Obama appointees said a decision to allow General Motors to cut salaried retiree pensions while topping up those of their hourly counterparts was reasonable and not an effect of political pressure.
Former Auto Czar Steve Rattner, one of seven witnesses called to testify Wednesday before the Committee on Oversight and Government Reform, said the decision was "commercially reasonable" and that GM had been under no obligation to top up the salaried employees' pensions.
The three-hour hearing was scheduled in an attempt to determine the administration's role in protecting United Auto Workers' pensions while about 20,000 Delphi salaried retirees lost much of their pensions during the federal bailout following GM's 2009 bankruptcy.
Delphi, also in bankruptcy at the time, was needed by the automaker to supply necessary auto parts.
Wednesday's hearing was triggered largely by a report released in August by the special inspector general overseeing the $700 billion Troubled Asset Relief Program. The report indicated the Obama auto task force had a key role in approving GM's decision to top up the UAW pensions but stopped short of assigning blame.
Christy Romero, special inspector general for the Troubled Asset Relief Program or SIGTARP, who authored the report, said the top up of the salaried retirees' pensions came because it had been previously spelled out during negotiations with the United Auto Workers in the union's collective bargaining agreement. By contrast, there was no labor agreement for salaried workers.
Romero said the decision was made by GM, not by the government, and said the U.S. Treasury Department acted only as an adviser in the bankruptcy decisions.
Salaried retirees, including about 1,500 in the Mahoning Valley, have been fighting for treatment equal to their hourly counterparts.
Romero said SIGTARP confirmed during its investigation in the matter that the Delphi pensions were fully funded, and in fact over funded, when Delphi spun off from General Motors in 1999. During the next decade, however, the fund became underfunded.
"It was Delphi management who did not continue to make payments, therefore leading to Delphi salaried retirees' (pensions) to become underfunded."
Still, subcommittee chairman Rep. John Mica, R-Florida, and committee member U.S. Rep. Mike Turner, R-Dayton, maintained their stance that the Obama administration's auto team picked the winners and losers.
"What I have a problem with is the thousands (of salaried retirees) that were left behind, and we are using taxpayer money for the top off," Mica said.
U.S. Rep. Timothy J. Ryan, D-Niles, who is not a member of the committee, but still sat in on the hearing because of the large constituency affected by the issue, called for some type of resolution and used the issue as a springboard for his call for federal bankruptcy reform.
"This happens all the time. The distinction here is the government is involved. But there are bankruptcies everyday in this country, and we need bankruptcy reform," Ryan said. "There are thousands and thousands and thousands of other workers across this country who end up on the short end of the stick because they were at the end of the line."