Cops and Teachers vs. Chrysler and Obama

Rick Moran
The list of victims for Obama's government squeeze of auto maker bondholders is longer than anyone thinks.

Not only is the story of pension funds who were stiffed when Obama wiped Chrysler's slate clean not being widely reported, but the victims of those funds - in one case, Indiana cops and teachers - remain unidentified by the media.

It is a calamity for tens of thousands of Americans as reported in Business Week by Esme Deprez:

As gas prices hovered around $4 a gallon and American automakers watched their pickup-truck and sport-utility sales plummet last summer, investment managers for some 100,000 Indiana teachers, police officers, and other civil servants poured millions of pension dollars into what the funds considered a safe investment: secured debt in Chrysler. Now, as the company speeds toward an exit from bankruptcy court, they are crying foul.

On Friday, June 5, the Indiana State Teachers Retirement Fund, the Indiana State Police Pension Trust, and the Indiana Major Moves Construction Fund will attempt to block Chrysler's structured bankruptcy and sale to Fiat (FIA.MI) in New York's Second U.S. Circuit Court of Appeals. The group argues that the U.S. government's intervention in the bankruptcy is unconstitutional, since the proposed plan will pay back unsecured lenders before those that were secured. The unsecured creditors and the United Auto Workers contend the sale is fair and is supported by a majority of Chrysler's creditors.

The outcome of Friday's hearing could provide a road map for how similar challenges will be handled in the case of much larger General Motors, which filed for bankruptcy on June 1.

Some are trying to make the case that the pension funds should have stuck with more secure instruments like T-Bills or blue chip stocks. Have you checked the yield on those lately? Public employee pension funds, already underfunded, needed to maintain their earnings to insure solvency. Buying into Chrysler debt seemed relatively safe compared to other options.

If you think the Chrysler situation is a mess, just wait until the lawsuits get rolling over GM's bankruptcy and forced debt sale to the government.

Hat Tip: Ed Lasky




The list of victims for Obama's government squeeze of auto maker bondholders is longer than anyone thinks.

Not only is the story of pension funds who were stiffed when Obama wiped Chrysler's slate clean not being widely reported, but the victims of those funds - in one case, Indiana cops and teachers - remain unidentified by the media.

It is a calamity for tens of thousands of Americans as reported in Business Week by Esme Deprez:

As gas prices hovered around $4 a gallon and American automakers watched their pickup-truck and sport-utility sales plummet last summer, investment managers for some 100,000 Indiana teachers, police officers, and other civil servants poured millions of pension dollars into what the funds considered a safe investment: secured debt in Chrysler. Now, as the company speeds toward an exit from bankruptcy court, they are crying foul.

On Friday, June 5, the Indiana State Teachers Retirement Fund, the Indiana State Police Pension Trust, and the Indiana Major Moves Construction Fund will attempt to block Chrysler's structured bankruptcy and sale to Fiat (FIA.MI) in New York's Second U.S. Circuit Court of Appeals. The group argues that the U.S. government's intervention in the bankruptcy is unconstitutional, since the proposed plan will pay back unsecured lenders before those that were secured. The unsecured creditors and the United Auto Workers contend the sale is fair and is supported by a majority of Chrysler's creditors.

The outcome of Friday's hearing could provide a road map for how similar challenges will be handled in the case of much larger General Motors, which filed for bankruptcy on June 1.

Some are trying to make the case that the pension funds should have stuck with more secure instruments like T-Bills or blue chip stocks. Have you checked the yield on those lately? Public employee pension funds, already underfunded, needed to maintain their earnings to insure solvency. Buying into Chrysler debt seemed relatively safe compared to other options.

If you think the Chrysler situation is a mess, just wait until the lawsuits get rolling over GM's bankruptcy and forced debt sale to the government.

Hat Tip: Ed Lasky