significant financial distress at that time in 2009. i believe that the work of the auto team contributed to a successful effort to avert disastrous consequences to both the american automobile industry and the american economy as a whole. i'm fiercely proud of my service and i'm prepared today to assist the committee in reaching a complete understanding of the auto team's work during what was a difficult time and an unprecedented challenge for all involved. although it's wonderful to see the dramatic recovery of the automobile manufacturers and the thousands of american jobs that were saved as a result of our work, i'm mindful that the restructurings that the auto team worked on required many americans to make great personal sacrifices. as a result of delphi, the delphi corporation bankruptcy, for example, delphi and the pension benefit guarantee corporation were forced to terminate delphi's pension plans which means that there are delphi retirees who unfortunately will collect less than their full pension benefits. delphi had underfunded its hourly pension plan and later, its salaried pension plan, well

prior to filing for bankruptcy protection. a situation that ultimately threatened general motors' future success as it exited from its own bankruptcy. because general motors viewed well motivated work force at its largest supplier as critical to ensuring an uninterrupted supply chain, general motors made the commercially reasonable and necessary decision to honor certain top-up agreements it entered into in 1999 with the united auto workers and certain other unions when delphi was first spun off from general motors. sadly, many of delphi's employees did not have top-up agreements with general motors and some of those employees -- the auto team agreed that honoring the top-up agreements was a prudent business decision and we believe that doing so would protect both general motors and the american taxpayers' collective investment in the company. we supported general motors' business decision and i remain convinced today that it was the best course of action available

at that time. while i'm pleased that general motors and other american automobile manufacturers have become successful, profitable contributors to our economy, i recognize that the restructuring process imposed, painful but necessary sacrifices on many of delphi's stake holders. as a bankruptcy practitioner, and restructuring specialist, i have seen similar circumstances all too often. it is without a doubt one of the most difficult, disheartening aspects of my job and i have only the deepest sympathy for everyone affected. prior to my decision to testify here today i received a request from the office of special inspector for troubled asset relief program that i participate in an interview. i attempted to determine what further information sig-t.a.r.p. believed it required to complete its audit because my memory concerning significant details was better in 2009 when i gave a lengthy deposition in connection with the delphi chapter 11 proceedings that covered many of the topics concerning my role on the auto team. it was my hope that the transcript of that deposition

along with the extensive documentary record sig-t.a.r.p. has undoubtedly assembled would be sufficient to meet their needs. after several requests, sig-t.a.r.p. provided a list of six topics on which it desired further information but it appears that sig-t.a.r.p. contacted the subcommittee before i had an opportunity to respond. in any event, i'm here today prepared to answer any questions the subcommittee has concerning my role on the auto team which i will do to the best of my ability. >> thank you. mr. wilson. >> chairman mchenry, ranking member quigley, members of the subcommittee, thank you for the opportunity to testify before you today. i'm here to report at your request on the government's efforts in 2009 to avoid a catastrophic collapse of the u.s. automotive industry and specifically regarding investments in general motors. my testimony today is in my capacity as a former treasury official which i left in early august 2009, so that is the limit of my direct knowledge. first brief background on myself. i spent the vast majority of my career in the private sector

working at some of the best financial firms in the country with a focus on fixing troubled businesses. as the late 2008 financial crisis deepened and the bush and then obama administrations began to intervene through t.a.r.p., i felt it was critical that treasury officials had the restructuring skills that i had in order to minimize the costs to taxpayers so though i'm a life-long republican, due to my desire to serve my country, i joined the auto team in early march 2009 and focused primarily on general motors. after general motors exited bankruptcy, i wrapped up my work and left treasury. i continued my turn-around work both in the private sector and public sector since then. for example, in 2010, i was republican nominee for new york state comptroller. i ran on a platform of seeking to fix new york state's broken government and though i lost in a very close race with nearly 2.1 million votes, i was the top republican vote getter in new york in 2010. shortly after that i founded a firm which has focused on fixing problem companies. let me turn to the auto rescue. in late 2008, early 2009, gm and

