, mr. thomas kochan,d miss dalmia and bruce gump. delphi in 2005 filed for

bankruptcy and took over the company's pension plan. gm agreed to top up the pension of delphi unions. meaning they will receive the pensions they were promised. such were not provided to the salary employees or certain other union employees. given the statutory limits on the benefits that they can pay, many of delphi's salary retirees are receiving benefits that are far lower than promised by delphi. the consequences of the short falls are truly heartbreaking, particularly as the employees have also lost their health coverage. this matter is, however, the subject of ongoing litigation that makes the pbgc as a defendant, it names the pbgc as a defendant. mr. bloom is not just being

sued, but as an individual on the line. obviously, this will prevent him from answering questions on this matter, a situation that i hope everyone will respect. again, mr. chairman, i want to thank you for this hearing and with that, i yield back. >> thank you, gentleman. i ask unanimous consent from the gentleman from ohio, congressman be allowed to participate in today's hearing. without objection, so ordered. now recognize the other gentleman from ohio, mr. turner, for an opening statement. >> thank you, mr. chairman. i also want to thank our ranking member and other fellow ohioan, mr. kucinich for holding the hearing and the importance of the issue that we are addressing today. i was very disappointed to hear that the administration has prohibited mr. bloom from speaking to us on delphi's pension. i was hoping to hear mr. bloom explain the administration's plan for finally restoring the

hard-earned retirement benefits of delphi salary workers from across the country. two weeks ago, the white house unvailed a report entitled resurgence of the american automotive industry and president obama paid a visit to toledo, ohio. what they failed to pension -- mention was the plan to restore benefits to the delphi retirees. i believe it's because there isn't one. the administration picked winners and losers where the pension of mr. salary delphi workers were lost. this was done without any explanation, without any justification, or without any basis. and today it is still being done without any answers. now i beg to differ, litigation does not prohibit mr. bloom from answering. what prohibits mr. bloom from answering is perhaps the answers

or the truth might be damaging in litigation. and that being it would be damaging because these delphi retirees are entitled to the benefits, these benefits were wrongly taken from them. and they deserve an answer. we live in a government where the government is responsive to the people. things can't happen in secret. the administration picked winners and losers. not only do the taxpayers need to know, because taxpayers money was involved, but certainly the delphi retirees deserve an answer. more importantly, they deserve the registration -- restoration of these benefits. 15,000 workers, some of them denied up to 75% of the pension, all of them 100% of the life insurance and health insurance. it's an action that was done by the administration while they were picking winners and losers. it's one that needs to addressed not only in just provided answers which is what we are seeking today, but also insolvent. the workers deserved to have

their pensions restored. now pursuant to the hearing, we have the ability to kind of provide additional opportunities for mr. bloom, mr. snowbarger to answer questions. i'm going to present today. i have a staff member that's going to present to mr. bloom and snowbarger. i would appreciate if you could respond. the types that you are going to receiving today, they go to the issue of the delphi retirees and salary workers. i appreciate your finally intending to give them the information they deserve. thank you for having the hearing. we look forward to getting some answers for the retirees. >> i thank the gentleman from ohio for his statement and being here today and hard work on the issue. the other gentleman from ohio, mr. kucinich is now recognized. >> thank you, mr. chairman. i ask unanimous consent to

insert into the record a statement by our colleague, congressman kildee. >> thank you. i interpret. i ask to submit a letter from senator portman and a study done. thank you. >> thank you so much for holding the hearing. this is a chance to conduct oversight, and also a chance to take stock of a critical and successful government intervention. the federal government saved two companies, gm and chrysler, and probably an entire region of the country. i come from that region. there's a gm factory located east of cleveland called large down. in march 2009, the community of large town was profiled in this way. they said, quote, holding on for dear life. where 70% of the accounts tax base came from the gm plant according to the mayor. just last month, the cbs news

story proviled the community in a completely different light. talk about it being jolted back to life by 4,000 pounds of steal. the large town gm plant was dead for a short period of time. without a single car being manufactured. but it's now alive and employees around 4500 people. those workers are using parts made down the road in my district, roughly 20 percent of the parts in the gm metal center in my district go to large town. with the manufacturing of the chevy cruz. it doesn't stop there. they apply equipment from napoleon, ohio to make autoparts, sustaining yet another ohio work force. the web of connections goes on and on in the parts, materials, equipment, goods, and services that the auto industry workers and families depend upon. whether it survived or torn apart was at stake in late 2008

and 2009. thankfully the bush administration decided to make the first loans and current administration built on what the bush administration did with more financial support for the restructuring of the industry and successful emergence from bankruptcy. the most important point i hope we remember throughout the hearing was a calamity averted for the communities in the investment. without the investment, as many as 3.3 million u.s. jobs amounting to 3.5% in gross domestic product from 2009 to 2011. second, i hope we remember it was necessary for us to ask judicially. gm, for instance,, -- excuse me -- were to have language, so would communities like lords town and the jobs rev mu and jobs evaporate. in the light of the success achieved by gm, the hearing will

examine a situation by employees of the delphi. being mindful in the ongoing litigation, i welcome the opportunity to hear testimony from bruce gump on the delphi retiree association and the individuals the organization represents. mr. chairman, on this point before i yield, other committees such as education and labor as long ago as december of 2009 have heard testimony on the fact that certain retirees of delphi such as salary, such as retirees represented by a union lost their benefits because they had no agreement to have their benefits topped up to the level they deserve. it's painful. i know it's an issue that concerned you, as well, mr. chairman. i appreciate mr. gump coming

here, we need to determine the course of action to solve the problem. i ask you to work together on legislation and consider whether or not that legislation would enable topping up of benefits of all of the delphi retirees and the union retirees that saw the benefits disappear in delphi bankruptcy. i don't -- you know, we're going to need to have some kind of action and just in the time that i have remaining if the -- i'd ask the gentleman if we could work together to do something here. >> i always look forward to work, the gentleman from cleveland and work, you and other members from the ohio delegation and surrounding states and congresswoman. what is the best approach moving forward? i appreciate the gentleman's statement. i'd like to work with you and other members of the committee. as ohioans, i think we have a chance to reaffirm our support. not just for automotive, but the america's manufacturing base has been at risk. when i join with you in fighting

the bailouts to wall street, which produces paper, we're talking about people that produce cars, people that make steal, aerospace, american manufacturing, it's something that we ought to be investing in. i want to thank the chair so we can get into the issues. thank you. >> i thank the gentleman for his statement. i just point out before recognizing mr. kelly for an opening statement that highlighting the facility which we are all generally, you know, glad it is still operating and jobs are there and it's help that community. underscoring what took place here. there were winners and losers selected. we had just down the road in ohio, the gm facility that was closed. what we are trying to get at is was were the decisions made by general motors or were they, in fact, made by the auto task force and people in the government not only picking winners and losers, but also getting into the day-to-day

operations of the company which will stay open and which will not. that's an important question that we need answered as well. >> thank you, mr. chairman. >> now i yield to mr. kelly. >> thank you. as someone who was close to the situation being a chevrolet/cadillac dealer and going through the process is the thing that does bother me, we never know if general motors could have survived. the general motors my dad started with as a parts picker, went through a war, and he was able to rise through the organization and buy his own dealership. i'm talks about not a huge dealership but a one-car show room and build into something that we were very proud of through hard work. through hard work. not because somebody picked he was going to be a winner or said, no, you don't have an opportunity. that never happened to him. but it did happen to me. after the government takeover in a business that we worked very

