I have written quite a bit about the challenge by Richard Mourdock to Obama’s Favorite Republican, Richard Lugar.
But one subject I haven’t touched upon was Mourdock’s valiant effort, against great political odds, to stand up for private bondholders against the Obama-enforced bailout of Chrysler.
With barely two weeks until the primary, if you still need a reason to dig deep and help Mourdock out against Lugar’s money machine, then listen and read about the Chrysler bailout.
Via the IndyStar this morning:
State Treasurer Richard Mourdock made a decision three years ago that was fraught with risk for thousands of Hoosier jobs and his own political future.
He tried to stop the Chrysler bankruptcy deal.
Within minutes of his decision, he became a target — especially for many in the auto industry.
“I thought that my political career was over,” Mourdock recalled….
But the reason Mourdock is in a position to challenge Lugar at all goes back to Mourdock’s May 19, 2009, decision to be the nation’s lone government official to challenge the auto bailout…
As part of a restructuring deal, Chrysler would get $8.5 billion and GM would get $35.1 billion.
Most was in loans, but the federal government took a small share of Chrysler stock and, with the United Auto Workers, a much larger share of GM.
The plan required secured bondholders to accept 29 cents on the dollar for their investments. That came as a shock to Indiana. The Indiana State Police Pension Fund and the Major Moves road construction fund, managed by the treasurer, and the Teachers’ Retirement Fund, managed by a board, all had Chrysler bonds….
Instead, Mourdock sued to prevent the trampling of bond holder rights. Ultimately the bailout was allowed to proceed.:
The U.S. Supreme Court cleared the way for Chrysler LLC to sell its best assets to a group led by Italy’s Fiat SpA, refusing to grant a stay sought by Indiana pension funds and consumer advocates.
The rebuff eliminates the last obstacle to a White House-backed plan that aims to make the Chrysler, Jeep and Dodge brands more competitive by spinning them off through bankruptcy. Chrysler, based in Auburn Hills, Michigan, says a quick sale is necessary to stanch losses of $100 million a day.
In a four-paragraph opinion issued by the court as whole, the justices said the challengers didn’t meet the legal standard for emergency intervention. The court said its ruling “is based on the record and proceedings in this case alone,” possibly hinting that it wasn’t reaching any conclusions about the planned General Motors Corp. reorganization.
I think this author had it right when he titled his blog post Supreme Court Screws Chrysler Bondholders.
Needless to say, it is easy for Lugar and Democrat Joe Donelly to demagogue the issue. Indeed, true to form, Lugar went along with the bailout. But the question was not about Chrysler jobs — but about whether private property owners and bond holders are entitled to enforce their rights even if not politically popular. The auto bailouts were not about saving the companies, that could have been done through a normal bankruptcy process, but about saving the United Auto Workers union, as CNN noted at the time:
If the Chrysler deal goes through, Chrysler would sell its best assets — including its best-performing factories and dealerships — to a newly formed entity called the Chrysler Group.
The Chrysler Group would be controlled primarily by a United Auto Workers union trust, which will own a majority stake of 55%. Fiat will own 20% initially. Minority stakes would go to governments: 8% for the United States and 2% for Canada. Fiat’s stake will increase to 35% if it reaches certain goals.
Richard Mourdock took a principled stand against crony capitalism before being against crony capiatlism was cool.
That’s who we need in the Senate.
You can support Mourdock here.
Update: This will surprise no one, Boston Newspaper Editor Wants Hoosier Democrats To Save Lugar.