chrysler were on the verge of collapse due to years of mismanagement and the financial crisis. unfortunately, the capital markets were in the middle of an unprecedented shut-down, obliterating any possibility of private financing. this lack of private financing and the substantial interdependency in the american automotive industry meant the following. one, that absent tens of billions of dollars, gm and chrysler would liquidate. two, the liquidation would have meant the failure of many of their suppliers and three, the widespread failure of suppli supplies -- emergency financial support, the path initiated by the bush administration. the obama administration decision to pursue this work in a commercial manner as defined meant we would seek the best outcome with the minimum potential cost to the taxpayer. the results of that work speak

for themselves. gm had its most profitable year ever in 2011, even though auto sales did not return to pre-crisis levels, it has grown market share and has a strong balance sheet. tragically -- [ no audio ] we were very careful to never get involved in specific decisions on plant closures, dealer closures or the like. we agreed with gm in the broad strokes which was to create a world class auto business and key components of that and they would make the detail decisions that needed to be made to implement those broad strokes. this approach applied to the same sad story of delphi. when delphi came to the auto team's attention, delphi was bleeding approximately $150 million in cash per month. gm was supporting delphi because

delphi was the sole supplier for certain critical gm parts, so delphi liquidation would have shut down all of general motors. this was an unsustainable proposition. both for gm and for the american taxpayer. to resolve delphi's long bankruptcy, gm management agreed to various measures, including providing capital and honoring the top agreements gm had made in 1999. other commitments including pensions for salaried employees or other unionized employees not covered by top-up agreements were not accorded additional consideration. consistent with the rest of our work, treasury provided general input but not specific decisions in these matters as was recognized in the gao finding in december 2011. in closing, the restructuring world is a difficult one, filled with painful choices that minimize the human and financial costs while maximizing the probability of a colorampany's long-term success. the human costs of the rescue were deep, significant and tragic and those who suffered losses of any kind have my deepest sympathies but as great

as those -- [ no audio ] >> amidst the worst financial crisis in the past 75 years, the actions the bush and obama administrations avoided devastating liquidations and provided the american auto industry a second chance. then one last point on testifying. i would disagree with the characterization of my particular willingness to testify because i believe as sig-t.a.r.p. now knows i committed to both the majority staff last thursday, minority staff on sunday and through treasury to sig-t.a.r.p. officials themselves to testify. be happy to do so. with that, i look forward to your questions. >> we certainly appreciate that willingness that's been just over a year in the making. but we're grateful for it nonetheless, as well as the other two members of the task force, even if it's at the 11th hour. we're grateful as i said for the ranking member and his good work and the minority staff, good

work on securing those commitments the day before this important hearing. we're simply just trying, and thank you for submitting that for the record, that's going to be one of my questions, if we can submit for the record whether or not the three members of the task force represented today will submit themselves for that interview with sig-t.a.r.p. the outline that i have of extensive requests from sig-t.a.r.p. to you three gentlemen, mr. bloom, mr. feldman and mr. wilson, is extensive, and so pardon me for not relieving you of the burden of testifying before congress, when we get that commitment at 5:46 the day before a 10:00 a.m. hearing, but i think we're going to continue with this and you know, expect some questions on that as i'm sure you do. mr. wilson, mr. feldman, thank you for your willingness to testify on the particular issue of this hearing and mr. bloom, we'll direct some questions to you to see if you'll be willing

to submit some testimony for that. with that, miss clowers from the government accountability office, you're recognized for five minutes. >> thank you, chairman mchenry, ranking member quigley and members of the subcommittee. i appreciate you having me here today to speak about the termination of delphi's pension plans. in my comments today, i will discuss two issues. first, the key events leading to the termination of delphi's pension plans and two, the role of the department of treasury and those events. my comments are based on our recent reports on these issues. first, the termination of delphi's pension plans and the provision of retirement benefits supplements also called top-ups to some delphi employees but not others culminated from a complex series of events involving delphi, gm, various unions, treasury, pbgc, that stretch back to 1999. any.hat year, gm spun off delphi at that time, gm agreed to provide top-ups to collectively

