Eric Bradner, writing for the Evansville Courier Press, has an article about Lugar challenging Mourdock’s Chrysler antics.
A couple of critiques. First, it characterizes the argument that secured creditors would have gotten less under Mourdock’s proposal as a Joe Donnelly argument. Certainly Joe is pointing it out; but this was a central finding of the bankruptcy court. (pdf) Second, it lets Mourdock skate on his explanation of how Chrysler would have been saved and how secured creditors would have gotten paid more if Mourdock had gotten his way. Mourdock says vaguely, “I’m sure someone would’ve stepped up if the government hadn’t been involved.” (I’m paraphrasing.) But there was nobody. Chrysler had been looking for investors for years; nobody. The bankruptcy court took offers. It was early 2009 – nobody was investing in anything. The assets were wasting.
This was a political move by Mourdock. His complaint wasn’t that secured creditors were getting less than they would have otherwise. His complaint was that the government was being used to benefit unions in any way. His acts were an effort to cut off the nose to spite the face — it would have been fine, under his scenario, for secured creditors to get less so long as the unions got nothing.
It was short sighted, and he should be more accountable for what he was trying to do and why; not be allowed to say vaguely that the money fairy would have appeared to give secured creditors more money if only the socialist Obama administration hadn’t interfered. If he thinks secured creditors would have gotten more under his proposal, he should show us the math.
As for Lugar using this angle against Mourdock; it’s about time.
Mourdock spent $2.25 million or so for atty fees for a NYC lawfirm
on his folly appeal to the US Supreme Ct. Worse, that Idiot Daniels recently claimed those attorney fees were at at a “bargain” rate
for the sake of freedom and preserving the constitution.
When Daimler bought Chrysler to merge in the 1990s, they paid $35 billion. When Daimler sold Chrysler to the American investment group a number of years later, Daimler got just over $7 billion.
Chrysler was in bad shape, thus the high risk bonds which Indiana had bought and then their pre-packaged bankruptcy.
Most Hoosiers are clueless about just how reckless and wasteful Mourdock’s legal meddling in the Chrysler bankruptcy was. Nor do they understand his motivation was his visceral hatred of unions. In short he used taxpayer dollars to promote his own political agenda at the expense of all of us and in particular Chrysler workers and all those Hoosiers who se lives would have been turned upside down if Chrysler had failed. Thanks for spotlighting this, Doug. This is going to be a huge issue in the fall if Mourdock beats Lugar nex week.
Sorry to break it to you Bill but this issue is not going to be as powerful as you think. As you pointed out, “most Hoosiers are clueless” even more so about the bankruptcy laws. Although Doug fairly lays it out, you can’t do that in a 10 second sound bite. Most Hoosier voters aren’t going to have a clue what this issue is about. It is is just too complicated.
“Richard Mourdock spent $2 million dollars on New York Lawyers on a failed legal effort. If Mourdock and his New York Lawyers had gotten their way, Indiana would have gotten even less money back on Mourdock’s risky investments. He was willing to sacrifice the interest of Hoosiers because the result would have been even more painful to unions.”
Maybe use that woman’s voice you always hear in campaign commercial with the perfect mix of outrage, scorn, and disbelief.
“His complaint was that the government was being used to benefit unions in any way.”
His argument was that the government was providing more to the unsecured labor unions (which incidentally contributed significant amounts to Obama’s 2008 presidential campaign), more than secured creditors, who by standard bankruptcy law, should receive more than unsecured creditors like labor unions in a bankruptcy.
If that’s the case, then he’s been horribly misinformed. The unions got paid nothing for their unsecured debt. I summarized the bankruptcy court’s decision on that matter in my 6/3/09 blog post:
(emphasis added)
Unsecured debts were not paid. Secured creditors got more for their secured debts under the government restructuring plan than they would have under liquidation.
Mourdock’s real argument is not that unsecured creditors got paid more. They didn’t. His real argument is that UAW and VEBA got paid more than their new contributions to the New Chrysler were worth. But, as a secured creditor, it’s not really any of his business what an outside source of financing does with its money so long as the secured creditor is getting paid more than it would under other scenarios.
Doug, your last paragraph is true, but is a bit too much of a 30,000 foot view so to speak. A closer to the ground description of the benefits are:
(1) Chrysler would not fold.
(2) The (well-compensated) union employees would not strike or be fired from their jobs.
(3) In addition to their significant salaries and pension payments for work performed after the bankruptcy filing, the unsecured creditor unions would also receive (billions?, I forget now) in payments to their pension plans for liabilities that occurred prior to the bankruptcy filing.
(4) Secured creditors (like the state of Indiana) get a small fraction of the amount provided to the unions.
It is my belief that the union employees received more than (1) the secured creditors and (2) the value of their labor for signing the deal. That shouldn’t happen. This effectively subjugates the secured creditor to the unsecured.
Paul C. – I tried explaining this before but lost. Mourdock’s JOB was to protect the first-in-line status of the secured creditors.
