November 19, 2009 featuring Richard Mourdock

" The Chrysler bankruptcy has circumvented. Most of the relevant law in that area. And when it began the White House publicly condemn those who oppose the accelerated bankruptcy. And included Indiana State pensioners. Richard Murdoch is the treasurer of the state of Indiana hoping to recover those funds taken from pensioners in the accelerating Chrysler bankruptcy. He spoke at the Cato Institute October 15 2009."

" This case is it unfold in Indiana had huge implications. We have over 6000 Chrysler employees in the state of Indiana. We have nearly twice that many General Motors employees in the state of Indiana. And as was mentioned we also have Honda and we have Toyota and we have rises -- And Indiana though you may not know we are the motor state used to beat Michigan not so much anymore it's Indiana. And win the Chrysler bankruptcy was announced I had no idea that we would be involved in this case to the way that we were. From our historical perspective the state of Indiana had three funds that had bought that secured debt of Chrysler corporation. One is the Indiana teachers retirement fund. For which I have no legal authority by the way I simply served as their representative in this case. The Indiana State Police pension fund I'm the sole trustee of that fund. And an infrastructure fund that I serve effectively as trustee of the major moves construction fund. Those three funds bought 43 million dollars worth of secured debt of Chrysler corporation in July of 2000. And seven. And you might think -- genie back then that wasn't the best of times even for the automotive industry why did you buy that stuff. And the answer -- and I'm SARS that 2007 was 2008. We've brought in July 2008 yet the auto and issue is sucking wind to put it mildly. But it was steeply discounted at 43 cents on the dollar so we effectively paid seventeen million dollars. And we bought it for a very basic reason aside from the fact was secured we also have in our state as most states do. The open policy of trying to support businesses that have a big footprint in that state. And so when we bought that -- of Chrysler we were hoping to be a party to their success. Never imagining that eight weeks later when Lehman Brothers went down in the stock market went down that we would be dragged him. To this incredible struggle. As was said here the bankruptcy was announced in. Late April is actually April 30 of 2009. It happened after an as a Republican it pains me to say this but it started with as stand correctly pointed out the Bush Administration starting to use money from TARP. And we ultimately said the that was an illegal use of those funds. Even we have records now the show as early -- and late February. Early march United States government in many ways began running Chrysler corporation and we know that from a chain of emails it was going back and forth that came to us through the discovery process. When the bankruptcy was announced two things were said that immediately should put every American's. Nerves on edge I think. It was said it would be the most complex bankruptcy in American history. And secondly it was said it would be completed in thirty days."

" I mean if you've ever been involved with the bankruptcy -- normally last month's. If not years some last decades. And yet this the most complex bankruptcy in American history we were told was gonna be pushed through in less than thirty days. One of the reasons that was given. Was that the potential buyer Fiat was gonna walk away if the deal wasn't done by them. Well as you've heard presser today. They didn't have to invest depending I kept saying all through this process slow it down slow it down the governments and Fiat will walk away. Message you know what you give me 400 million dollars if you don't give it to me on Monday tell me to come back on Tuesday I promise I'll be back. Indeed on the day the sale I called the gift. Took place to Fiat. The president and chairman FER corporation Sergio march Leone said. The words date came from never came from us. Think about that that was the so called reason for pushing this thing through from the US government. And yet ahead of the corporation it was getting the gift. Said it didn't come from that it was all part of the orchestrated plan did you show of this through it any price make it happen. Win that. Announcement was made about the bankruptcy on that day as indicated in the slide there were six point nine billion dollars of senior secured debt. All of that six point 96 point six withheld by the biggest banks. 300 million. -- by private equity funds and pension funds that's where we are entering in science. And professor mentioned this article -- add the emphasis here and you can tell I'm getting angry Coca I've told this story at least seventy times from a podium every time I still get angry. Six point six billion dollars was held by the largest TARP banks today -- the bankruptcy they also will you know what we've worked for Chrysler for years we understand the finance and we saw other sheets and December at the close of the year. There's billions -- we expect a hundred cents on the dollar. -- it was the government not Chrysler corporation said no you're not get a hundred cents."

" But but but more secured creditors. Doesn't matter. Three days later they effectively all walked in -- room smiles on their faces and said we're gonna take Tony -- Everyone of you should wonder what the heck happened. And professor told you what happened. This whole class of secured creditors have been made prostitute. By the fact that they had received the TARP monies. How impossible to imagine that the officials of the United States treasury didn't say to those folks don't you boys get. We told you too big to fail. We told you would put ninety billion dollars in your collective banks. You have to worry about losses anymore. American taxpayers got your back."

