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Right a Government Wrong!
Support S. 3766 / H.R. 6929
The Bipartisan Susan Muffley Act

v4


Questions Congress Should Consider

·       Is it wrong for the Government to treat citizens differently within a group with public funds?

·       Should the Government turn a blind eye to errors it makes?

·       If errors aren’t corrected, are future Administrations encouraged to repeat them?

·       If Government can choose winners and losers in a private industry, who is next?

Background In 2009, the U.S. Government formed an Auto Team (AT) under U.S. Treasury. It was comprised of several corporate restructuring professionals who took leaves from their Wall Street jobs for about five months. The Team’s mandate was to act in a “commercially reasonable manner” in directing General Motors (GM) through a quick bankruptcy. Using $50 billion in taxpayer money, Treasury bought 61% of “new GM,” allowing it to emerge from Chapter 11 bankruptcy in 40 days. But first, the Auto Team had to deal with the bankruptcy of GM’s primary supplier, Delphi Corporation — The AT needed to speed Delphi out of Chapter 11 bankruptcy too.

Two Government errors were made as the Delphi Salaried Retirement Plan (DSRP) was singled out for harsh treatment. The Auto Team’s chief legal advisor told the GAO that it intended to terminate the DSRP from the very beginning. In May of 2009, Delphi’s bankruptcy judge ordered the AT, GM, Delphi, and Delphi’s bankruptcy lenders into mediation. The Pension Benefit Guaranty Corporation (PBGC) was present, too, but its lead negotiator later swore under oath that they didn’t attempt to save the DSRP. They just “sat in a room and read books all day.” The PBGC simply abandoned its responsibility to protect the pensions of salaried retirees. The meeting resulted in the PBGC terminating all Delphi pension plans on July 31, 2009. This meant reduced pension benefits for everyone affected. The AT gave GM enough additional money so GM could protect the full earned pensions of Delphi’s union-represented retirees.

Error #1: The Auto Team picked winners and losers. The DSRP was certified to be 86% funded nine months earlier, but the AT chose to NOT equally protect the full earned benefits of salaried retirees, who were equally essential to the business. So DSRP benefits were cut by up to 70%. In allocating the People’s money, the AT ignored its government role and instead acted like it was investing private funds.

Error #2: the PBGC misdirected $600-$650 million from liens against Delphi’s foreign assets that were meant to assure full salaried pensions.

WHAT THE SPECIAL INSPECTOR GENERAL FOR THE TARP PROGRAM SAID IN SIGTARP 13-003 ABOUT TREASURY’S ROLE IN THE HANDLING OF DELPHI PENSIONS: “An important lesson Government officials should learn from the Government’s unprecedented TARP intervention into private companies is that actions and decisions taken must represent the overarching responsibilities the Government owes the American public.”

Please support passage of the Susan Muffley Act, S.3766/H.R.6929

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