'Indiana State Police Pension Trust v. Chrysler LLC was a lawsuit brought in United States federal court June 2009 by several pension funds against Chrysler LLC and the United States Department of the Treasury, to block the planned sale of Chrysler LLC assets to a "New Chrysler" entity in the Chrysler bankruptcy.

When there's two competing and legitimate arguments, it's up to the courts to decide what is correct.   Apparently, not a single court that reviewed this case, including the U.S. Supreme Court, found any major fault with how it was handled by Chrysler or the U.S. government.

So....all that sturm and drang about an egregious violation of bankruptcy laws was just um, opinion, and not fact.

From what I've read the VEBA, the union workers, had something like $10 billion in health/pension benefits wrapped up in the company.  That alone made them a powerful voice in negotiations.     By comparision, the investment of the secured investors fighting the sale was paltry, $42 milllion. 

 And btw, the institutional investors did recoup more than half of their investment, which is better than many investors can expect after a catastrophic collapse and bankruptcy.

  Yes, they got only 29 cents on the dollar, but that was on an investment that they bought for 43 cents on the dollar.  (A key fact that never seems to make it into the anti-Obama version.)

Union workers getting the benefits they earned through employment is equal to "stealing" from the "legal" investors pensions?

Wow, that's some partisan spin you got there.  

The article linked to above in my previous post is a point-by-point commentary on the OPINION piece Romney had published in the Detroit newspapers in February 2012.   I messed up the link so it didn't highlight, but here are some interesting parts.    What's in bold face is taken from Romney's commentary and then the reporters' response.

As a first-hand witness, I can attest that some of Romney's new arguments hold their own — but most don't. Let me explain, point by point:

"Three years ago, in the midst of an economic crisis, a newly elected President Barack Obama stepped in with a bailout for the auto industry."

In fact, the bailout began with President George W. Bush, who was forced to lend GM and Chrysler $17.4 billion in December 2008 after Senate Republicans blocked a rescue plan in Congress. Bush told reporters just last week that he was warned by Federal Reserve Chairman Ben Bernanke and Treasury Secretary Hank Paulson that if he didn't act to shore up GM and Chrysler, up to 1 million jobs could vanish. Knowing what we know now, says Bush, "I'd do it again."

"The president tells us that without his intervention things in Detroit would be worse. I believe that without his intervention things there would be better."

The crux of Romney's argument: If Obama had not acted, private companies would have stepped in and run a "managed bankruptcy." What this ignores is that in the fall of 2008, before Obama was even sworn in, no one on Wall Street or anywhere else was willing to lend GM and Chrysler a penny — let alone the $81 billion they and their financial arms eventually needed.

Both companies' bankruptcies required money on a scale not seen in legal history. Unlike airlines, which can keep running with much smaller short-term loans while they restructure, automakers need massive amounts of up-front capital to pay suppliers and workers while they build cars; their finance companies need even more to keep making car loans that can bring in revenues. The potential damage wasn't just layoffs; Chrysler executives testified on the first day of bankruptcy that without immediate cash the company risked destroying hundreds of millions of dollars' worth of equipment.

Even after Obama took office, GM and Chrysler searched frantically for paths to avoid bankruptcy, including a possible merger. Chrysler held a one-week garage sale of its assets in February 2009, inviting anyone with enough money to bid for parts of the company. No one bit.

"Ultimately, that is what happened. The course I recommended was eventually followed. GM entered managed bankruptcy in June 2009 and exited it a month later in July.

The Chrysler timeline was similarly swift. But something else happened along the way that was truly egregious. Before the companies were allowed to enter and exit bankruptcy, the U.S. government swept in with an $85 billion sweetheart deal disguised as a rescue plan."

No entity blocked GM and Chrysler's path to the bankruptcy court except their own executives. Had the government not intervened as Romney suggests, GM and Chrysler likely would have been liquidated by their Wall Street bondholders, some of whom held out for a few more pennies on the dollar at the risk of the entire bankruptcy case. One auto industry think tank estimated doing so would have led to 1.3 million job losses and threatened Ford, Toyota and other automakers.