bargained hourly employees, meaning that if something went for these employees after delphi became a separate company, gm would ensure these employees received their promised benefits. no such agreement was negotiated for salaried employees. when these agreements were negotiated, delphi's pension plan for the hourly workers was not fully funded. in contrast, the plan for the salaried workers was fully funded. delphi filed for bankruptcy in 2005, and as part of its initial reorganization plan, made public in 2007, the company planned to maintain its pension plans but by this time, both the salaried and union pension plans were underfunded. as part of delphi's exit from bankruptcy, gm agreed to take on some liabilities from delphi's hourly pension plan in two phases. however, by the time gm declared bankruptcy in june 2009, it had only taken on the first phase of the plan's liabilities. gm did agree with the uaw, however, as part of its restructuring that gm would

honor the previously negotiated top-ups. salaried delphi employees and delphi employees who belonged the other unions were not included in this agreement. employees of these other unions along with delphi salaried employees protested this outcome in bankruptcy court. to maintain its supply chain, gm agreed to top up the pensions of two other unions as their consent was needed to resolve delphi's bankruptcy. however, they did not agree to do so for the salaried workers and this is where the situation stands today. i would now like to discuss treasury's role in these events. treasury's role stemmed from its position as the primary lender to gm in its bankruptcy. as the primary lender, gm played a significant role in helping gm resolve the delphi bankruptcy in terms of gm's interests. however, with regard to gm decisions about delphi pension plans, court filings and statement from gm and treasury officials suggest that treasury deferred to gm's business judgment. nevertheless, according to the records and treasury officials,

treasury agreed with gm's assessment that the company could not afford the potential costs of sponsoring the delphi hourly plan itself upon emerging from bankruptcy. treasury also agreed with gm's rationale not to assume the delphi salaried plan since that plan had been fully funded when gm transferred it to delphi in 1999. as for the top-ups, treasury officials said that while treasury did not explicitly approve or disapprove of gm's agreement to honor previously negotiated top-up agreements with some unions, it agreed with gm's conclusion that it had solid commercial reasons to enter into such agreement. in particular, treasury stated that its aim was to ensure that new gm would only assume the liabilities of old gm that were commercially necessary, and that due to new gm's continued dependency on the uaw work force and the work force of other unions, treasury officials felt gm had solid commercial reasons to agree to the top-ups for these retirees. also, treasury stated that gm was never obligated to provide

top-ups to the salaried or other retirees. in conclusion, mr. chairman, when companies go bankrupt and leave their plans with large unfunded liabilities, some participants will not get their full benefits promised to them by their employer. this unfortunately is not unusual. what makes this case more unusual is the series of events that unfolded over the last decade that lead us here today and the number of players, including delphi, pbgc, the unions, gm and treasury and the roles they played. mr. chairman, mr. ranking member, and members of the subcommittee, this completes my prepared statement. i would be happy to answer any questions that you may have at the appropriate time. my colleague, charles jessik, is also available to answer specific questions regarding pbgc. >> thank you. thank you for your testimony. professor zawicki, you are recognized for five minutes. >> thank you. chairman mchenry, ranking member quigley, members of subcommittee, it is my pleasure to testify today on matters related to the obama administration's automotive task

force and the refusal of former automotive task force members to cooperate in efforts to understand the tax forces controversial decision to top up delphi corporation's pension plan for delphi employees who were members of the united auto workers labor union. general motors' decision to guarantee the obligations of a completely separate company, delphi, was completely unjustified under current established principles of bankruptcy law and it increased the cost to the taxpayer bailout of the automotive industry by more than $1 billion with no reciprocal benefit to general motors. i commend this committee for seeking answers to this unexplained behavior by the automotive task force and sig-t.a.r.p. christie romero for insisting on answers to these questions. all together, the government pumped $80 billion into -- of t.a.r.p. funds into the bailouts of general motors and chrysler and related entities, with as

chairman mchenry suggested, not a shred -- [ no audio ] [ no audio ] -- to the unjustified preferential treatment of the uaw in bankruptcy. to the tune of $26.5 billion. to give you a sense of the size of those losses, that is larger than nasa's annual budget, that is larger than the entire foreign aid budget and that is larger than the annual budget of the state of missouri. it would be much more accurate to refer to this as a uaw bailout rather than an automotive bailout. we have heard a lot of talk

about shared sacrifice today, but i think steven ratner, the obama administration's former car czar, said it best when he said we should have asked the uaw to do more. we did not ask any uaw member to take a cut in their pay. james shirk and i document three different ways in which the uaw was given preferential treatment here that resulted in this massive loss to the taxpayers. first, uaw was given far better treatment as unsecured creditors than any other unsecured creditors at either general motors or chrysler bankruptcy cases. second, uaw employees were given -- [ no audio ]

