foreign service for the secretary and to manage the secretary for the foreign service. he carried out both tasks with a reference aplomb. he would sum up his travails in epic tales of vicissitudes overcome by her rope fortitude, - heroic fortitude, accounts he was able to share with mankind at the slightest encouragement. if truth be told, even without it. [laughter] . .

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>> were you pressured in the bailout process to make the determination to do -- terminate the pension plans? >> no. >> why did they decide to terminate a plan similar to the average pension funds. ? why was a maid? >> i disagree that it was funded at that level. the standards and statutes, we

made the decision on that basis well as the fact that -- >> we have a short time views. why is the fighting so hard against releasing the records? >> i disagree with that. i believe we have released them. >> we release them to this committee as well as to the special i.g. and a.g.o. >> i apologize. i was misinformed. i have no further questions, mr. chairman. i think this is regrettable. i'm going to continue to look for the answers to find out how we rectify this and bring justice to the retirees.

>> thank you, mr. dart -- johnson. >> i apologize for just getting here. one of the concerns i had, i'm not sure who can answer this question. why the salaried employees, i heard you cannot comment, but the degree you can, i would like to know why the salaried employees got chopped up so badly compared to the others that were under contract. it does not make any sense to me. it does not seem fair. do we have any of those charts? there was a chart we can show. or a slide. hello? there we have a.

if you look at this side, i want to concentrate on the last column. those are the salaried employees. they took a cut in their life insurance and health care. 100% cut in their vision and dental. 100% cut in medical. 30% and 70% in their pension. i do not understand. what did they do that they did not get the same consideration as those under contract? >> i am not in a position to comment specifically on the allegations. >> excuse me one second the. . a lot of these employees live in my district. this is not an allegation. they were cut.

>> i am not in a position to comments. i can agree with you that many stakeholders received far less than they were promised. not everyone received the exact same amount. as i indicated, a number of the suppliers, many of whom do business in your district, received 100 cents on the dollar. that was become the -- because they came forward with a plan that was required in order to effectuate the bankruptcy. we did not insisted pay everybody 100 cents on the dollar. that would cost a multiple of what was invested. we did judge at the management made a good-faith effort to be in theiral and fehair

judgments. >> this is pretty damning when you look at this. the union workers that were under contract and the others, they were treated somewhat fairly. some of them were treated very well considering the bankruptcy. the salaried employees just got killed. i do not know why. it seems un-american that you would show deference to one segment of the population for a company like general motors and throw the rest of them to the dogs. it seems really bad. i'm not saying this because they have a plant near my district. i would say this anywhere. it seems like there should be a shared pain.

there certainly is no shared pain as far as the salaried employees. >> it may be that the bankruptcy laws of the nation should be reviewed on that question. the company's actions were consistent with bankruptcy law. judges ruled over that carefully. there were extensive hearings. they judge to the actions were in concert with bankruptcy law. it is terrible when any ndividual or business is ann't able to receive what they were promised. everybody had to sacrifice. there were circumstances were some received more than others. it was based on the commercial judgments. >> of judges render the decision based upon current bankruptcy laws, we ought to take another look at them. if a major corporation goes bankrupt and lee's one segment

of the employee population hanging out to dry, that needs to be re-evaluated. i will talk to my staff. thank you. >> back to the ranking member. >> i want to thank the chairman and the gentleman from indiana. the point he makes about the people in hints district, the delphi employees who were not protected, it is well received here. as i mentioned earlier when chairman jordan was in the chair, i look forward to working with my colleagues to see what we can do to provide some relief to those individuals who were left out. makee're trying to do was sure that our constituents who may have been involved are not

going to be destroyed financially. that goes to the question, mr. bloom, the concern that so many members have expressed about the dealerships. the task force did not deal with that question. i understand that. my district, gm put to people at a business -- out of business. there are a lot of hard feelings about that. they will not go away. there were people who were embedded in a community giving everything they had. suddenly with the government providing the money, you saved the corporation and the corporation destroys dealerships. you can respond. >> nobody is clad that general

motors believed that in order to survive, it had to restructure its dealer base. general motors had become a smaller company than it was when i had the number of dealers that had. the company believed that in order to be successful and to not have the investments before nothing, they needed to rationalize their dealer network. we examined the proposition in addition to many others. one of the factors was closed in his district. that is a terrible thing. all those workers were told to go home. the alternative was no general motors at all. no general motors at all, everybody would have lost their jobs. everybody would have lost their pension. mr. snowbarger began to talk

about the pension plan for the chrysler plan. they have 1.5 million beneficiaries. general motors has that many. we have to evaluate this against the real world alternatives. if they are allowed to liquidate -- >> i understand. you need to understand that a whole lot of this looked arbor cherry to us. just so you know. -- arbitray to us. just so you know. my friend mr. johnson sent the e-mail referencing the provisions. it is important to identify. greg martin was an official at

gm. the fact that mr. bloom was on a cc does not prove anything except the fact that gm was in control of the gm. the treasury was an observer, not able to dictate. that is what we found that gm common throughout the bailout, remained under private control. i do not see it from this memo that this indicates it was not gm officials leading the dance. i wanted to point that out. i understand the concerns my colleagues have. i share many of those concerns.

