General Motors Co. managers, not U.S. Treasury officials, decided to boost pensions of hourly Delphi Automotive PLC workers to help secure an agreement critical to GM's bailout, the program's architect said.
Steven Rattner, who was President Barack Obama's auto czar, defended the decision to give a so-called top-off of pensions for United Auto Workers-represented hourly employees at parts supplier Delphi, which GM spun off in 1999.
Salaried Delphi retirees had their pensions cut as part of the agreement, leading to an investigation by the House Oversight and Government Reform Committee, which held a hearing on the topic Wednesday.
“The UAW was an absolutely critical party to bring to the negotiating table,” Mr. Rattner said in testimony prepared for the hearing. “They had the power to hold up a deal in bankruptcy or to strike, either of which could have been devastating to GM's efforts to get back on its feet and in turn, to the U.S. economy.”
The decision was made by GM with union input, and not by government officials, Mr. Rattner said. The inspector general of the U.S. Troubled Asset Relief Program said in an August report that government officials led by Mr. Rattner were worried the UAW could stall GM's bankruptcy reorganization and pressured the automaker to reach agreement quickly on its pension liabilities.
GM was facing default when the government, concerned that would affect the automaker's supply chain and the U.S. economy, agreed to intervene in late 2008.
In exchange for about $50 billion in investments, the Treasury became GM's majority owner with a 61% stake in the company that emerged from bankruptcy in July 2009, according to the report.
As of June 5, the government's share was 13.7%, according to data compiled by Bloomberg.
The department said it had recovered about $35 billion of its GM investment as of July 31.