"Chrysler's 'secured creditors,' who in the normal course of affairs should have been first in line for compensation, were given short shrift, while at the same time, the UAWs' union-boss-controlled trust fund received a 55 percent stake in the firm."

Chrysler's secured creditors were a group of Wall Street banks — including J.P. Morgan, Citigroup and Goldman Sachs — and investment firms, some of whom had bought the company's secured bonds in the months ahead of bankruptcy hoping to cash in. They could have rejected the government's offer of 28 cents on the dollar in cash for their $6.7 billion in bonds and paid to liquidate Chrysler themselves, but decided that not only would they come out even further behind, they'd also be blamed for destroying an American automaker. (GM's secured creditors − also mostly Wall Street banks — were paid in full, and endorsed the Obama bankruptcy plan.)

As for the "union-boss-controlled trust fund," that's what's known as a VEBA trust that now pays the health care of 426,409 retirees from GM, Ford and Chrysler — and in return, owns all future health-care obligations from the companies for those retirees. With this, Romney appears to argue that before hundreds of thousands of UAW retirees got health care, Wall Street should have been made whole.

"American taxpayers have been left on the hook for billions to benefit unions and the union bosses who contributed millions to Barack Obama's election campaign. Such a state of affairs is intolerable, and as president I would not tolerate it. The Obama administration needs to act now to divest itself of its ownership position in GM."

If the Obama administration sold its 500 million shares in GM today, it would lose at least $14 billion. GM shares have struggled even as the company reported strong profits, in part over concerns about an underfunded pension plan. If GM shores up its pension costs, its shares could rise — although they would need to nearly double before the government broke even.

There's ample factual reasons to criticize the bankruptcies — from the treatment of Delphi's retirees and GM's unsecured bondholders to the advantages GM, Chrysler and Chrysler's new parent Fiat gained over Ford. But doing so requires acknowledging that Obama's decisions, including his call to save Chrysler when some advisors were ready to let it go, were mostly right: GM and Chrysler came out stronger and leaner, keeping jobs in the country that would have disappeared if they'd gone out of existence.

Even in Detroit's more conservative newspaper, the comments this morning on Romney's new op-ed arerunning about 2-1 against him. Romney has plenty of time to change minds, but these comments left the factory with a few too many defects -- and losing your home state over its keystone industry would be a political sting no amount of Vernors could soothe.

How does Chrysler closing factories make Obama a vulture capitalist?

The machinations involved in the Chrysler/GM restructuring did not bring a massive personal fortune to Obama.  

That's why it's a ginned up outrage in the right-wing blogosphere and not a national scandal.   Autoworkers got their pensions paid ahead of the institutional investors instead of being utterly wiped out --- it's hard to get outraged that people got the benefits they worked for.  

 And Obama is not the one with a two-hundred-million fortune stashed in off-shore tax havens.   

http://autos.yahoo.com/blogs/motoramic/mitt-romney-gets-wrong-detroit-automakers-bailouts-154006392.html 

“The U.A.W’s retiree health fund took an ownership stake in return for more than $10 billion that Chrysler OWED it. Union workers weren't handed any political patronage.....those were benefits they earned under contract. The company's workers got paid what was due them ahead of large institutional investors, who are assumed to understand that they took a risk when they made the investments.”

No one is saying that Chrysler didn’t owe billions to VEBA. But as busdriver so eloquently pointed out, you’re avoiding the point. And you’re just plain wrong in saying that the union workers merely got paid “what was due them.”

VEBA was an UNSECURED creditor. The bondholders who got screwed were SECURED creditors. According to bankruptcy law, the secured creditors should have been paid in full before money was allocated to subordinate unsecured creditors such as VEBA. Obama subverted the rules by paying off the UAW fund nearly in full while forcing the first-lien secured creditors to take only 29 cents on the dollar, and wiping out completely the second-lien secured creditors and all other unsecured non-union trade creditors. This was NOT the risk that the secured investors understood themselves to be taking when they made their investments. There was NOTHING in the union workers’ benefits contract that entitled them to jump to the head of the line and squeeze out the secured investors who had priority, not to mention the similarly situated non-union unsecured creditors who should have been treated equally to the union unsecured creditors. If that’s not special treatment, what is it?