" I returned to that 300 million dollar to launch."

" Held by those private equity fund it was very clear and the pension funds and nobody had -- back nobody told us that we were too big to fail. Almost immediately leaders executives and those private equity funds were rushing to the courthouse."

" In the bankruptcy trial -- bankruptcy of New York to file suits and filed complaints to stop the sale. The next day the president of the United States said. Anyone who would try to stop the cars for bankruptcy was an unpatriotic American unwilling to sacrifice. I'm willing to sacrifice for the community. That was pretty shocking stuff to me. Especially representing teachers and state police. Story become -- personal here. You know I know a woman who is retired spent most of her career working in schools not a teacher but spent working schools. She's getting a pension from the teachers' pension fund. -- man who's a retired state police officer."

" And there my parents. They both served in World War II in the United States navy they are not unpatriotic burns. I should -- for the record they're not from Indiana either. But they are the type of people that were affected by this bankruptcy. And -- the overreaching of the federal government to have their resources ripped away from. It is wrong it is wrong. Those private equity fund managers were rushing to the courthouse mr. Obama made those statements who was also said been leaked I think that a full weight and measure of the White House media office would be used against anybody. We tried to stop the bankruptcy."

" As reported in the New York Times in The Wall Street Journal during the next several days all of the managers of those private equity funds went back to the court asked to withdraw the lawsuits. Because of the threats had received. And they asked to withdraw the losses to the point that they ask that the court documents be permanently sealed to protect their identities."

" I'm not making this stuff up."

" As that was happening I had a meeting with governor Daniels. And we talked about what we might likely do in this case we were stunned to see these things unfolding. And we agreed that we would probably without the pension funds be part of a class action suit be an anonymous member of a class and quite frankly that would been fine with me. I'm not one I'd do this because as part of the job I don't know surrogate in front of microphones or cameras because I like to do it. For the next day sitting at my desk looking over the computer screen. I cannot begin to describe the feeling that hit in the pit of my stomach as I read the other pension funds that were in fact there were other states but only to lose it had bought this -- One was the state of California. That very week Arnold Schwarzenegger was in this city trying to get his own fifty billion dollar bailout. So I knew he wasn't gonna bucked the Fed's. In the other state. Irony of ironies perhaps. It was a state of Michigan. Home -- Chrysler -- General Motors. Sitting there looking at that screen at that moment."

" Thinking you know there are 305 million Americans why do I have to be the guy -- got to be here. Percent of would've gladly give the job somebody else. We brought the lawsuit. We brought ourselves into this case because of three fundamental points."

" Number one and I'm not gonna repeat all the detail that professor gave you know I'm just not being a lower I'm gonna dumb this down to my level. And some of you may understand this better if you're not lawyers. Basically we made the argument number one."

" This is a sub rose up under the table deal. He had the United States government. Picking creditors which orange would do well which ones wouldn't. Picking which assets would be kept in the package which ones wouldn't what the liquidation could be done how we done what the values would be even suggestions as to which dealers will be kept and which ones wouldn't be it was all being put in a package for an auction in which it would only be one better. Industrialized. The United States government. He just said there won't be one better how did I know that would be the case. Because in fact it was a 10% nonrefundable. Big deposit you had to make which -- about 600 million dollars is pretty sure nobody else was gonna show up. I was right. The second point that we argued under that saw Bruce argument. Is that you cannot as a professor explained used bankruptcy just to get rid of the creditors and start all over again. So what bankruptcies for that doesn't. Just sent totally the wrong message and yet you look at this so called new Chrysler. It's effectively the same management. Was the same labor force working in the same plants with the same tools under the seems patents with the same licenses making the same products in the same divisions selling them. Through the same dealerships. Sounds like the same company to me. Second point of our lawsuit and these are the parts are better understand to be quite clear. That pesky old document. We call a constitution. Article one. Section eight. Says in part that the congress. Shall establish uniform bankruptcy law. It began that work in 1790. And it. Deemed those words secured creditor to mean in the event of that nightmare scenario you are first in line to get your money back. Doesn't guarantee that you're gonna get all your money back but before any of the non secured get a penny all the security would get terror money back. Until this professor skill set until Chrysler. Congress shall set bankruptcy law it is not for the judicial system to do it in and it's certainly not for the executive. The Fifth Amendment of the United States constitution has what is often called the takings clause which earlier should be called the non takings clause. He says the government cannot take the wealth of any citizen without due process of law. Couple examples of what we see your field due process here. We received from the bankruptcy court in new York. At 10 o'clock on Monday may eighteenth. Are written notice it was signed certified letter I think actually terminal five. Telling us if we wish to file to try to get something other than the point nine cents. We had to provide all our trade tickets we had to provide affidavits and had to do depositions we had to provide a synopsis of a financial analysis of Chrysler corporation. And it all had to be in the Barack's record of New York a 4 o'clock the next afternoon. Does that sound like due process I don't think so. Ultimately we got six days. To review what we receive from Chrysler. We received 385000. Pages of financial documents. We had six days to review them. I don't think that's due process -- The last point of law that we raised was that TARP issue. As Dan said. The TARP bill passed in October of 2008. It was to -- the -- financial industry if you read the 179 pages you'll find the word automobile appears twice. Both times as an adjective in front of the word batteries. As said secretary Paulson testified to both the house and Senate Committees and this isn't an -- real bailout bill SI -- four. Two months later. When that auto bailout bill passed the house and then died in the Senate. Which begs the question by the way it was the same congress if they thought they build up to car companies in October. Why did they even come back and try to pass a bailout bill in December it's because they knew they hadn't voted to help the car companies. That bill dies and in the bush admin."