i wanted to correct the record. >> i'm going to allow myself five minutes. the most important today we can understand is not about democrats or republicans, it is about the american people. this hearing is essential. wheat are talking about taxpayer dollars being invested. mr. bloom, there was $50.2 billion in assistance. how was that divided up? >> i am not familiar with that number. there was $49.5 million to gm. i am familiar with that number. i'm trying to be responsive. i am not familiar with the $50.2 million. >> how was that divided? the rough numbers are $49.5

billion. the total assistance to chrysler was top $0.5 billion. $1.5 billion to chrysler financial, a $17.2 billion to general motors, now called ally financial. some assistance to suppliers and to guarantee warrantees. not all of those funds were drawn down. the amount of that was drawn down is about 4 billion less than that. that is roughly the total amounts that were allocated to those companies. >> i know quite a bit of money was put into the scroll. as we reference to earlier, some of the money in escrow were used to pay down the loan. i want to walk you through something. i'm sure most of the people have done this for years. when you buy an automobile,

there are stipulations in the deal. a lot of the house to do with the amount of money are going to bar. the stipulations require some downpayment. this.ying to relate the down payment that is required at the time is usually referred to as cash. it is truly cash. it is not part of another loan. that distorts the total amount that car is own dog. what bothers me more than anyone else's that we used taxpayer money in order to pay off a loan. it was not cast that was paid down. i do not know if we're getting that across. this is for the american people to understand. this was an odd bankruptcy.

in 40 days it could rise from the dead no problem. that is a remarkable activity. i have declared bankruptcy. i would not be given the same opportunity. the american people need to know this was a historic structuring of a loan. the bottom line is, these are of taxpayer dollars. that is the thing that is most discouraging. i have no idea the old gm is still in bankruptcy the new gm is not. general motors has survived. it would have survived having gone through it on its own.

it is difficult to sit here and listen to the premise that general motors was able to eliminate private business. people who have franchises. i was one of them. one of them was taken away because, not because i was not doing things right. i had friends terminated as dealers. they chose to exit as individuals. some people took their own lives because the business was taken from them by a procedure that had nothing to do with natural events. while this may have been historic, it was catastrophic for small business people. i am not blaming you. i am saying the american people had better understand there's something going on that makes no sense. i have to tell you, from somebody who was a dealer,

general motors never gave me anything. every carbs, every part, everything i have done was purchased with my own money. to sit there, i am not blaming you. this premise that general motors could not have afforded dealers is ridiculous. we were on our own. we were supporting our own families. the american people have always believed but what what is there. not as what is legal. i know there's no correlation between fair and legal. it is correlates -- horrendously could do these things to individuals what made contributions in their communities. if you do not believe that, i would suggest you go into a community and find these dealerships that are no longer there. their names are still on the fences of the little leagues. they supported the girl scouts, their local bands.

everything in the high schools. these guys are the ones they go to first. picking and choosing winners and losers is up to the free market. it is not up to the government. the government made a serious mistake. i appreciate your being here today. you have five minutes. >> i want to say one thing. i would agree with almost everything you said. where i would disagree is that if the government had not stepped in, i do not believe tell motorists would have faced a fate other than complete liquidation and the elimination of all dealerships. >> we will never know. >> we will not know. at the time, we could find no evidence that private capital could have saved this company. >> there was a bankruptcy they could have gone through. it was taken out of the hanson taken care by the government. i was there. i walked the walk.

i know people who lost their dealerships and took another to exit, too. it should have never happened. >> mr. bloom, i am just told enough -- old enough, i was a supplier to the car business. but you remember cadillac in new york? the largest dealer in america. the largest limousine provider? he tried to get a replacement of the president. you know how they fix to that? they paid him twice what his dealership was worth and handed it to roger penske just to get him out of the business. but did not have you to do their dirty work so they paid him a lot of money to get rid of a thorn in their side who they felt was agitating against the

president. do you think in some way and that general motors had a reason to make selections that had something to do other than with the absolute monetary interest when they used you in order to cut the number of dealers? >> i am not familiar with the story you have to relate. i cannot -- >> it is famous enough i say and knowing that roger penske is a wonderful guy. general motors hated some of their dealers, love the others. they cut all kinds of deals. they did not have the government to do it for them. >> i have no evidence one way or the other. i do not doubt your story. as to your question, which i can answer. >> we found dealerships that

