Officials with the Troubled Asset Relief Program also known as TARP today testified that they told the General Motors to selectively fund pensions for UAW members over retired salaried employees from GM subsidiary.
In part that decision was driven by UAW's threat to strike over pension benefits back in 2009, as the company tried to reorganize itself with the assistance of the Obama administration.
"The UAW was an absolutely critical party to bring to the negotiating table," Rattner says in written testimony submitted to the committee and posted on its Web site. "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. This disparity in bargaining leverage may not seem fair, but it was the reality."
The reality is that the whole affair actually should've been handled in a court of law like traditional bankruptcies. The criticism today continues to be that the Obama administration favored a key constituency's interests, the UAW, versus doing what was correct under the law.
As a result the legal wrangling will continue:
The Delphi Salaried Retirees Association filed a federal lawsuit in November 2009 seeking to overturn GM's decision.
Dennis Black, chairman of the Delphi Salaried Retirees Association, said the group welcomed today's hearing.
"For four years, we've been trying to find out how the decision to terminate our pension plan was made in 2009," Black said Wednesday in a statement. "Today, we still fight them in two federal courts to get their documents and be able to depose people. The coverup must end."
As of the last quarter GM had $24 billion in cash on hand and was generating about $10 billion worth of cash flow over the last trailing 12 months.
With low interest rates, operating conditions for automotive companies have been almost ideal. GM needs to make taxpayers and retirees whole at some point.
Why not now?
GM closed down 1.76% to $36.35 on Wednesday.