" Storage and started misappropriating funds and sending towards the auto companies. We ultimately received a short stay from the second district Court of Appeals. Madam justice Ginsburg issued a short stay that lasted from 358 army Monday until about 7 o'clock the next day. And in the sale and forward. When these. Order that was issued by the Supreme Court to remove the stay that let the sale happen it said these words and this is a direct quote I do have it memorized. Denial of stay is not a decision on the underlying legal merits of the case. An amazing statement to a layman. To read from the United States Supreme Court. Ultimately. It's in August. Some sixty days after they gave a ten minute head to head of ruling gave a ten minutes after that hearing they presented their argument when they. Basically turned us down ten minutes it took them to come to a decision. Took in sixty days to write up. What they had to say about our case I'm talking the United States second district Court of Appeals. On that issue of sub -- they say no no it really is a different company now because Fiat. Owns -- percent of okay you know working as a U game point 8% turn off."

" On our points of the constitutional arguments. They come this close I mean this this this close. To saying Iranians right. But then they say. After a torturous argument. Indiana pensioners don't have standing. And the reason we don't have standing is because we didn't demonstrate that we could in under any other circumstances get more than point nine cents. That we're ring offer. And that comes back to the due process argument why -- we didn't have a chance to really make the argument. On the TARP issue and I love this language this -- is directly from the document. Indiana pensioners freeze in arresting and vexing question. Regarding the constitutional appropriateness. Of the treasury secretary's actions. In using TARP monies for the auto makers. They go on to make the point that during the oral arguments to -- actually said well yet -- will stipulate TARP was meant for the financial industry for the banks. But the auto industry is so related to the bank's. That they are in fact banks themselves. To which the second district road if that is the standard there is no standard it is inconceivable to congress United States have passed a law without their intending to be extinct. Some court the second district program should take this case on and decide but we don't have the authority to do so because we say they don't have standing."

" Because the court initially issued a stay in our case. And I may have this technically incorrect but this is -- I think it works in layman's terms because the Supreme Court initially issued a stay we actually had a ninety day window. When the sale took place in June the rights of all the other secured creditors vaporized. But because they took the time to hear our case we actually had ninety days to go back to them. So in early September we went back where it with a writ of certiorari asking the court to again review the case. At our attorney suggestion. Who's had much expert at the court so let's. Removed from the real basis of the argument to constitutional issue lets you remove the -- her grip let's focus on the due process issues here. And -- so we've done. If four justices. Signed our ripped the full court will hear the case. Call me a rosy cheeked optimist. But I have to believe. Justices Scalia. Thomas Alito and Roberts. Who want to deal with the law."

" I'm an optimist I really -- even after this experience. So we're hoping yet to have this case -- Total dollar amount. You know I get asked all the time homer -- put your argument here it was it was that the money was depressed or that the law. -- Those three things are just absolutely inseparable in this case. If we're successful we would be quite happy to get back the six million not 1000000006 million dollars that would make us -- in this case. We do not. And I say we not just -- Not just two issues. Americans. Deserve better than a government that will institute a policy that subsidizes foreign corporations. While it's ripping off our -- retirees. That's what we have here. Those hardworking hoosiers who say that I don't care it's 6006600. Million or six billion dollars it's their money. They saved it."

" They've invested. And to see the minimal value that was given to Fiat and this is absolutely minimal value. 400 million dollars worth of assets on day one. And I could argue -- about five billion dollars. Richard Murdoch is the treasurer of the state of Indiana to full event driving in the wrong direction is available at Cato got to work."