Romney criticizes Obama’s handling of Delphi retirees

Romney criticizes Obama’s handling of Delphi retirees
By DAVID SHEPARDSON / Detroit News Washington Bureau
Washington- Former Massachusetts Gov. Mitt Romney on Monday criticized the Obama administration’s treatment of 20,000 salaried retirees at Delphi Corp. who lost pensions and insurance benefits.

He also called for a re-examination of General Motors Co.’s 2009 bankruptcy restructuring as part of the U.S. government’s $49.5 billion bailout. “I think it’s important for us to go back and look at what happened and take apart this bankruptcy process. See to what extent the finger of politics was placed on the scales of justice and see if we can’t be more fair to the people involved in this process,” Romney said at a campaign stop in Ohio.

Troy-based Delphi Corp., while in bankruptcy in 2009, terminated the pension plans of 70,000 people and left a $7.2 billion shortfall. The Pension Benefit Guaranty Corp. — the government’s pension insurer — must pay $6 billion of the losses.

The supplier’s pension termination is the second-largest loss to PBGC in its history, behind only United Airlines’ pension shortfall of $7.4 billion in 2005.

In a move that has brought harsh criticism from Congress, GM “topped up” the pensions of most union Delphi hourly workers and retirees — primarily those from the United Auto Workers union — even though it wasn’t legally obligated to do so.

GM did not do the same for Delphi’s 20,000 salaried retirees and pension participants. The automaker also didn’t agree to “top up” the pensions of smaller unions.

Romney was asked Monday by a Delphi retiree about what could be done.

“There’s a normal process and various participants at the table get their fair share. But instead of that happening, the president made sure that the UAW got more than their fair share. I don’t have a problem with union workers and their rights to have their rights respected,” Romney said. “What I object to is when a president exercises crony capitalism, which means when a president says by virtue of my power, I’m going to take care of my friends. There’s no question that support for his campaign came from organized labor, and so he took care of organized labor.”

Romney has come under criticism for his opposition to the auto bailout.

Then-UAW President Ron Gettelfinger in January 2010 called the treatment of salaried retirees at Delphi “a grave injustice.” Michigan’s two U.S. senators, House Speaker John Boehner and many others in Congress have urged GM to reconsider its decision not to cover Delphi’s salaried pensions. GM has declined to do so.

Romney suggested that Delphi salaried retirees were treated differently.

“You weren’t part of that union. You were part of management and you got left with nothing. Is it nothing or was it close to nothing?” Romney said. “I don’t know the specifics of what happened to you or employees at Delphi, but I will endeavor along with your senator to learn exactly what’s happened and to make sure that the American people understand that, in this nation, we are a nation of laws. We follow the law. We don’t distort the law to take care of people who may have been our political supporters.”

Of salaried and hourly workers, about half have seen their pensions cut by PBGC as required under the law.

The Treasury declined to comment on Romney’s remarks.

The Treasury official overseeing the auto bailout, Tim Massad, said in December that the government acknowledged the Delphi bankruptcy had been “extremely difficult and challenging for all of its employees.”

The Treasury has insisted it did not make the decision to “top up” hourly Delphi retiree pensions, but that it understood why GM decided to do so. GM expects that agreement will cost $1 billion.

GM told a government audit released in December it made the decisions “because of its dependence” on the UAW.

PBGC recovered about $650 million from Delphi, meaning its net losses from taking over the pension plans is about $5.3 billion.

A GM spokesman declined to comment. A Treasury spokesman didn’t immediately return a message seeking comment.

Delphi salaried retirees have a suit pending in U.S. District Court in Detroit. In September, U.S. District Judge Arthur Tarnow dismissed claims against the Treasury but allowed the suit against PBGC to continue.

In November, two years after the company exited bankruptcy as a new firm, Delphi Automotive went public.

Delphi was a former unit of General Motors until it was spun off in 1999.

During bankruptcy, the supplier eliminated most of its U.S. plants and hourly workers, along with billions of dollars in pension obligations and other debts. It also canceled salaried retiree health care and life insurance.

When it filed for bankruptcy, Delphi had 50,000 U.S. employees and more than 30 plants. It closed more than 70 sites worldwide, most of them in the United States. Today, Delphi has 5,000 U.S. workers and five U.S. plants. None of its 1,000 U.S. hourly employees are represented by the United Auto Workers.

More than 90 percent of Delphi’s roughly 100,000 hourly workers are in low-wage countries, and 30 percent of its factory workers are temporary workers.

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