“During the 2009 bankruptcy, Chrysler closed dealers, shut factories….”

I guess Obama is a vulture capitalist, too.


“… demanded and got pay cuts and other concessions from union autoworkers.”

As far as the concessions went, Tier 1 UAW members who were current at the time suffered no loss in their base hourly pay, no reduction in their healthcare, and no reduction in their pensions. Their limited concessions included suspended cost-of-living adjustments and bonuses, reduced paid time off, restrictions on overtime, and the loss of the ability for laid-off employees to get paid nearly full wages for not working. Not bad, considering that the bankruptcy code gave the courts explicit authority to shred their collectively bargained contracts if necessary to make the company viable. Even after the bailout, both GM and Chrysler have billions in unfunded pension liabilities. Above market labor costs was one reason these companies were in trouble in the first place.

Let's all drink the kool-aid here. Everything Obama has done is wonderful and in the best interest of the country. Completely ethical, has never given any political favors to any person or group, only morsels of truth and wisdom pass through his honeyed lips. And Romney is pure evil, greed and selfishness. 

Built yourself a great big strawman there, huh?   

Seriously now,  how much money would those non-auto union pension holders (the institutional investors) have lost if Obama had listened to the conservative voices who wanted to stop the government bailout and let the automakers fail?

 There was not a shred of concern back then about what the collapse of the Big Two would do to the American auto industry, the hundreds of thousands of workers whose jobs would be wiped out, the loss of pension and health benefits for those workers, the loss of hundreds of thousands of other jobs in auto-related industries and the domino effect on countless other businesses large and small, not to mention the devastation that would have rippled through the stock market.

  Leave the government out of it and if they fail, they fail was the call from the Right.   Nary a peep of concern for these middle-class pensions invested in the auto industry back then.   How times do change. 

Major USA maize growing areas are experiencing severe drought conditions. One of the legacies America has from the GWB, besides the unpaid Iraq and Afghan Wars, is Gasohol which has cost us and the World 10's of billions of $$ without increasing our energy security, balance of payments, nor food security. 

Prediction: We will see a runup in gasoline prices even though the price of oil will be in the mid $80 range. The gasohol mandate will drive the pump price. 

If there was ever an issue for the Republicans to grasp and win, it's this fighting this ill concieved W's Mandate, which was originally championed by tree huggers as a way to reduce pollution. Remember, the Federal and State governments has forced everyone to use gasohol for which you pay 10% more per gallon, get 10% less power and fuel efficiency for which you again must but +10% more gasohol to get to the grocery store that charges 10% more for the meat of your choice. Fellow Americans we are paying more for CornFlakes for breakfast and eating less American raised steak and replacing these staples with $11.99/# Arab beans and Brazilian pinkslime beef ! 

MR can be a champion for the middle class American. Cars wiith more power, meat on the table, and  Bourbon.  

During the 2009 bankruptcy, Chrysler closed dealers, shut factories, demanded and got pay cuts and other concessions from union autoworkers. Not such a lucrative "return" for political contributions, but jobs were saved.

  The U.A.W’s  retiree health fund took an ownership stake in return for more than $10 billion that Chrysler OWED  it.    Union workers weren't handed any political patronage.....those were benefits they earned under contract.  The company's workers got paid what was due them ahead of large institutional investors, who are assumed to understand that they took a risk when they made the investments.  

I feel for those who lost money in the downturn --- they would have lost a lot more presumably had the bailout not happened at all --- but no way is this a scandal on Obama's part.  

Nice try but no cigar.    

Perhaps MR took the darkside of Richard Gere's role in Pretty Woman (1990,http://www.imdb.com/title/tt0100405/). I can't help imagining MR as the Edward Lewis. Screws anything and everything, and makes money too. 

this role solidified Richard Gere as a leading man.  

uh, why is it that MR has to hit back on the hypothesis that MR "May" have done a feloney. Rather than say BO told a falsehood, MR could have said, 'can you prove your allegation.'

In one of my previous careers, I was federally regulated and had to make certain attestations under federal felony penalties. I suspect BO is alluding to these attestations and affirmations. However, there are certain exceptions to the federal rule, one of which is that you are a lawyer and licensed by your state which have a higher standard than federal regulations.  Someone needs to research this more fully for a more precise answer. 