Well, more precisely, to minimize the losses to the Indiana creditors. For example, if he were getting paid 90%, and the unions were getting 20%, he shouldn’t care provided that the alternative was him getting paid 50% and the unions getting paid 0%.
The alternative might be a purer protection of “first-in-line” status, but the former is getting more money. As fiduciary for the Indiana investments, getting more money is the bottom line.
Doug: your comment assumes (you know what assuming does) that if Indiana won its objection, another, better offer by the federal government was not going to come. I can appreciate that a better offer or “plan” may not have been guaranteed, but it certainly has a significant possibility.
Yes, I am well aware of this issue Gene. That is exactly my point. Mourdock had a fiduciary duty to ensure that the investments in Chrysler had maximized results. So, Lugar’s argument that Mourdock’s actions “risked Hoosier jobs” are horseshit. Mourdock’s job was to increase the amount his investments received, period. It doesn’t matter if Mourdock’s actions were bad for Indiana employees, his duty was to the public unions he manages.
(also see my reply to Doug below)
Regardless, he gambled, lost in the lower courts and
higher courts and incurred +$2 million in atty fees.
The fact that the Indiana Atty Genl’s office stayed away from the case says alot.
Whether it was right or wrong, a TV commercial that
says he outsourced to NYC attorneys to the tune of over $2 million, is a message that everyone understands.
1. “The fact that the Indiana Atty Genl’s office stayed away from the case says alot.”
Perhaps it says that they might not have been the best option regarding the matter? After all, I doubt that these public servants have much experience in such nuanced bankruptcy matters? Incidentally, it also appears that the A.G. office did have some involvement in the case. Note who signed here: http://online.wsj.com/public/resources/documents/indiana.pdf
2. “Whether it was right or wrong, a TV commercial that says he outsourced to NYC attorneys to the tune of over $2 million, is a message that everyone understands”‘
Ahh, the lowest common denominator approach. So much for Lugar being a “statesman” that is above such type of base appeals, eh?
But to be fair, we already knew that when Lugar started attacking Mourdock for briefly having a 2nd homestead exemption when Mourdock clearly did everything he could to fix it and the county auditor admitted it was their error.
There is serious irony when Lugar, who has no homestead in the state of Indiana, attacked Mourdock for a transaction where he erroneously was provided a second through no fault of his own. I am hoping Doug will write an insightful blog post about that attack too.
So far, Mourdock’s campaign commercials have been
1) Lugar has been a Senator for 35 years. Too long
2) Mourdock hates Obama
3) Mourdock is a conserative and hates liberals like Obama
4) Lugar has become a liberal
5) Mourdock would uphold conservative values in his votes
6) Mourdock would eliminate depts of commerce, education,
energy and health and decrease govt benefits such as social security
I want Mourdock to beat Lugar because Mourdock is a complete nutjob and Joe D would stand a better chance to get elected this fall
with Mourdock as his opponent.
You forgot:
(a) Earmarks;
(b) No longer being a Hoosier;
(c) Raising the debt ceiling;
(d) Bailouts;
(e) Permissive immigration policy;
(f) Voting to restrict gun rights.
You know, real policy disagreements.
I actually don’t know of an ad that suggests eliminating the federal dept. of commerce, education, and energy. Please enlighten me to the location of those ads.
Raising the debt ceiling wasn’t a bad decision it was the only decision. Raising the debt ceiling wasn’t increasing spending, it was agreeing to pay debts we already had. Unfortunately, the Tea Party and the R’s held the issue hostage and it resulted in an drop in our credit rating. Depending on your political affiliation, and/or your grasp on reality the bailouts have resulted in preventing the economy from totally bottoming out and mitigated the worst of the recession.
As for earmarks, I used to be against them. But, loathe as I am to admit it, they do serve a practical purpose. They help allow compromise to get bills to pass. They shouldn’t be “out-of-line” but that’s a whole other discussion that depends on one’s definition of out-of-line.
As for the last two, I think those are purely partisan issues and in all likelihood our worldviews are different enough that we would never see eye-to-eye on them.
While I disagree with your conclusions regarding the bailouts and earmarks (and have a firm grasp of reality), my list only served to provide the contents of Mourdock’s commercials. This was intended to correct and supplement the inaccurate list provided by “Knowledge is Power”.
You dismiss immigration policy and gun rights as “partisan issues”, but consider Mourdock’s commercials are in the context of a Republican primary, and by definition, primaries are generally full of “partisan issues.”
I don’t really care about the Lugar-Mourdock battle. I think that Lugar has changed so much that even if he wins the primary he will have a tough opponent in Joe Donnelly.
As for immigration and guns: I say they’re partisan but what I guess I was meaning was that depending on your view of the world will depend on how you view the solution. And I think they’re pretty much third-rail issues similar to abortion. I’d rather worry about issues that are actually possible to fix at the moment, than hot-button issues that drive wedges and eliminate compromise.