hard to build for 56 years. i got a phone call. in five minutes, 56 work of saving and putting everything on the line was pretty much taken away. i got a phone call that say where you? i'm sitting at my desk. i'm in detroit, i'm with a lawyer, we need to talk about the document. are you talking about the 39 pages? i'm not signing it. why not? because i refuse to give up my franchise. that's not up to you. i got to tell you, it is up to me. it's up to the people that 100 and some people that work with me every day. and to have somebody make a phone call and tell me that you are no longer going to be a dealer because a decision that was made not by car people, but by government, not by people who have any skin in the game, or people who put their life on the long, but by people that made a decision based on a metric that i have no idea where it came

from. then you say i'm going to go to arbitration and for somebody to laugh at me. are you kidding, you, mike kelly from butler, pennsylvania with your limited resources and one lawyer against a government. you don't have a snowball's chance in hell. you know, i'll take those odds. we got through it. went to arbitration, got the dealership back. my friends that didn't go to arbitration aren't no longer in business. not because they didn't make it, because government decided they will go out of business. that is not america. we will never know if general motors could have made it. they followed and said come with us. we'll lend you money. we'll help you. these gentleman complied into washington and are berated because the plan that doesn't make sense by the same people that are $14.3 trillion in the red. telling these guys they don't know how to run a business. my question is where does it lie? what really could have happened?

because in my opinion, the government is the one that picks and chooses who was going to win and lose. from my stand point, mr. chairman, i appreciate the opportunity to be here from somebody who's been able to get through some difficult times. we're now in the 60th year. not because of the things that we've done separately, but the things we've done collectively as the organization and through the grace of god we've been able to get through it. i do wonder the direction of the country. when we place our fate in the future in the hands of those who have never done it, never walked in our shoes, never done the things we've done, but who do have the ability to open a laptop and tell you, you are no longer in business. that's not the american way. i don't accept it. my father wouldn't have accepted it. i think it's time to shed some light. i thank you for doing what you are doing. because we are here truly to make sure the job creators, the small business people have an opportunity to compete and it's not taken out of their hands by

somebody who's never, ever had any skin in the game. i thank you, sir. >> i thank the gentleman for his opening statement. now i think we're going to have to deal with swearing in the witnesses. i apologize, it's one of those days. we're swear you in and take a brief recess to go vote and come back. we'll try to be accommodating with your time. we understand that you are busy as well. unfortunately, we have three votes on the floor. if you will just rise and raise your right hand. so you solemnly swear or affirm that the testimony you are about to give will be the whole truth and nothing but the truth? let the record show the witnesses answered in the affirmative. we have with us ron bloom, senior advisory to the secretary of treasury, now working as senior manufacturing advisor to the president, i believe. and vince snowbarger as the

deputy and former member of congress from new york state -- kansas. why did i have new york. long way from new york, kansas. still a great state. we appreciate you both being here. we're going to stand in recess for for -- probably 30-35-40 minute. then we'll be back. [inaudible conversations] [inau%[inaudible conversations] [inaudible conversations]

>> we're going to start with mr. bloom. you know the routine, you get five minutes in the light system. it's pretty self-explanatory. keep it around five, that'd be great. if you want to go shorter, that's fine too. we'll go mr. bloom, then mr. snowbarger. go ahead. >> chairman jordan, members of the subcommittee, thank you for opportunity to testify today. i'm here to report on the obama administration's investments. as you know, since january 2011, i've served as the assistance for manufacturing policy. while i'm here today in the capacity as a former treasury official, i no longer work as treasury and no longer participate in the oversight of treasuries automotive investments. thus, i'm not in position to discuss events since february 2011 or anything concerning possible future actions. further, i understand that the committee has taken an interest in issues regarding the pensions of certain former employees of the delphi corporation and as

has been communicated to your staff over the last few days and as i communicated in a letter to a chairman, i'm a party to a lawsuit that's currently pending in federal court in michigan. i've been named as a defendant in my capacity as a former treasury employees and individual capacity. i'm not in position to speak to the delphi in any way. when president obama took office, the american automobile industry was in collapse. the year before they shed 400,000 jobs. as 2008 came to a close, gm and chrystler were running out of cash and faced the prospect of uncontrolled liquidation. therefore, the previous administration provided -- we were fragile and requesting

additional assistance. after studying, president obama decided that he would not commit additional taxpayer resources to the companies without fundamental change in accountability. he rejected their initial plans, and demanded they develop more ambitious strategies to reduce cost and increase efficient sis to become sustainable. however, president obama also recognized that failing to stand behind these companies would have consequences that extended far beyond. gm and chrystler were supported by a vast network of autosuppliers, because ford and other companies depended on the suppliers, the suppliers would have caused the autocompanies to fail as well. also at risk, the dealers across the country, as well as countless small businesses and communities with workers. it was the interdependence among the makers, suppliers, that led some experts that at least a million could have been lost if

gm and chrystler went under. to avoid, the president decided to give gm and chrystler a chance to show they could take steps to become profitable companies and stand behind them. working with the stakeholders both gm and chrystler underwent fair and open bankruptcies that resulted in stronger companies. this process required deep and painful sacrifices from all stakeholders. however, the steps that the president took not only avoided a catastrophic collapse, they also kept hundreds of thousands of americans working and gave gm and chrystler a chance to once again become viable. today the american auto industry is mounting a comeback. in 2010, gm can be chrystler, and ford increased their collective market share. in 2009, the auto industry added 113,000. the fastest pace of job growth in the industry since 1998.

the u.s. government provided a total of 80 billion to stabilize the automobile industry. as of today, 40 billion has been returned to taxpayer. while the government does not anticipate recovering all of the funds, lost estimates from treasury and the cbo has improved. independent analysis estimate that the intervention saved the federal government tens of millions of dollars in direct and indirect cost. in a perfect world, the intervening between gm and chrystler would not have to have been made. the administration's decisions avoided devastating many liquidations and provided a new lease on life. thank you for opportunity to testify. i look forward to your questions. >> thank you, mr. bloom. mr. snowbarger. >> good afternoon, chairman jordan and other members, i'm ben snowbarger and i'm with the

pension corporation. i should also point out from january 2009 until july of 2010 i was also the acting director for the pbgc. i will testify today about the pension plan, the nation's largest producer of autoparts. as you know in july of 2009, pbgc stepped in to protect the pensions of 70,000 workers and retirees. pbgc will cover about $6 billion of the plans shortfall, $1.2 billion is not guaranteed. pbgc's interest and the pension plans spans the past decade. they began actively monitoring delphi after the spinoff in 19 e. in early 2005, dell -- delphi's credit was down to creditor to speculative. after they entered, they worked

intensively with delphi, gm, and other stakeholders to keep it ongoing. delphi told it's employees and pbgc that it intended to reorganize with the pension plans ongoing. however, when delphi failed to make the contributions to plans, liens were triggered against delphi nonbankrupt foreign subsidiaries. beginning in march of 2006, they affected the liens so they had a secured interest. in september of 2007, delphi filed a reorganization plan with the delphi bankruptcy court. as part of that, gm and delphi agreed to transfer part of the plan to gm's hourly plan. and delphi was to retain all of their pension plans, including the salary plan. in april of 2008, the reorganization deal fell through. however, in the lighter half of 2008, delphi still anticipated

to the reorganize, maintain it's salary plan, and merge the hourly plan into the gm hourly plan. in september of 2008, delphi and gm with the approval of the delphi bankruptcy court plan to transfer up to $3.4 billion of net liabilities from delphi's hourly plan to gm's hourly plan in two phases. the first $2.1 billion was transferred the same month in september of 2008. the transfer eliminated pbgc's lien on behalf of the hourly plan. the subsequent downturn in the auto markets left gm unable to pay for taking the remaining organization of the hourly plan that the second transfer never occurred. in late -- excuse me -- in late july 2009, the delphi bankruptcy of court approved delphi's modified plan calling for the liquidation, termination of the

settlement, and settlement of pbgc's claims. the settlement provided a $3 billion general unsecured claim against the bankruptcy of state. the investors in new delphi required pbgc to release thes a sets before it can proceed. at the time of that settlement, pbgc had a $196 million lien on behalf of the salary plan. in exchange for the releasing the liens, pbgc reached an agreement with the buyers to give pbgc $70 billion in cash and investment in company. the cash payment effectively paid the salary plan lien and gave pbgc a reasonable recovery on the claims. in march of 2011, new delphi redeemed pbgc's stake in the company for $594 million. i'd point out that's less than 10% of the total under funding

in the plans. however, under statutory rules, they may allow pbgc to pay small amounts to older delphi workers who retired or would have retired by july 31, of 2006, three years before the delphi plans terminated. companies that sponsor pension plans have a responsibility to live up to the promises they made to their workers and retirees. plans come to the pbgc because the sponsors have failed to properly fund them. in the unfortunately case like delphi where the sponsors fail and liquidate, pbgc is forced to, and will step in to protect workers and retirees. i'd be happy to answer any questions. >> welcome to the testimony. we're going to start with mr. turner. gentleman from ohio is recognized for five minutes. >> thank you, mr. chairman. i want to thank you again for holding the important hearing. this is an issue that is certainly important in my district. i think it's important to people throughout the country when they

look at the administration's stepping in to a bankruptcy and there are pensions and retirees and people are picked as winners and losers. they are not treated the same. this is inequality. i think all of the americans should be very concerned about the process that this went through, what is the policy, what does it say about the security that people have in their pensions, and what does it say about the administrations commitment to ensure that people have access to their promised health benefits and to their salaries? gentleman, i presented both of you with a list of questions. mr. bloom, you received 25, mr. snowbarger, 30. i'm going to ask you that review those questions and to the best of your ability provide me with answers. do i have that commitment? >> absolutely. >> thank you. the questions involve many of the issues that i think that the

taxpayers deserve answers to. how did the process go through? how is it that we were winners and losers picked? and how can it be resolved more importantly? because the issue is, i think, this congress, i know the chairman doesn't want us to just discover what happened, we also want to find out what the solution is. mr. bloom, you and i had a conversation just before the hearing reconvened that i wanted to for the record to restate it. i was telling you that, i think, that everyone knows when people aren't treated equally, there's an injustice or inequality. you have great knowledge and great understanding. your expertise and commitment to the salary retirees from delphi can be made whole. you said you would be very willing to work with me on that. it goes to my question of are you working on that? is that on your to-do list? i would really want to know that the administration has it's own to-do list that this issue not

be the status quo. that we look at ways to have the salary-employees with the pension. :

>> and that the direction of the administration they were kept. i mean, the retirees from delphi were not treated similarly, at the direction of the administration. so this is not just promises that they couldn't keep. selectively, some people's promises were not upheld and others' were. >> let me try to address that. first thing, as i said, because i am a defendant lawsuit, i'm not in a position to comment specifically about delphi, but i can say this. the company came to the administration with restructuring plans, and we reviewed those overall plans, but we did not make determinations of particular treatment for particular groups. the company came to us with an overall plan, and as was referenced by the chairman in his opening remarks -- >> would the gentleman yield for one second? i just want to add one clarification on that. the company came to you with a restructuring plan, but isn't it true they turned down the plan?

>> yes. >> so -- >> and the reason we did, sir, is we concluded those plans did not -- >> so the selectivity that the gentleman's getting to took place with the first plan -- >> it was not selected. we concluded that the overall plan was not viable. we concluded that the company had not made, unfortunately, difficult enough decisions to turn them viable so that if president was going to commit additional taxpayer resources, we would have a reasonable chance of having viable companies on the back end. >> mr. bloom, my time is expiring. mr. chairman, with your consent, if i could have just one more minute to do a summation -- >> without objection. >> mr. bloom, it was the administration picking winners and losers, and that really is the crux of everything that the taxpayers deserve to discover. i mean, that's what this whole hearing process is about, and i want to encourage the chairman to have additional hearings, i believe that there ought to be subpoenas to the administration, i believe there ought to be

depositions. this is not something you did in a vacuum, you did this with taxpayer dollars. the taxpayers will not be made whole, nor will the retirees, but others will. absolutely somewhere in a room at the white house people were picked as winners and losers. there was inequality and justice that was not done, and we will get to the bottom of how that was done. i have one more comment, mr. chairman, and then i'll yield. the issue of the litigation is not one of requiring you to be silent. it is absolutely for your sole convenience that you stand in front of us and not answer questions based on pending litigation. because if you made statements to us that were truthful, they wouldn't change the outcome of the litigation. right? because the statements themselves, it's the actions from which liability arises, not from your statement. so by you not speaking on it today, you're protected in convenience not as a requirement. true, if you made statements in front of us that were

inconsistent, it would go to your issue of voracity in litigation. if you revealed something perhaps we all didn't know, it might expedite litigation. but speaking in front of a congressional hearing and telling the american public truthfully what happened with their tax dollars in the administration's deal making, it is only for your convenience. mr. chairman, i encourage you to continue investigating this matter and bring to light what occurred here. thank you. >> next the ranking member from maryland. >> yes. just in the last set of questions it's not, i would say to the gentleman, it's not that simple having been a trial lawyer for 20, almost 30 years. it's not that simple. and i'm not trying to defend mr. bloom. when you're in litigation, it's just not that simple. but let me go to you, mr. bloom. president george bush extended the first federal aid to gm totaling $9.4 billion.

what did the president require as an addition of that initial aid, do you know? >> i believe, congressman, thank you for that question. i believe, actually, the total assistance provided by the bush administration to general motors was actually $13.4 billion. the only requirement of that was that the companies come forward with restructuring plans. and those plans were to be, come forward by, first, the 17th of february and then judged on by the 31st of march. so that was the only condition of those loans. there was no condition to the company in any way restructure, actually restructure or address its long-seeded, deep-seeded problems. >> so when president obama came into office, he required both gm and chrysler to develop plans to restructure their businesses so they could be competitive, and gm's initial plan was reviewed, i take it, by the auto task force which you advised, and that plan was rejected. and so can you -- you said that

the first plan was not, did you say viable? and what did you -- i don't -- i'm not trying to put words in your mouth, but you all made a -- that's, basically, a judgment call. >> yes, congressman. i mean, look, the president very much wanted to find a way to stand behind general motors and chrysler if he could, but he also recognized that these companies had made a lot of mistakes over prior years and had gotten themselves insolvent. and as i said earlier, we're not in a position to honor the promises they had made. that is a tragic situation that faced all the stakeholders of the company, but that is the situation that we were handed. and so what he insisted is that they make the difficult decisions that included, tragically, having to close factories and put blue collar workers out of work. that's a terrible thing to have to do, but the alternative was either, a, do nothing and have the companies liquidate in their entirety in which case every single stakeholder would have done worse than they did, or to

simply hand them a blank check and say because many of these stories are heart rending, we're going to give you all the money that you ask to meet all those promises. tragically, that would have been a multiple of the money that the president, in fact, extended. so in that light we chose the middle path, we forced the companies to come up with very tough-minded restructurings as a condition of further assistance. >> so you all gave gm 60 days to resubmit s that right? a man? >> approximately 60 days after the 31st -- >> and was that plan accepted, the next plan? >> the subsequent plan, yes, we did choose to back the company and the management who put forth the plan, we did choose to help them get through bankruptcy in order to effectuate that plan. >> so what sort of support did the government give gm during the current administration? >> the total funds extended by this president to general motors

are approximately $36.1 billion, congressman. >> okay. the united states government became the dominant shareholder in gm owning more than 60% of the company at one time. was the united states or an active or pass i shareholder? >> that's a very good question, congressman. we made a very conscious decision that while we did have to do this intervention because we were in an extraordinary moment in our nation's history, the greatest recession since the great depression, et, that we wanted to minimally involve ourselves in the operation of the company. so after the bankruptcy we were involve inside choosing an exemplary group of men and women to be on the board of directors, but we did not involve ourselves in any way in the day-to-day management of the company. >> so, so the operational decisions at gm, basically, you weren't involved in that, is that right? >> we very consciously chose not to be involved in those. we left that to the board of directors who carries out their will. >> i don't know if you can answer this question or not, but

you've been accused of, in this hearing, i think, of picking winners and losers. can you comment on that? does that -- >> well, i guess i -- >> when i say winners and losers, was there some political considerations to your knowledge? >> >> congressman, there were no political considerations. the admonition of the president was to be commercial, to be tough-minded and to be fair, and that is the, and that is the direction that the staff at the auto task force of which i was a part carried out. >> mr. bloom, the title of today's hearing is lasting implications of general motors' bailout. wouldn't you say that the most significant lasting implication is the fact that we were able to award a massive disruption in the united states economy that would have been caused by the liquidation of gm, is that a fair statement? >> i think that's a very fair statement. >> all right. i see i've run out of time. >> the gentleman from florida, mr. mack. >> thank you, mr. chairman, and

i, too, want to thank you for this hearing, and i believe that everyone back home, certainly, has a big interest in this hearing. you know, it strikes me as kind of interesting that there's so much talk about winners and losers. how about, how about the people in southwest florida where there isn't an automobile manufacturer who feel like the car industry was chosen over, maybe, some of the businesses that they were in. so it's an interesting conversation. but my questions are going to go to you, mr. bloom. and just so i have perspective in this because i'm kind of new to some of this, is it true that you spent the vast majority of your professional life prior to coming to the administration working for or on behalf of unions? >> a good portion of it, yes. >> um, and then let me ask you another question. do you believe that the free market is nonsense? >> no the, i don't. >> all right. well, let me, if i could, ask for the first clip to be played.

>> generally speaking, we get the joke. we know that the free market is nonsense, we know that the whole point is -- >> that is you, isn't it, mr. bloom? >> yes, it is. >> okay. so do you believe that it is appropriate for someone who has been a union leader and someone who doesn't believe in the free market to then be picked by the president and placed in charge of restructuring a private company in our american free market? >> well, first thing, i think a comment i made in jest at a speech does not represent my view on this matter, first thing. second thing, i would leaf to others whether or not -- leave to others whether or not the choice of my work, the choice for me to work on this is appropriate or not. and i was part of a large team. there were about a dozen people at staff and the treasury department. >> all right. let me just get back to this.

but that was you making that comment, and you spent most of your adult working life working either for unions or on behalf of unions, and i believe you gave a speech in 2006 in front of the international association of restructuring and solvency bankruptcy professionals in arizona in which you described, um, a bargaining technique, the dentist chair bargaining technique. can you describe to us what the dentist chair bargaining technique is? >> yeah. again, in a light-hearted speech i indicated i thought it was important that all parties to the bargain have skin in the game in order to produce the best result. >> what is the, what is the dentist chair technique? >> it's a reference to how a person might go into a dentist's office and make sure that the dentist doesn't hurt them. >> and how would they do that? >> they would -- [laughter] they would do that by making clear that they also had leverage on the dentist. >> and how do they have leverage on the dentist? >> by grabbing him where it

might hurt. >> so you think the free market is nonsense -- >> i didn't say that, congressman. >> okay, well, i guess -- >> i explained that comment. >> people can see it for themselves. >> right. >> you worked as either for or on behalf of unions, you believe that there's a bargaining, a way to bargain by making sure that the dentist feels the pain. um, do you think that -- let me say this. there are some people who might disagree with your approach, would you agree with that? >> there were a wide variety of views on the task force about how to best carry this out. there were people in the task force who had had experience on nothing but the business side of the house, those of us who had experience on the union side of the house. we all worked together and came to a consensus of the best way to do this and took it forward to our principles -- >> if we could, we're going to play another clip here for you, and tell me what you think of this. >> the market is nonsense. we know that the whole point is

to game the system, to beat the market or at least find someone who'll pay you a lot of money because they're convinced that there is a free lunch. we know this is largely about power, that it's an adults-only, no-limit game. we kind of agree with mao that political power comes lance armstrongly from the -- largely from the barrel of a gun, and we get it that if you want a friend, you should get a dog. >> did you really just talk about mao and that somehow -- well, let me ask you this. is that representative of the culture in the unions, the leadership in unions? >> i think it's representative of trying to make a point through exaggeration. >> well, you know, i -- through exaggeration. >> correct. although i don't -- >> excuse me. i don't think that americans think that exaggerating at a time when our economy is hurting

so much is the right way to go. now, you might have made these statements earlier, but you did say that you think free market is nonsense. you described a tactic of bargaining that is not professional, you also talk about mao and how political, getting things done is at the end of a barrel. do you think that maybe it was a mistake that you were put in a position in the first place to be part of any kind of restructuring of anything in if american free market? >> that would be for others to judge. >> who, where did you -- how did you get into that position? is. >> i was asked to serve by people at the treasury department. >> was, was, did president obama pick you to serve? is. >> i do not know what the president's role was in the choice. >> thank you, mr. chairman. >> i thank the gentleman. before we turn to mr. johnson, just let me ask this question: what's the status of the auto

task force today? is there still such an entity? because i know your title has changed, but is there still, obviously, the taxpayers still have an interest, so what's the status of the auto task force? >> i said in my opening remarks, mr. chairman, i am not at the treasury department anymore, but my understanding is there is the auto task force itself was actually a group of members of the cabinet who convened to provide oversight to the overall effort. there was then a staff group set up at the treasury department to do the day-to-day work. my understanding is the treasury department still does have a staff group that is over, that is providing oversight for our investments in those companies. i am not a part of it. >> the individuals who were selected that we knew publicly as part of the task force. you were on that, mr. ratner first chaired it, others, names escape me now, were part of that. that, that group of people is no longer meeting on a regular

basis, having input and oversight of the auto industry, or are they? >> if you're referring to individuals like myself and mr. ratner, on an individual basis we're not, obviously. but, yes, there is a group at treasury. i'm not familiar with who they are because i'm not at the treasury, but i know there are a group of individuals at treasury whose job it is to provide oversight to our remaining investments in the automobile industry, yes. >> okay. thank the gentleman. we now recognize the gentleman from ohio, mr. johnson. >> well, thank you, mr. chairman. and to the rest of the subcommittee members for allowing me to attend and participate in today's oversight hearing. as some of you may know, i represent ohio's sixth congressional district, and a large number of delphi retirees both salaried and unsalaried live in my district. i think we've heard and will continue to hear more about the unintended consequences that occur when the federal government bails out private industries and picks winners and

losers. clearly, the obama administration picked winners and losers in the bailout process, and i'm especially thankful, mr. chairman, that you're holding this hearing. hopefully, we'll get the administration to answer some of these questions, although now i'm, i'm seriously doubting that that will come to that. i'm kind of appalled by what i've heard. i've got a list of questions here, but i've got to ask this first one. did i understand you, mr. bloom, that you said that those comments that you made in that clip were in jest? >> some of them were in jest and some of them were exaggerations to make a point. >> at what point did you start laughing to make the joke? when did you deliver the punchline? because i didn't see any laughing in that video, i didn't see a punchline in that video. i deliver speeches virtually every day. that looked like a pretty serious speech to me. >> i thought my demeanor was quite light-hearted, but i guess that would be for others to judge. >> okay. well, i'm passing judgment then. i don't understand your, don't understand that. did you, mr. bloom, did you not

say at the following -- the following at a congressional hearing about two years ago: from the beginning of this process the president gave the auto task force two clear directions, the first was to behave in a commercial manner by insuring that all stakeholders were treated fairly and received no more or less than they would have simply because the government was involved, the second was to refrain from intervene anything the day-to-day management of these companies? did you say that? >> yes, congressman. >> do you think that the auto task force accomplished the president's first directions, specifically that all were treated fairly and received neither more or less than they would have simply because the government was involved? >> yes. i feel very strongly that our treatment, as i said in response to a prior question, that our object i, our directive and, i think, the result was that people were treated commercially and fairly. >> i, mr. bloom, i find it hard to believe that you or anyone else could believe that everyone

was treated fairly considering that the delphi retirees lost 30-70% of their pensions, all of their health care benefits, all of their life insurance while hourly retirees retained their full pension and health benefits. frankly, your, you know, that's almost as funny as your comment during the video clip. but they must be, they must be exaggerations because how do you consider that fair? >> congressman, i didn't say they were treated equally, i said they were treated fairly. the difference -- >> define fair. >> i'm going to try to, sir. what the companies did is came forward with business plans that in their commercial judgment provided the treatment that was required in order to successfully effectuate the bankruptcy. we looked at those plans, and as the earlier question indicated we rejected the first version and then approved a second version. those plans were then brought

forward to bankruptcy courts, and in both cases -- general motors and chrysler -- bankruptcy judges reviewing that with nothing other than the question of legal, of accordance with the law in mind, a judge that both -- adjudged that both those plans were reasonable and both plans were in full concert with bankruptcy law. >> in full concert maybe with bankruptcy law, but where does the word "fair" come into play? how can you consider that taking away pensions, life insurance and benefits from one group and not having that same treatment to another group be considered fair? >> because the different situation that the groups found themselves in provided the opportunity for different treatment which the companies believed was fair. for instance, the suppliers -- >> but it wasn't the company. it wasn't the company. did you not say just a few minutes ago that the administration through the auto task force approved and

disapproved of these plans? >> >> i said the companies tabled the plans, and the auto -- the administration approved the plan. >> so, basically, with does the buck stop, mr. bloom? with the administration, right? >> clearly, we approved the plans. and the plans had, for instance, that the people who supplied parts to the companies received almost in many cases 100 cents on the dollar. we did that because the companies believed and persuaded us that to provide that level of treatment to their suppliers was critical to successfully reorganize. likewise, the claimants for warranties who received a complete 100 cents on the dollar. we were also persuaded that while that was more than other unsecured creditors got, it was necessary and fair to effectuate the restructuring. >> mr. bloom, my time is up. i hate to cut you off. i wish we could continue this all day because i've got a lot more questions. i would like to answer the question that my colleague asked that you would not answer as to whether or not you were the right person for the job. i'm going to tell you i don't think so.

because of what's happened to the people that live in my district. your idea of what's fair and what's not fair defies my understanding of the word. we teach our children that if you tell the truth, you've done nothing wrong, everything will be okay. and yet you don't want to talk about the delphi situation here because of litigation which, certainly, leads me to have some big questions. i'm going to, i'm going to assert to you that i'm going to continue digging, i hope our chairman will continue digging. one way or another we're going to get these answers. if it were up to me, those who refused to answer would be found in contempt of congress. and if i have anything to say about it, that's exactly when's going to happen. i yield back. >> thank you. now recognize the gentleman from

california. >> thank you, mr. chairman. i'd like to play a clip for you because in april 2010 general motors began a national ad campaign claiming it had paid the government loan in if full, five years ahead of schedule. here's a look at the clip, and i just want to get your opinion on this, whether it's disingenuous or not. >> a lot of americans didn't agree with giving gm a second chance. quite frankly, i can respect that. we want to make this a company all americans can be proud of again. that's why i'm here to announce we have repaid our government loan in full with interest five years ahead of the original schedule. but there's still more -- >> i think you've seen that before. >> i have. >> okay. your opinion? disingenuous? is. >> it might not have been the way i would have worded it, but we made a -- >> can so you would agree it is -- >> that's not what i said. >> no, no, seriously. being an automobile dealer all my life, and i serve on several

national committees for the automobile manufacturers. one of the things we come out with media campaigns, marketing campaigns. do you know the critical part? making surering we say is true and factual, and that's put through great scrutiny. so i would suggest, you know, we're going to use taxpayer funds to run a marketing campaign that we should spend it actually on product and not in propaganda. now, at the time this advertisement ran secretary geithner said we are encouraged that general motors has repaid its debt well ahead of schedule and confident that this company is on a strong path to viability. you were quoted as saying that the treasury department has tried to be as straight as humanly possible. and we watch this clip, and the question is, was the treasury department being as straight as humanly possible? >> the treasury department didn't make that ad, sir. >> okay. >> the treasury department made a decision on behalf of the administration to not intervene in the day-to-day operations of the company including

providing -- >> with well, i would disagree with that. i have a lot of friends who are no longerç in business becausef decisions that were made -- >> well, we -- >> you did steer the whole program. now, in an article, and this is from a very conservative paper called "the new york times," they wrote that what neither general motors nor the treasury department disclosed was that theç company simply used other funds held by the treasury to pay off its original loan. furthermore, the specialment inner, the inspector general for t.a.r.p., wrote in its quarter report in april 2010 that the source of funds for these quarterly payments will be other t.a.r.p. funds currently held in escrow account. do you think that general motors' ad campaign and the statements made by the treasury department told the complete truth about these loans? >> congressman, i'm happy to answer questions about what the treasury department said. i indicate today you that we didn't make the general motors ad and whether we would have

made it that way is something i can't comment on. i will tell you about what the treasury department -- >> just as an average guy who watches a lot of tv. no, no, no, this is really easy. >> i don't watch a lot of tv. >> you don't? well, i don't watch as much as i used to. >> nor i. >> but i've got to tell you, when i see this type of thing going on and we told the public general motors is working so hard and paying back the money, what we didn't tell them was they were using taxpayer money to make a statement they were actually paying off their loan. they, in fact, did not. i've got to tell you, i live that. i walked that walk, and i you said the difference between taxpayer-funded loan repayments and private individuals paying back the loans that they took out and they're responsible for. this was not a good program. it did, in fact, pick winners and losers. it did, in fact, use taxpayer money. every penny of this money came out of taxpayers' pockets. and we have huge loans.

and i like what you said earlier about part of the problem with these companies were they made promises they couldn't keep. and i've got to tell you, i hope we use that same type of philosophy when i read about how the president made his decision. they weren't going to allow these companies to continue to operate the way they operated knowing it was leading to the path of destruction. they weren't going to lend the money to do that. i hope we use that same philosophy when we talk about raising the debt ceiling on a business that really, general motors pales in comparison to the way this business is being run, and it's all being done the same way, with taxpayer dollars. mr. chairman, i'm going to yield back my time, but i've got to tell you, this is one of the most disappointing examples of how the government gets involved and in over its head and putting people in a position that they absolutely did pick winners and losers. the biggest losers in this whole thing? the american taxpayer. >> i thank the gentleman. now recognize the ranking member, mr. kucinich.

>> i want to say to my friend, mr. kelly, you know, some of the questions that he's raised as somebody who's been involved with auto dealers are questions that i raised with mr. latourette in the last congress, and those are legitimate questions. now, i'm, i have a slightly different take on this, and mr. bloom, rather than an outright bailout was the support truly an investment, not only in if auto communities themselves, but in commitments, in the country and america's overall skill set to continue its manufacturing sectors. that -- >> i think -- >> that could have been lost, actually, if big three had gone down. >> i think a number of independent observers, congressman, have indicated that if general motors and chrysler had failed the auto supply space would have failed. the ceo of ford supported the auto restructuring for that very

reason. i think the entire ability of the united states to make cars was at risk at that time. >> well, my colleague's right about the role of the taxpayers, but the taxpayers put in value. did they receive value back? >> i think what the taxpayers got back is, hopefully, they're going to get -- they have an automobile industry. they have all those people working, they have all those communities with that support, all those dealers who -- and some dealers, unfortunately, were not able to keep their dealership. but the overwhelming majority were, and if -- >> that was a private decision, was it not? is. >> that was a decision by general motors. >> i mean, i wasn't happy with many of those decisions. we had some good people in the greater cleveland area who lost their dealership. >> no one could be happy with those decisions, but if general motors had failed, every single dealer would have lost their dealership. >> mr. speaker --ç mr. speaker already, mr. chairman, i ask unanimous consent for a november 2010 report published by the economic policy institute to be put in the record. >> without objection, so

ordered. and while we're here again, our colleague has a letter that he'd like for the record too. >> thank you. i just"w9q"uz quote from that report which i've asked to be submit inside the record. it said the return on investment for the public from the restructuring of the domestic auto industry was extraordinary. federal, state and local governments saved between $10 and $78 for every dollar invested, federal taxpayers are likely to recoup most or all of their investment in the gm and will likely gain $7 billion in the auto investment recovery plan. mr. bloom, would you agree that the return on treasury's investment will be greater than the amount of financial taxpayer assistance extended to companies? >> i think a number of independent studies have indicated that, congressman. >> and you say a number of independent studies, can you

present this committee with any -- >> we'd be happy to provide you with additional data on that. >> so would you tell this committee, what are the taxpayers getting out of their investment in gm besides just monetary payback? >> well, again, i think they're getting the fact that we have an automobile industry here in america. general motors employs tens and tens of thousands of people, the supply base employs three times what gm employs, there are tens and tens of thousands of dealers. there are numerous communities, when a large manufacturing company closes wherever it is, the impact is enormous. all those communities that have gm plans all which would have lost those employers would have suffered far, far greater harm than, in fact, they suffered during the recession, and your example of lord's town, for better or worse, it's only one of dozens of what we would have seen across this country if we'd allowed general motors and chrysler to fail.

>> i want to say, again, my colleagues in this room who have complained quite correctly about the government picking winners and losers, i join them on that theme with respect to what happened on wall street because i not only voted against the bailouts, i was one of the leaders against the bailouts. but i'm looking at something a little bit different from the finance economy which as paper transactions, and it actually works to put people out of work. it's american manufacturing. it's the core, this is part of our strategic industrial base. and while some could argue that what the government did was actually picking a win or, if that is true, the winner it picked was the american audit motive -- automotive industry and the american auto workers and all of the small businesses that depend on that industry. so i just wanted to mention that, and i have a great deal of respect for my colleagues who are concerned about how taxpayer money is being spent here, and

it sounds like the auto task force was cognizant of their responsibilities. >> the thank the gentleman. mr. snowbarger, we haven't forgotten about you. i guarantee i'll have at least one question for you at some point. [laughter] >> i appreciate that. >> i first want to go to mr. bloom. you said we did not involve ourselves in the day-to-day operations. that's your statement. >> yes, sir. >> can we put up on the slide the e-mail from mr. feldman to -- oh, we have it. okay, good. can you look at this e-mail then? >> i'd like to, sir, but i can't. >> okay. well, i'll read it for you. this is from mr. feldman, part of the auto task force, correct? >> yes. >> do you know him? >> yes. >> this is to general motors. have you begun a dialogue with uaw over your desire to see the hourly plans terminated? at a minimum, this could get messy and the uaw should --

>> i was, and i don't think i'm copied on this e-mail grsm let me just ask this question, is that involvement of the auto task force in day-to-day operation? >> >> i think this is a matter that touches on the delphi litigation, so i'm, unfortunately, not -- >> let's go to the next one. do we have the next one? this is from, i think, jenny to greg martin at general motors. greg, we would ask that you move the reference to treasury down to the third paragraph, taking it out of the lead. so this is on a press release that was going to go out where we now have the auto task force involving themselves with general motors on a press release. so, again, i just want to ask, is this involvement in day-to-day operations? >> no. i think what this is is involvement regarding the treasury department. in other words, when the company is talking about us, meaning the treasury department, i think it's proper that we would, that we would have interest in how we

be characterized. so if -- >> well, some would argue this, mr. bloom, some would argue if treasury's involving themselves in press release that is the company is doing but not picking winners or losers, not deciding which factories to stay open and closed, some would say that's really what's going on? this is what the auto task force did? they were coordinating how press releases went out, but, but we, you know, gm made the decisions on which facilities stayed open and which ones were closed? is. >> what we were doing is -- >> i'm just asking you this, do you see how someone could gather and reach that conclusion? >> no, i wouldn't, congressman. >> really? really? >> yes, i would answer the question. what we did is if general motors was going to talk about the treasury department, we would, obviously, want it to be done properly. general motors came forward to the treasury department with a restructuring plan. we scrutinized that plan, we criticized that plan, we examined that plan, but we did not -- >> let me ask you something, can

we look at that plan? the first restructuring plan, let me ask you this, that you gave the thumbs down to, are members of congress allowed to see that? >> i believe those plans were actually posted on the web, the february -- >> because last time i got a chance to talk about this in the judiciary committee, we were told that was proprietary information, we couldn't look at that. >> to the extent under confidentiality -- >> oh, so we can't see what you saw? >> i didn't say that. the companies provided us information that they believed implicated their proprietary technologies or business plans, we were not in a position -- >> well, answer my question. we wouldn't be able to see the same thing you saw? is. >> i'm happy to -- >> can yes or no. >> i'm happy to take back a particular request, and if there's a document -- >> well, it's changed, because it was no before. you made a decision gm made a restructuring plan, you said no. we'd like to see the same plan you saw. >> if you have documents you wish to see, i'm happy to review the list.

i'm not at treasury, but i'm sure treasury would be happy to review the list and provide you those documents that would be appropriate. >> met let me put up one more e-mail. as i understand, you probably had daily calls, weekly calls. it says in this morning's call, i'm assuming some kind of conference call, we will akuwait a, quote, temperature check -- await a, quote, temperature check from jenny. so, again, timing when the company will announce what it's going to do, auto task force was giving the thumbs up or thumbs down, yet no involvement in day-to-day operations. do you still stand by that -- >> yes. >> do you see this statement? >> again, it's, if general motors -- >> well, no, no, they're not talking about treasury, they're talking about a new car they're building. you can't say that involves treasury. >> i believe this, i believe this press release was -- again, i don't know the specifics of

this particular press release. um, we were, we obviously communicated with general motors on a regular basis, particularly prior to the bankruptcy. um, we communicated with them on a regular basis regarding their plans. um, but that did not mean that we gave them direction about which plans to close or which cars to make -- >> it seems to me common sense says you can't have it both ways. you can't have all this taxpayer money at risk, an auto task force selected by the president, you replaced the board and the ceo of the general motors and say we're not running the company. it's got to be one or the other. >> we absolutely did -- >> yet you maintain this fine line, and yet you're influencing how they write their press release. >> what i said in my statement was we absolutely were involved in picking the board of directors at the conclusion of the bankruptcy. and as i said, after the bankruptcy we relied on the board of directors to be responsible for overseeing the day-to-day operation of the company. >> let me do one question, and

then we'll go a second round. we'll go first to mr. kucinich and mr. kelly and mr. johnson. mr. snowbarger, throughout this process what kind of interaction was there between the auto task force and -- because you were heading the pension guarantee board then. throughout this process you were involved with the delphi and this process, so what kind of interaction took place between the two of you? is. >> in regard to general motors? >> in regard to both, delphi/general motors overall. >> my recollection was that very early in the process pbgc had a conversation with mr. ratner, i believe mr. bloom was invite today that meeting but was held up at another occasion, at which we discussed the consequences of a general motors failure on the pension system of general motorses and what the impact of that might be on the pension insurance system -- >> what discussion did they have with you relative to the hourly being topped off and not the salary?

is. >> none. >> any, any comments, any correspondence that they gave you on that specific question? >> i don't recall any, no. >> okay. ranking member is recognized for an additional five minutes, or a second round, excuse me, of questioning. >> thank you very much, mr. chairman. i just want to say that, well, that the, that the chair's line of inquiry here, um, whether or not the auto task force was running gm, it's an appropriate line of inquiry. you know, the committee has an interest in knowing that.

i would have an interest in knowing that because the outcome is so stunning it may give you more credit than, at this point, you apparently are willing to want to claim. but i want to say, mr. chairman, mr. chairman? i'm going -- okay. um, when the chair comes back, i'm going to state this for the record because it relates to something that he said, and i'll be glad to enter in a colloquy with him if he has any response. but the e-mail that was put into evidence that the chair had quoted about the press release may inadvertently prove mr. bloom's case because the e-mail shows that treasury is actually not in control. if you look at it, they, there's a quote. greg, we would ask that you move the reference to the treasury down to the third paragraph, taking it out of the lead,

unquote. if they were in control, they wouldn't ask. they would tell. they'd be dictating. and that department happen. -- and that didn't happen. it's just a subtle difference, but i just want to call that to the attention of the committee. and what the e-mail does is it concerns gm's characterization of treasury, um, and, you know, of course, you can have an interest in a characterization without actually dictating policy. that's a point that i wanted to make. i have some, a few questions to mr. snowbarger. the pbgc takes over pension when a corporation decides to stop offering the pension to its retirees either through a bankruptcy or corporate decision not to do so. can you briefly describe the circumstances that led to the creation of the pbgc to protect defined benefit pensions? >> um, first of all, let me

correct a misimpression there. companies can't just decide not to continue their pension plan. >> with well, they have to file -- >> well, but they have to show that they cannot continue their business -- >> okay. >> -- and maintain the plan. >> so can you tell us what -- >> well, i don't know how far back you want to go. >> well, let me go -- no, you know, for the retirement plans that have been taken over by the pbgc, have you found that their original sponsoring corporations have been making the appropriate contributions to keep them fully funded or not? is. >> pension plans don't come to the pbgc if they've been properly funded. >> my understanding is that when pbgc assumed trusteeship of them, you found them to be underfunded, is that true? >> that's correct. >> and when you take over an underfunded retirement plan, how does the pbgc meet its obligation particularly when a fund does not have enough assets

to pay the benefits that pbgc is allow today play under law? >> >> one is set by congress, the second is recoveries, and recoveries from bankruptcies and from settlements with corporations, investment income and then bankruptcy recoveries which are typically pennies on the dollar. >> so do you have the ability in a bankruptcy process to recover assets that can be put to use to pay pension benefits? >> we are unsecured creditors in bankruptcies for most purposes. >> and that means? >> >> that means we get pennies on the dollar if there are assets at all. >> does congress usually provide top-up support? would that require special legislation? >> yes. >> can you meet your current, the long-term obligations with your current assets? >> if you look at the long-term picture at this point, we are $23 billion in deficit. we have plenty of money for

meeting immediate obligations, but over the long term we're $23 billion short assets to liabilities. >> and could you translate that into how many millions of retirees are actually looking at receiving or having retirement benefits that are far below what they anticipated when they were in the work force? >> well, we cover the pensions of approximately one and a half million people. um, approximately 80% of those we pay the full amount of their benefits and so they don't, they aren't reduced. more like 84%. so it's only 16% that receive some reduction in benefits, although that can be fairly substantial. >> so just to wrap it up, mr. chairman, the, those one and a half -- how many? >> one and a half million. >> one and a half million, they're in trouble, and the pbgc's in trouble because the corporations who had made a commitment to fund those

programs didn't keep their end of the deal, isn't that right? >> again, plans don't come to pbgc unless they're underfunded. >> with so is that right? >> yes. >> i want to thank the chairman. thank you very much. >> i'd like to thank the ranking member also. mr. johnson? give you fife minutes. >> thank you, mr. chairman. mr. bloom, did you know when you were working at the treasury that gm was paying their loan with the taxpayer dollars from one pot to another? did you know that? >> when general motors -- >> that's a yes or no. did you know that? >> i'm going to try to give you a complete answer if i could. >> can -- i'd just like a yes or no. >> we knew they were using their corporate resources which were legally theirs to pay the loan. >> l and it was taxpayer funding, you knew that, right? >> we knew all funds had come from either ourselves or the canadian government. >> okay.

did you have any sense of responsibility to the american people to divulge that? i mean, this is the treasury. this is the, this is the group that handles the manages the nation's wealth. and it's being pillaged. did you not have a sense of responsibility to let the american people know that a corporation that had defaulted was playing a shell game with taxpayer dollars? >> i don't think in any way, shape or form that we deceived the american people, and i don't think anybody was being pillaged in any way, shape or form. the -- >> do you think it was appropriate, do you think it was appropriate to claim that they were paying down their debt from one pot of taxpayer dollars that was, essentially, a prop up in the first place? into another? >> i think the treasury's characterization of what general motors did, which is that we invested money in this company after we made the investment the money was the property of the company, at that point they chose to use some of their

corporate resources to repay a debt that they had taken out from the treasury. >> you called it an investment. i think the american taxpayer saw it as a bailout, right? that was money that was supposed to be paid back, correct? >> the money was invested in two forms, three forms. some of it was in the form of preferred stock, some in the form of common stock, and some of it was in the form of a debt instrument. >> okay. we've got to move on. i've got another e-mail clip that i want to have shown up here if it could come up. um, this one, you said a little, few minutes ago that you had no specific knowledge of the, um, of the small car -- what's it called, the, um, revised small car release. um, look at the cc line up there that's highlighted in red. who's ron.bloom? >> what i said, congressman, was i wasn't on the e-mail you referred to to mr. feldman.

