Uneven pension benefits for Delphi's salaried and union employees resulting from the federal bailout of General Motors in 2009 were “fair” and necessary to rescue GM, Ron Bloom, vice chairman for U.S. investment banking at Lazard, told a House panel Tuesday.
When the Pension Benefit Guaranty Corp. terminated six Delphi Automotive LLP defined benefit plans, GM agreed to “top up” pension benefits for workers covered by three union agreements to make up the difference between PBGC benefit caps and previous levels. The pensions of salaried employees and Delphi workers in three other plans were not topped up and were subject to PBGC benefit caps.
Delphi was spun off from GM in 1999.
“While there was terrible suffering, much greater suffering was averted” by enabling GM to restructure quickly, said Mr. Bloom, a member of the automotive task force the Obama administration formed in 2009.
Mr. Bloom and fellow members of the task force appeared before the House Committee on Oversight and Government Reform's subcommittee responsible for government bailout programs. The hearing was in response to complaints from the Special Inspector General Christy Romero for the Troubled Asset Relief Program that task force members were not cooperating with her investigation into what role Treasury and White House officials played in the pension arrangements.
Rep. Mike Turner, R-Ohio, who convened Tuesday's hearing and whose district includes both Delphi retiree groups, will continue investigating whether taxpayer funds were improperly used and whether all Delphi retirees were treated fairly, spokesman Thomas Crosson said in an interview.