The blindfold vs. the balance

June 09, 2009 05:44 pm

— State Treasurer Richard Mourdock wants to remind America that Lady Justice wears a blindfold.
He, Sen. Jim Buck of Kokomo and like-minded conservatives have a problem with Chrysler LLC’s sale to Fiat SpA.
They believe President Obama and his automotive task force sidestepped the Constitution – that any reorganization plan must first be approved by creditors. They believe the administration is using Troubled Asset Relief Program funds illegally in the Chrysler bailout. They believe that Fiat and the United Auto Workers are getting more out of Chrysler’s bankruptcy than secured creditors.
They believe our courts are giving the administration preferential treatment, and creditors the shaft.
We want to remind ideologues such as Mourdock that Lady Justice also holds a measuring balance.
Mourdock is fighting Chrysler’s sale on behalf of three state funds that own loans to the nation’s third-largest automaker. Those loans have a face value of $42 million. Indiana bought the loans in the secondary market for $17 million. The state would receive $12.2 million in Chrysler’s sale to Fiat, Chrysler said.
If successful, however, Mourdock’s arguments could lead to a Chrysler liquidation. Rep. Joe Donnelly, D-Ind., has said if that occurred, secured creditors such as the Indiana pension funds would receive a zero-to-18 percent return on investment.
We doubt State Troopers and retired teachers would consider liquidation financially responsible on Mourdock’s part.
Furthermore, it would result in the loss of 38,500 Chrysler jobs – about 6,000 in Kokomo alone. Liquidation would decimate the benefits of tens of thousands of Chrysler retirees, exacerbate the already-tenuous finances of its parts suppliers, and lead to the loss of thousands of auto-related jobs across the nation.
Such economic pain would not affect just Chrysler towns such as Kokomo. It would be nationwide.
According to Chrysler, Mourdock is being offered 71.8 percent of the actual value of pension-fund holdings. If he truly takes his “oath of office and fiduciary responsibilities very, very seriously,” as he said in a letter to the editor we published May 26, he’ll drop his case against the Chrysler sale.