>> you said you had no specific knowledge of that release. >> no i -- >> we can have it read back. >> that'd be fine. if i said that, i misspoke. what i said was i was not involved in the e-mail that was asked about mr. feldman. i was aware that general motors had held decisions regarding construction of a new facility, or the revitalization of a facility to make small cars, yes, i was aware of that. >> request i think it's pretty clear that you jest with a straight face because i'm having trouble understanding when you're joking and when you're not because this all looks like a joke to me and to the american taxpayer. let's move on. mr. snowbarger, was the pbgc pressured by the auto task force to make the determination to terminate the delphi salaried employees' pension plans? >> no. >> if not, why then did the pbgc decide to terminate a plan that was funded in a similar manner

and at a similar level as the average of the top 100 pension funds in america at the time? why was that decision made? >> well, i disagree with your characterization that it was funded at that level. we applied the same standards to all of the delphi plans, and the standards are in erisa -- by statute, in other words -- and we made the decision on that basis as well as the fact that delphi -- >> okay, we've got a short time fuse here. why then is the pbgc fighting so hard against releasing the records of the pbgc decision making process that led up to that determination? >> i disagree with that characterization as well. >> have you released those records? is. >> i believe we have. >> you have released those records? >> i believe we have, yes. we have release today this committee, as well as gao, as well as freedom of information

act requests to various delphi employees and in the court case as well. >> i apologize then. i was misinformed. thank you for clearing that up. i have no further questions, mr. chairman. i think this is regrettable, and i can assure you that i'm going to continue to look for the answers to find out how we, how we rectify this and bring justice to the delphi retirees. >> [inaudible] thank you, mr. johnson. mr. burton from indiana. >> i apologize for just getting here, mr. chairman. but one of the concerns that i've had, and i'm not sure who can answer this question, is why the salaried employees -- and i've heard your can't comment on this because it's in litigation -- but to the degree that you can answer any questions, i'd like to know why the salaried employees got chopped up so badly compared to

the others that were under contract? it just doesn't make any sense to me, and it doesn't seem fair. i mean, when i look at -- i don't know if there's a chart. do we have any of those charts? i think you said there was a chart, a slide we could show? hello. oh there, we have it. if you look at this slide, i just want to concentrate on the last column there. those are the salaried employees. you see they took 100% cut in their life insurance, 100% cut in health care, 100% cut in their vision and dental, 100% cut in medical and between 30 and 70% cut in their base pensions. and i just don't understand why. what did they do that was so bad that they didn't get the same consideration as those that were under contract? >> well, congressman, as i

indicated earlier i'm not in a position to comment specifically on the allegations in the delphi litigation. i can -- >> well, excuse me one second. i don't think it's allegations. you may not be able to comment, but these aren't allegations. a lot of these salaried employees live in my district, and i've talked to them about that. so this suspect, you know, allegations. -- this isn't, you know, allegations. they were cut like this. so go ahead. >> again, i'm not in a position to comment on that. i am certainly in a position to agree with you that many stakeholders in the entire general motors and chrysler bankruptcy, unfortunately, received far, far less than they were promised. and not everyone received the exact same amount as a percentage of what they were promised. as i indicated earlier, for instance, a number of the suppliers, probably many of whom do business in your district, received 100 cents on the dollars, and that was because the company came forward in the restructuring plan that they believed provided the treatment of the various stakeholders that

was required in order to successfully effectuate the bankruptcy. we did not insist that they pay everybody 100 cents on the dollar because that would have cost the taxpayer a multiple of what was eventually invested in general motors, andç we did jue that the management had made a good faith effort to be commercial and fair in their, in their judgments on how to treat people. >> let me interrupt here. this is pretty damning when you look at this because the union workers that wereç under contrt and the others that were under contract, they were treated at least somewhat fairly. in fact, some of them were treated very well considering the bankruptcy. but the salaried employees just for what reason i know not just got killed. and it just seems almost un-american that you would show deference to one segment of the employee population for a company like general motors and

then throw the rest of them to the dogs. and it just, it just seems really bad. i'm going to -- i'm not saying this because they're from, delphi has a plant near kokomo in our district. i'd say this about any company in the united states. if there's a bankruptcy, it seems like, it seems like there should be shared pain. and there certainly is no shared pain as far as the salaried employeed were concerned. >> it may be, it may be, congressman, that the bankruptcy laws of the nation should be reviewed on that question, but the company's actions were entirely consistent with bankruptcy law. two judges ruled over that very, very carefully, extensive hearings, um, and judged that the company's actions were completely in concert with bankruptcy law. um, i agree with you that it's terrible when any individual or business isn't able to receive the entire promise that they were made. all stakeholders to this, to this tragedy had to take

sacrifice -- >> with well -- >> -- and there was, there were circumstances where some received more than others. it was based on the commercial judgments, as i said. >> well, if judges rendered that kind of a decision based upon current bankruptcy laws, we probably ought to take another look at them because if a major corporation goes bankrupt like this and leaves one selling on - segment of the employee population hanging out to dry, that needs to be reevaluated. so i will talk to my staff. thank you, mr. chairman, for the extra time. i will talk to my staff about taking a look at the bankruptcy laws. thank you. >> thank the gentleman from indiana. also back to the ranking member, mr. kucinich. >> i want to thank the chairman, and i want to thank the gentleman from indiana because the point that he makes about people in his district and delphi employees who were not protected in the bankruptcy as well, is well received here, and as i mentioned earlier when chairman jordan was in the

chair, i look forward to working with my colleagues to see what we might do to be able to, um, provide some relief to those individuals who were, essentially, left out. because all that we're trying to do is to make sure that our constituencies who may have been involved in this are not going to be destroyed financially. which goes to the question, mr. bloom, that, you know, the concern that so many members have expressed here about what's happened to dealerships now the auto task force didn't deal with that question. i understand that. you've testify today that. but, you know, in my district and other places around the country gm, essentially, put people out of business like that. people who had auto dealerships in their families for generations. and there's a lot of hard feelings about that. and those feelings are not going

the easily go away because they're people who were embedded in a community, gave everything they had to a business and then suddenly with the government providing the money, you know, this is what gets people. government provided the money. you save a corporation, the corporation turns around and destroys dealerships. so you -- >> congressman -- >> you can respond. >> congressman, nobody, again, is glad that general motors believed that in order to survive it had to substantially restructure its dealer base. um, but general motors, unfortunately, had become a much smaller company than it was when it had the number of dealers it had. and the company believed that in order to be successful and to not have the investment that the president made simply be for naught, that they needed to rationalize their dealer network. we examined that proposition in addition to many other propositions including that they closeç factories. ane