-- it's going on right now as we see in the airline bankruptcies, for instance. [ no audio ] as a result, the wages for general motors, in particular, still remain above that of any foreign transplants and in any other states. third, brings us to the issue that we are here today. the $1 billion that was given by general motors to top up the pensions of certain delphi employees, united auto workers, and uswa union members but not other hourly employees or salaried workers. how can this be? delphi was spun off in 1999, a full ten years before the general motors bankruptcy. they were a completely separate company. there was no continuing legal

obligation for general motors to pay for the retirement of the employees of a completely separate company. instead, all we've heard as far as i can tell is a far-fetched rationalization that we needed to squander a billion dollars for some theoretical fear related to this. it's hard to see any explanation other than political clout. what i would like to know is whether any rational investor would spend $1 billion of their own money to pay for the retirement of employees of a completely separate company, or whether they would be only willing to do it with our money, the money of the taxpayers. and perhaps it was necessary to have a targeted intervention in order to deal with the frozen credit markets at the time. that could be firms like this reorganize all the time, and i take any claims like that with a grain of salt. but by and large, this is a smokescreen for what we're talking about today. the question is today whether or not it was worth throwing away $26.5 billion worth of taxpayer dollars purely to preserve the

benefits and the wages and everything else of the uaw. was it worth it to go through bankruptcy and go through a process in which the indiana teachers and police and firefighters lost some of their secured bonds in order to enrich the uaw. i look forward to questions. to questions. >> thank you. thank you for your testimony. we have two current federal folks that are in federal service on this panel. i want to thank you for your current service to our government and to our people. i want to thank the three previous members of -- that were in government service for your service to our government and to our people. public service should be just that. now there are also consequences for the decisions we make given the public trust and that is in conjunction with that thought, that is what this hearing is about. i ask unanimous consent that our colleague from ohio, mr. johnson, be allowed to participate in today's hearing.

without objection, that is ordered. i'll recognize myself for five minutes. for more than a year sig-t.a.r.p. has been trying to secure interviews to complete their work on this subject matter of the delphi pension decisions. i want to ask mr. bloom why were you not willing to cooperate? >> i was very involved in personal matters at the time. it's been i spent a long time in government service and i didn't feel i had anything that i could usefully contribute. if it's important to the committee, i'm prepared to sit with them now. >> mr. feldman, same question. why did you not -- why were you simply not willing to cooperate? >> in 2009 when i was deposed, i felt at that time i had answered and given all the information

that i had available to me. i also, frankly, have left public life and have an active and busy private life and my response to sig-t.a.r.p. was i think you have everything i can give you. having said that, if an interview is helpful, as i've said to the staffers, i'm prepared to cooperate. >> sure. well, mr. feldman to that matter, your attorney mr. shatter was contacted -- sig-t.a.r.p. was actually in new york and willing to meet with you in august to september of last year. and you wouldn't participate. mr. wilson? same question. why were you not willing to cooperate? >> sure, mr. chairman. i'll give you the same answer i gave to treasury at the time they approached me about it which was i gave a lengthy deposition. i sat for 10 or 12 hours of testimony in the summer of 2009 related to the gm bankruptcy. testified on anything under the sun as can you imagine in that long period of time.

i had the experience of being interviewed for mr. ratner's book on these activities in early or summer of 2010. frankly, i knew then that i recalled a lot of the facts from a year before. this was a year later, two years after the fact. i said to treasury, i don't remember a lot of what we went through. i can refresh my memory and take me a couple days reading through public documents to do that. i'm extremely busy. i don't know how much i can add. that was the exact response i gave to treasury. >> i got you, you're businessy. i hear you. not too busy to meet with mr. ratner about his book. i'll be happy to yield to my colleague. >> gentlemen, i respect your service. let me just say this, the percentage of the american public that thinks that we do the right thing or will do the right thing is in single digits. the real cost of the problems that we faced here in my community of the public's perception of us and the

public's perception of corruption is the loss of the ability to lead. the president characterized it as the deficit of trust. i'm not suggesting for a second that you all did anything wrong. but you have to appreciate this lost year for whatever the personal reasons and whether you're in public service or not really doesn't matter. it is the perception of how things are done. it is the ability to have transparency to appreciate how i made the decisions. and if your answers, with all due respect are i don't remember, i get that. or you just give the best answers you possibly can. but when you do -- when you put things off in this manner, you don't help us. and you don't help the decisions you made. frankly, i think we made the right decision. we're going to discuss that later about the bailout. i think the industry mattered. i think the chairman is correct. this was a mistake.

i appreciate your willingness to testify now, testify here and to cooperate by sig-t.a.r.p.. it's hard to add anything to what mr. romero said except for the fact that it is that you haven't done anything wrong, it's that the american public has a right to know how those decisions were made when so much money was being spent, even if they agree with the decisions. i mean no disrespect. i just wanted to add to an extent compliment with the chairman is trying to say. >> i thank the ranking member. and so the question i'll have mr. bloom, is are you willing to submit yourself to an interview with sig-t.a.r.p. within the next, let's say two months? >> yes. >> mr. feldman? >> yes. >> mr. wilson? >> yes, i offered up this afternoon. i haven't gotten a response yet. i'd be happy to do that. >> excellent. well, mr. romero, the next time

you don't have people willing to sit down for you with an interview, let me know. we'll be happy to have a hearing. >> i can't say how grateful i to the committee and to the chairman and ranking member of the full committee. this is all we want. all we wanted doctor we're also not -- we haven't reached any conclusions in our audit. how can we? i can't character the role they plays without giving them an opportunity to speak to that role. i'm very grateful for. that it also goes beyond just these three witnesses and this audit as i talked about in my opening statement. it will be a very, very dangerous precedent if former treasury officials or other government officials who worked on t.a.r.p. matters and then leave and refuse to be interviewed by sig-t.a.r.p.. i thank you very much. >> thank you. >> i thank you for your willingness to submit yourself

to this. mr. ratner who received about this, this matter, the interview took approximately two hours with sig-t.a.r.p.. i know you have busy lives. and i also know that this was a very important matter in your life and both your public service and now in your private sector experience. you know, this is something major for our nation. i think we need to have an accurate portrayal of what actually happened and why you made the decisions that you made. books have been written about this. there are going to be generations that talk about this excessive amount of government intervention whether justified or unjustified and the results of those bailouts. and i also will submit for the record that currently the gm stock price today is under $21. the ipo was $33. for government to break even for the taxpayer to break even, that

number had to be $53. so with that, we've had $16 billion in direct losses to the taxpayer based on the bailout of just gm. now, i just want to submit that for the record. i do have other questions. in the interest of other members' time, we'll now recognize mr. ross for -- i'm sorry, mr. quigley for five minutes. after which we'll recognize mr. ross for five minutes. mr. quigley? >> thank you, mr. chairman. i yield to the ranking member of the full committee. >> thank you very much. mr. chairman, i want to associate myself with those of mr. quigley and miss romero with regard to the necessity and importance of witnesses cooperating in these investigations. i want to thank the witnesses

for being here and for their service to the country. the former members of the auto task force were part of the obama administration's successful rescue of the american automotive industry. in december 2008 an analysis by the economic policy institute projected that the bankruptcy of u.s. automakers and collapse of the domestic auto assembly industry could eliminate up to 3.3 million u.s. jobs within the next year. that's a quote. the collapse of general motors alone would lead to an estimated loss of 900,000 jobs. that calamity was averted by the actions of you, our former members of the government and the obama's administration's auto task force. and you deserve our thanks. we do appreciate what you have done. today's hearing is not focused on the successes but on why these three individuals have not