Brought to you by WBIW News and Network Indiana
Last updated on Thursday, June 11, 2009
(UNDATED) - Indiana will reexamine its bond holdings in the wake of its unsuccessful attempt to block the government-brokered sale of Chrysler to Fiat.
The US Supreme Court briefly delayed the sale before refusing to hear three pension funds' argument that their Chrysler bonds are secured debt that are supposed to be repaid in full under bankruptcy law.
Treasurer Richard Mourdock says he'll review current and potential corporate bonds in Indiana's portfolio to check whether those companies have their debt with financial institutions receiving federal bailout funds.
He contends it's that financial club in the government's hands that left Indiana on its own in fighting the sale.
Mourdock says his office is still discussing what its investment policy should be for such companies. One of Chrysler's lenders, JP Morgan Chase, noted in court that the holders of 92-percent of the automaker's debt had agreed to the restructuring, and argued that overwhelming majority amounted to consent from the company's creditors.
Mourdock says he'll also assess whether companies in Indiana's portfolio are likely to receive future bailout money.
The treasurer had already announced he will no longer invest state funds in companies which have received bailout money already.
Mourdock says the portfolios will not unload bonds they hold in general motors, which followed Chrysler into bankruptcy and is expected to take a similar path in resolving its debts.
Mourdock has said selling those bonds now would lock in losses.
The treasurer estimates the Chrysler bankruptcy will cost state police, firefighter and teacher pension funds $6 million, plus an additional $2 million in legal fees spent on the court battle.
The teachers retirement fund has its own governing structure outside the treasurer's office, but Mourdock says TRF officials have contacted him to discuss implementing similar standards for the fund's bond investments.
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