My name is Regretful and I'm a compulsive green energy investor. The fact I've socialized the consequences of my poor choices is probably what most keeps me from sleeping well at night.

Running for re-election seems to ease my pain, though.

I'm sorry, this is an opinion piece printed, you say, in Bloomberg News by

(Anthony Luzzatto Gardner works at Palamon Capital Partners, a private equity fund based in London, and was director of European affairs in the U.S. National Security Council in 1994-95. The opinions expressed are his own.)

We take this as gospel, really? For those of us who can read, perhaps not. 

Maybe Mitt should hit back with this stuff (from Bloomberg)  Its too bad that there are term limits.  The republicans could run GW again  - a significantly better candidate that Mitt.  By the way - I'm not joking about that either:

Romney’s Bain Yielded Private Gains, Socialized Losses

By Anthony Luzzatto Gardner Jul 15, 2012 6:30 PM ET

Mitt Romney touts his business acumen and job-creation record as a key qualification for being the next U.S. president.

What’s clear from a review of the public record during his management of the private-equity firm Bain Capital from 1985 to 1999 is that Romney was fabulously successful in generating high returns for its investors. He did so, in large part, through heavy use of tax-deductible debt, usually to finance outsized dividends for the firm’s partners and investors. When some of the investments went bad, workers and creditors felt most of the pain. Romney privatized the gains and socialized the losses.

What’s less clear is how his skills are relevant to the job of overseeing the U.S. economy, strengthening competitiveness and looking out for the welfare of the general public, especially the middle class.

Thanks to leverage, 10 of roughly 67 major deals by Bain Capital during Romney’s watch produced about 70 percent of the firm’s profits. Four of those 10 deals, as well as others, later wound up in bankruptcy. It’s worth examining some of them to understand Romney’s investment style at Bain Capital.

In 1986, in one of its earliest deals, Bain Capital acquired Accuride Corp., a manufacturer of aluminum truck wheels. The purchase was 97.5 percent financed by debt, a high level of leverage under any circumstances. It was especially burdensome for a company that was exposed to aluminum-price volatility and cyclical automotive production.

Casino Capitalism

Forty-to-one leverage is casino capitalism that hugely magnifies gains and losses. Bain Capital wisely chose to flip the company fast: After 18 months, it sold Accuride, converting its $2.6 million sliver of equity into a $61 million capital gain. That deal, which yielded a 1,123 percent annualized return, was critical to Bain Capital’s early success and led the firm to keep maximizing the use of leverage.

In 1992, Bain Capital bought American Pad & Paper by financing 87 percent of the purchase price. In the next three years, Ampad borrowed to make acquisitions, repay existing debt and pay Bain Capital and its investors $60 million in dividends.

As a result, the company’s debt swelled from $11 million in 1993 to $444 million by 1995. The $14 million in annual interest expense on this debt dwarfed the company’s $4.7 million operating cash flow. The proceeds of an initial public offering in July 1996 were used to pay Bain Capital $48 million for part of its stake and to reduce the company’s debt to $270 million.

From 1993 to 1999, Bain Capital charged Ampad about $18 million in various fees. By 1999, the company’s debt was back up to $400 million. Unable to pay the interest costs and drained of cash paid to Bain Capital in fees and dividends, Ampad filed for bankruptcy the following year. Senior secured lenders got less than 50 cents on the dollar, unsecured lenders received two-tenths of a cent on the dollar, and several hundred jobs were lost. Bain Capital had reaped capital gains of $107 million on its $5.1 million investment.

Bain Capital’s acquisition in 1994 of Dade International, a supplier of in-vitro diagnostic products, was 81 percent financed by debt. Of the $85 million in equity, about $27 million came from Bain with the rest coming from a group of investors that included Goldman Sachs Group Inc.

From 1995 to 1999, Bain Capital tripled Dade’s debt from about $300 million to $902 million. Some of the debt was used to pay for acquisitions of DuPont Co.’s in-vitro diagnostics division in May 1996 and Behring Diagnostics, a German medical-testing company, in 1997. But some was used to finance a repurchase of half of Bain Capital’s equity for $242 million --more than eight times its investment -- and to pay its investors almost $100 million in fees.

