Rescue Plan.pdf

The US Government Accountability Office (GAO) reported that over $81 billion was committed under the Troubled Asset Relief Program (TARP) to improve the domestic auto industry's competitiveness. The bulk of this assistance went to General Motors (GM) and Chrysler, which sponsor large defined benefit pension plans insured by the federal Pension Benefit Guaranty Corporation (PBGC). The GAO found that the new GM and Chrysler assumed sponsorship of pension plans during their bankruptcy process, but face future funding challenges, with large contributions needed to comply with federal pension funding requirements within the next 5 years. If GM and Chrysler do not return to profitability and their pension plans are terminated, PBGC would be hit hard financially and administratively, with estimated exposure to potential losses of about $14.5 billion. The GAO also noted that the federal government's multiple roles as pension regulator, shareholder, and creditor create potential tensions, particularly in allocating funds to company assets or pension fund assets.