| WASHINGTON, July 10
WASHINGTON, July 10 Market conditions have
slowed the U.S. Treasury's progress in selling stakes in General
Motors Co and its one-time consumer financing arm, but
the Obama administration should develop a solid plan for doing
so, a government watchdog said on Tuesday.
Christy Romero, special inspector general for the
financial-crisis-era corporate bailout initiative known as the
Troubled Asset Relief Program, plans to tell a congressional
committee that it could take a number of years for taxpayers to
simply break even on the investments in GM and Ally Financial.
Romero noted in prepared testimony for a subcommittee of the
Republican-led House Oversight Committee that previous
government audits had raised the prospect that Treasury could
sell shares below break-even prices.
"Although that would result in taxpayers getting out of
these investments more quickly, it would decrease taxpayer
return," Romero said. "Treasury should develop a concrete exit
plan for GM and Ally."
Treasury, which has invested more than $50 billion in GM,
has not sold any shares since 2010. It would need to sell its
remaining stake of 500 million shares at more than $52 each to
break even on the bailout.
The stock is trading just above $20, down sharply from its
initial public offering price of $33 in November 2010.
Also known as GMAC, Ally filed its intent in March 2011 to
seek a public share offering but has not yet taken that step.
Even if Treasury sells a large amount of its Ally stock in
an IPO, it would still take a year or more to dispose of its
ownership stake, Romero said, citing a government analysis.
The government injected $17 billion into the lender through
multiple bailouts during the recent financial crisis and now
owns about 74 percent of the company.
Taxpayers still hold about 30 percent of GM equity, roughly
half of their initial interest coming out of the automaker's
bankruptcy in 2009.
Romero also plans to tell the Oversight panel that former
Obama administration officials had refused to meet with
investigators examining decision making about certain union
pensions and the auto bailout.
Romero is looking at whether the White House and Treasury
Department pushed GM to shore up certain ailing union pension
plans at troubled auto-parts maker Delphi Corp, while
nonunion employees had to settle for reduced benefits as a
result of the supplier's bankruptcy.
Republicans have long complained that the
government-sponsored bailout and bankruptcy of GM, Chrysler
and suppliers were at least partly aimed at salvaging
union jobs in politically crucial and economically hard-hit
Michigan and Ohio.
President Barack Obama has campaigned heavily in those
states on a signature economic policy achievement - the revival
of U.S. auto manufacturing due to his intervention following its
near-collapse soon after he took office.
Organized labor has been a cornerstone Obama constituent and
a prime target for Republicans this election season. Some
Republicans have accused mainly public-sector unions of sapping
municipal budgets with bloated contracts and benefits.
'TOP UP' PAYMENT
Unable to meet its obligations, bankrupt Delphi turned over
its underfunded pension plans covering some 70,000 workers and
retirees in 2009 to government insurers, which would pay out
benefits but at rates lower than promised.
GM agreed to add about $1 billion to accounts for 40 percent
of the pension recipients, mainly hourly employees and retirees
of the United Auto Workers and other smaller unions. The 20,000
nonunion salaried employees were excluded, as were some other
Investigators had tried without success to interview former
Auto Task Force chief Ron Bloom, legal adviser Matthew Feldman,
and member Harry Wilson about the Delphi pensions and GM's
decision to "top up" certain plans, Romero said.
The task force disbanded after GM and Chrysler emerged from
bankruptcy with taxpayer capital, scaled-back operations and
thousands fewer workers.
"Mr. Bloom, Mr. Feldman, and Mr. Wilson played key roles on
the Auto Team, particularly with respect to decisions made
pertaining to GM," Romero said.
Without their information, investigators do not have
"sufficient facts to determine their role in the Delphi decision
or to make a determination as to whether there was any pressure
on GM in that decision," she said.
All three men were scheduled to testify on Tuesday.
Feldman, a corporate restructuring specialist, said in
written testimony that he had hoped his deposition in Delphi's
bankruptcy would satisfy any questions from the TARP inspector
He also said he had been in contact with the agency about
follow-up questions when asked to testify before the Oversight
According to Feldman and a Government Accountability Report
to be presented at the hearing, GM's decision to "top up"
underfunded pension plans stemmed from a 1999 agreement with the
United Auto Workers and other unions when Delphi was spun off
from the automaker.
Those deals were preserved during GM and Delphi's
The auto task force concluded that GM's decision to honor
the agreement was prudent, Feldman said. "We believed doing so
would protect" GM and taxpayers' investment in the company, he
Bloom, a former investment banker and union negotiator, said
in his testimony that he had helped prepare and deliver
responses to "countless inquiries" about watchdog and
congressional audits and in investigations of the auto bailout.
Wilson, a former private equity investor, lifelong
Republican, and candidate for New York State comptroller in
2010, said the Treasury Department had "provided general input
but not specific decisions" about GM's business.
GM has said the government never pressured it on business