Bankruptcy Filing

Dade was left in a weakened financial condition and couldn’t withstand the shocks of increased debt payments wheninterest rates rose and revenue from Europe fell because of a decline in the value of the euro. The company filed for bankruptcy in August 2002, because of its inability to service a $1.5 billion debt load. About 1,700 people lost their jobs while Bain Capital claimed capital gains (net of its losses in the bankruptcy) of roughly $216 million, an eightfold return.

There are many other examples of this debt-fueled strategy. In the two years following the acquisition in 1993 of GS Industries, a steel mill, for $8 million, Bain Capital increased the company’s debt to $378 million on operating income of less than a 10th of that amount. Some of this was used to pay Bain Capital a $36 million dividend in 1994. That degree of leverage was excessive in light of the cyclicality and capital-intensive nature of the steel industry.

By the time the company went bankrupt in 2001, it owed $554 million in debt against assets valued at $395 million. Many creditors lost money, and 750 workers lost their jobs. The U.S. Pension Benefit Guaranty Corp., which insures company retirement plans, determined in 2002 that GS had underfunded its pension by $44 million and had to step in to cover the shortfall.

Bain Capital’s acquisition of Stage Stores, a department-store chain, in 1988 was 96 percent financed by debt (mostly injunk bonds) -- an extreme level for a cyclical and very competitive low-margin business. Bain sold a large part of its stake in 1997 for a $184 million gain, three years before the company filed for bankruptcy because of its inability to service its $600 million debt.

Success, entrepreneurship, risk taking and wealth creation deserve to be celebrated when they are the result of fair play and hard work. President Barack Obama is correct in distinguishing the patient creation of value for the benefit of investors through genuine operational improvements and growth --the true mission of private equity -- from the form of rigged capitalism that was practiced by some in the industry in the past when debt was cheap and plentiful.

While Bain Capital wasn’t alone in using financial engineering to turbo-charge its returns, it was among the most aggressive under Romney’s leadership. Enriching investors by taking leveraged bets isn’t a qualification for a job requiring long-term vision and concern for public welfare. It is appropriate to point that out to voters.

(Anthony Luzzatto Gardner works at Palamon Capital Partners, a private equity fund based in London, and was director of European affairs in the U.S. National Security Council in 1994-95. The opinions expressed are his own.)

Read my lips, jd ---- WHO TF CARES?????

Even if whatever you took to the time to print is true (where is the citation, btw?)  WHO TF CARES???

I want someone to fix this country. Whether or not he kept his finger in at Bain - WHO TF CARES? 

The only people caring are the wingnuts who are spinning this to high heaven so as to divert attention from the clown we presently have in the Oval Office !

If you really think people are stupid enough to buy all this, esp. when the WashPo and CNN are stating otherwise, you are in for a sad, sad awakening.  Just brace yourself---this is making BHO , Axelrod et al look like the thugs they are, and people are noticing.

It's all about the Math, Isn't it.

Do you count the beginning day of the week as, day 0 or day 1?

No wonder why we Americans are so confused about taxes.

I seriously doubt very much that BHO is any smarter than GWB. After all, GWB has an advanced degree from Harvard too--it that's your yardstick.  I liked Bush because I saw him as a genuine human being. I prefer my presidents not be composite characters.

I see MR as a really, really sharp guy. Deny it all you want, but trying to stack up what Obama had accomplished in his life up to 2008, with what MR has done--it's no contest.  BHO has no business being where he is, in my opinion.  He's in way over his head. Unfortunately, we have to pay for it.

Recent polls have BHO and MR neck-in-neck.

We get it that you don't like PBO. Because he has good speaking skills? Or are you trying to remind us of Our last President we had who couldn't read from the teleprompter and had the printed versions of his speeches dramatically different from the spoken version?

Somehow I feel that the last President misread the teleprompter, saying that we should Not go to war. So easy to skip a small word when you're dexlexsic. 

I don't know why Mitt is running away from Bain, it created loads of jobs: