Let’s hear it for the Indiana Teacher’s State Retirement Fund
Why? Here’s why.
The group is one of those supposedly greedy first-line creditors that got shoved out of the way and dissed as insufficiently self-sacrificing by President Obama in his mad dash to reward his union friends in the Chrysler restructuring. The Retirement Fund didn’t object when the deal was first announced, but seems to have recovered its fight. Now the group is suing, joined by two other Indiana state pension funds in much the same position.
I say good for them. It will be interesting to see what the court has to say about the following arguments, which seem awfully logical to me:
In a court filing on Wednesday, the Indiana funds accused the government of adopting a strategy of “the ends justify the means”.
They also said the Treasury “has taken constructive possession of Chrysler and is requiring it to adopt a sale plan in bankruptcy that violates the most fundamental principles of creditor rights—that first-tier secured creditors have absolute priority”.
…The funds also allege that Tarp funds were meant to be funnelled only to financial institutions.
“Whatever powers the Treasury department may have under Tarp,” the funds said, “it does not have the power to control the entire restructuring of a company to the detriment of the company’s secured creditors and for the benefit of other interest groups so that certain broader policy and political objectives may be achieved.”
It’s things like this that make me think liberals are morons and/or hopelessly duplicitous.
Sure, they excoriated the hedge fund managers using appropriate populist rhetoric, but apparently either didn’t know, didn’t want to know, or chose to ignore where hedge funds get much of the money they invest. Even when it was pointed out to them that hedge funds typically are investing pension funds, liberals persisted in demonizing the hedge funds.
And, since this is a union pension fund, and not just an investment company representing ordinary people whose retirement is at stake, Obama can’t beat on them for being greedy.
I am glad that the pension fund is suing, and I hope more follow. But I worry that many people will ultimately be fighting over much less money than they hoped…
…on account of these government managed businesses not thriving.
Lets hope liberal groups begin consuming each other. This looks like a good start.
Very interesting. One consequence of this may be to publicize the inconvenient fact that some of those bad greedy giant secured creditors whom we are being encouraged to hate are . . . pension funds for retired teachers from Indiana. Not quite so evil, after all, perhaps?
All I can say is “Yes we can”
The underlying legal principles of the validity of contracts and the prohibition against ex post facto law-making are the real issues at stake here. Commercial law has long recognized the priority of creditors who possess perfected security interests in property under the laws of contracts and the Uniform Commercial Code, and, absent a waiver of those interests, or if the creditor does not agree to a novation of the underlying contract, then the government has no legal right to negate them. Moreover, the element of “good faith,” both a contractual and commercial law term, comes into play here. The security interests were entered into in good faith on the part of both the creditors and debtor, Chrysler, premised upon the then-existing laws of contracts and commercial law, and it is ex post facto manuvering to now attempt, as the government is doing, to obviate that good faith premise. The need for “grandfather clauses” in some statutes attests to this fact. But, like the fellows who didn’t “need no stinkin’ badges,” the Obama Administration doesn’t seem to “need no stinkin’ laws.”