By Peter Schroeder - 08/15/13 07:00 PM EDT
The report came less than a week after House Oversight Committee Chairman Darrell Issa (R-Calif.) subpoenaed Treasury Secretary Jack LewJack LewHousing groups argue Freddie Mac's loss should spur finance reform Hatch asks Treasury for memo that decreases transparency of tax rules Ryan fights to win GOP majority on Puerto Rico MORE to appear before his panel and discuss his department's handling of the GM bailout, particularly on the pension front. Issa said the Treasury had provided only a "fraction" of the documents requested by the committee.
The inspector general examined the process and found that union workers held significant leverage in the rush to steer GM through bankruptcy. Neither the Treasury nor GM believed the company could survive a lengthy bankruptcy, and a union strike could have thrown the entire matter into turmoil. Meanwhile non-union workers had little to no leverage in the matter, and administration officials said they were making the best decisions they could in a bad situation.
The report also found that it was sometimes unclear what role the Treasury was playing in the GM rescue. Sometimes it acted as a private investor would, making decisions based on what was "commercially reasonable." But other times it took on the mantle of the government, stepping in and agreeing to items that no private party would, out of a broader interest. For example, the Treasury opted not to cut costs and move GM's headquarters out of concern for what would happen to Detroit, the report concluded, along with other decisions motivated by protecting the broader American automotive industry and economy as a whole.
In an official response to the report, the Treasury defended its actions, saying pensioned Delphi workers were treated differently than hourly workers because "they were differently situated." It said the inspector general's findings prove the Treasury was driven by "sound commercial reasons" and argued that the watchdog's report makes several claims not backed up by facts.
The Treasury took issue with the fact that many of the interviews forming the foundation of the report were conducted without a Treasury representative present, adding that many former Treasury officials said their quotes included in the report were "inaccurate or taken out of context."
"While the bankruptcies of GM and Delphi have required painful sacrifices from all stakeholders ... this administration — as well as the prior administration — made the right choice to support the American auto industry," wrote Timothy Massad, the Treasury's assistant secretary for financial stability.
The Treasury Department announced in December that it planned to exit from its investments in GM over the next 12 to 15 months, likely at a loss to the government.
This post updated at 5:33 pm.