were cut and others that were preserved. there were huge mistakes in the decision process. >> what we did when we looked over their plan to rationalize their network is we satisfied ourselves of the company acted responsibly. we did not want to intervene in the data de -- >> you were vulnerable to whatever their underlying reasons were. you could not audit the legitimacy. >> we were not in a position and we did not want to place ourselves. we did not think it was appropriate to become the management of the company and to decide whether it be a dealership or a factory decision. >> let me follow up with a question. i chair this committee betts also chair -- but also chair

another company. do you think what you did in circumventing the bankruptcy law, what otherwise would have happened, in bypassing the decisions that could have been made by a bankruptcy judge and other trustees, and to you think he set a good precedent for the future, a bad precedent, or one time event? >> judges have found we did nothing to circumvent the bankruptcy law. this was an ordinary bankruptcy. i do not think there is any status.in the basics >> you think that screwing the salary worker was a in the ordinary course of what would have happened? everybody have been in the same pot of losing?

this differentiation has never happened. >> quite a bit, actually. >> salary people are not important but union workers are. >> companies make decisions of how that is to effectuate bankruptcy's. sometimes that is decided that certain creditors, sometimes warrantee holders, they are treated differently because the company concludes -- >> you would find that bondholders getting a haircut is also typical. i yield my remaining time to him. >> thank you. the bankruptcy judge just approved the plan. they did not make any decision on how the funds were to be disseminated. they just approved the overall plan. >> what they did was determined

that the bankruptcy laws of our country had been followed. >> but they made no changes. the laws have been followed but they did not make any determination on whether it was fair. i ask for another man in yourself. >> the determination had been followed. tasku're on the auto force. i am looking at some notes. there is a piece of correspondence, have you begun a dialogue over your desire to see the hourly plan terminated? this could get messy. dino about that comment? >> i answered a question about that area. >> answer it again. >> i was not on that e-mail

chain. given that this part of the litigation, i cannot comment. >> did you say this at a dinner? it was reported by david at a restaurant in late july 2009 the you said, "i did this for the union's." >> i did not say that. i was misquoted. >> i am going to call that guy and asked him. you are under oath here. you made no comment like that? >> no, sir. >> we will check that out. i'm going to call this reporter. you did see the graph and how the salaried employees were treated as opposed to union workers. >> i did.

>> were involved in that process. >> no, i was not. general motors came forward with a plan. i am not in a position to comment on the delphi situation. as in all aspects of this bankruptcy, general motors came forward with a plan about how they felt best to reorganize themselves. >> the auto task force had nothing to do with that. >> we had very much to do with that. >> but you had -- cannot comments. >> this question about the delphi employees, i cannot comment. i can talk to about the treatment of other stakeholders, other groups, other aspects. happy to talk with him about that. >> union workers were treated well. some of the others were treated less well. the salary employees got screwed. if you're on the task force, you

ought to be ashamed of that. that is terrible. they should have never been treated like that. >> one minute. we of the had references to the fact that it was the board of directors that made this decision. >> let me try to be more accurate. we were involved in putting the new board of directors in after the bankruptcy. during the run-up, it was management. >> i know you know the answer, under the old gm, how was the board of tractors determined? >> by the shareholders. >> under the new gm? >> the original board of the new gm was put forward by the treasury department. >> to say that the decisions were not made by the treasury

department, these were people appointed by this administration. there were not elected by shareholders. >> we were the largest shareholder. the distinction i was trying to make was that as the employees, we did not make these decisions. we entrusted a group of independent men and women. >> the appointments came out of the administration. having said that, there's a huge difference between a shareholder that was elected and a new gm because of the way you divvied up the company. you established who the board of directors would be. it was not done in the same way. it is important to be honest about that. i recognize the ranking member for one minute. >> this question about whether not the government controls gm

is the focal point. the points of the chair just made, the relationship between the new board there resulted in a lot of dealers closing, i see that as a legitimate line of questions. mr. bloom had nothing to do with that. you indicated that when you were charging on behalf of those who lost their dealerships. mr. bloom had nothing to do with it. the chair is well taken in a probing further how those decisions were made. the public has a right to know. thank you, mr. chairman. >> thank you very much. we're going to recess for one minute. then we have a final panel.

>> we want to welcome our second panel. i apologize for the schedule. all of your great wisdom is only get to a couple of members of congress. there's so many different things at this hour. we have the associate director of the center for trade institute. i appreciate you being here. bruce from the delphi retirees association. the george maverick professor of

management and at the massachusetts institute of technology. and a senior analyst. thank you for being here. the custom of the committee is to swear everyone in. do you solemnly swear to affirm the testimony about to give will be the truth, the whole truth, and nothing but the truth? everyone answered in the affirmative. your up first. >> good afternoon. i am disgusted direction of the center for trade policy studies. since 2009, i have followed the events surrounding the auto company bell labs. i am grateful for the opportunity to share my concerns of the implications. the views expressed today are my honor should not be construed as representing the cato institute.

the administration is pitching the narrative the ballots were successful. the evidence in support of the conclusion is limited to the fact that gm has been profitable and that chrysler has repaid much of its debt. calling the bela successful is to whitewash the diversion of funds by two administrations for purposes of an authorized by congress. the luting and redistribution of assets from shareholders and debtholders to pensioners. the unprecedented encroachment by the executive branch into the details of the bankruptcy process to orchestrate a sham sale. the cost of the nine ford and the other more deserving automakers the spoils of competition. the cost of insulating irresponsible actors from the outcomes of a political bankruptcy proceeding. the reduction of market and

ferment -- interventions. the lingering uncertainty about the direction of policy that pervades the business environment to this day. if the president wants to take credit for saving the auto industry, he should take responsibility for the regina uncertainty that has persisted. it flows from lessons learned from the intervention. acceptance of the pronouncement of success demands profound gullibility or willful ignorance. costs mustbailout's be considered. otherwise it is like a drunk driver of tha crash. if it is considered a success, the threshold for interventions will have been lowered.

we will have more in the future. if it is a failure, the lasting implications will be less destructive because the thresholds will be higher. on that score, contrary to what the administration would think, gauging the success of the bailout requires consideration of more than just the ratio of finances recuperated. there are numerous other costs that cannot factor into that equation. if the bailout is a success, some of the implications will include the following -- and increasing government interventions of important entities, fear mongering will be considered a technique to stifle debate, americans will be more willing to extend powers without objection to the executive branch would not extend otherwise. a greater diversion of assets is likely to occur from productive assets to put plans such as resources for research and development and lobbying.

a greater uncertainty in the business climate as the rule of law is weakened and risk premiums are assigned to economic activity. a greater push for the administration for a comprehensive policy and less subsidization of industries abroad. the objection to the bailout was not the the government would not be allowed to marshal resources to help. the most serious concerns about the consequences. the undermining of the rule of law, property confiscation, and the distortion of market signals. these must be taken into account. the recent profits begun the to the fact that politicians committed $50 billion to the task of subsidizing gm. with debts expunged, ownership reconstituted a political

obstacles steamrolled, only the most incompetent operations can sell to make profits. tax payers are still short $10 billion depending on the price of the shares of gm. that is a lot of public money in the balance. the administration should divest without regard to the stock price. keeping the tentacles around a large firm would keep the door open wider and would deter market decisions throughout the industry, keeping the brakes on the recovery. it will be a loss but the right lesson to learn is that government intervention has a real economic costs. thank you. >> we appreciate the points he made in your testimony. just so you know, your testimony will be part of the record. we will give them to each member so they can hear your good words. i have to leave and a couple of minutes.

-- in couple of minutes. mr. gump, you're recognized for five minutes. >> thank you for the opportunity to represent the retirees who were mistreated by the bomb administration during this intervention. i know you of how the opportunity to read my written testimony. i will summarize. i am not a lawyer. i am an engineer. i will do the best i can. you have to understand i may not be able to get it right. from the time obama and said in may that if a company goes bankrupt workers need to be our top priority. and his weekly radio address 20 said, we are focused on making sure if you work hard, you'll be able to get ahead and put your kids to college and retire with safety. we of learned that talk is

cheap. action is hard to come by. in this situation, a decision was made to critic government that was commercially minded instead of down by the precepts of the constitution such as due process and equal protection. decisions were discriminatory. they were made behind closed doors out of sight of a supervisory board. the records of those decisions have been protected and guarded by the treasury. the only explanation so far was that there was no necessity to do anything for those people. in reality, it was done for the expediency of the bankruptcy and not the people of the country. gm was forced into chapter 11 bankruptcy. delphi had already been in bankruptcy for several years but remained a supplier and so was

needed. because if we had not made contributions, it made it impossible for delphi to sell those assets. the treasury cut a deal with gm says that we give up our things for an equity position and a $3 billion claim. gm could keep their supplier but the participants in the pension plans lost a great deal. in may, 2009, we met with uaw to come to a settlement. we were not represented even though our government is charged with protecting all of us. they did nothing for the groups of workers, especially the salaried workers who were considered too weak to retaliate at the bad treatment. they did