Richard Mourdock
Indiana State Treasurer

Just Another Recession?

HOWEY: A fascinating race for state treasurer

INDIANAPOLIS — I’ve been writing this column since 1985 and I don’t recall ever talking about the treasurer of state race. The office is that of bureaucratic function and in my mind shouldn’t even be elected. It should be part of the governor’s appointed cabinet.

But this year we have a fascinating race between the Republican incumbent Richard Mourdock and a 28-year-old Democrat from South Bend named Peter Buttigieg (pronounced Boota-judge). Buttigieg is a Rhodes Scholar and studied economics at Oxford.

Mourdock is best known for his attempts to derail the Chrysler-Fiat merger, a case that was rejected by the U.S. Supreme Court during the summer of 2009 when the U.S. auto industry teetered on the brink. When the merger occurred, Mourdock believed that Indiana police and teacher pension funds were getting “ripped off.”

“Twenty-nine cents on the dollar for people like that is not ‘just compensation’ at all, but the government says they have to abide by it,” said Mourdock, spelling out the basis for Indiana’s lawsuit. “This is the first time in the history of American bankruptcy law when secured creditors received less than unsecured creditors. And that ain’t right!” he said.

Mourdock said he was doing his “fiduciary” duty and spent more than $2 million to pursue the lawsuit that ultimately the Supreme Court said “had not carried the burden” of proof.

Buttigieg is critical of Mourdock’s attempts to stop the Chrysler-Fiat merger, which, if it had occurred, would have forced Chrysler into liquidation. He questioned Mourdock’s wisdom for investing Hoosier pension funds into Chrysler stock, which was rated “junk” status at the time of purchase.

“Indiana’s government bought junk bonds for its pensioners” then “acted surprised when they lost value,” Buttigieg said.

The Democrat noted that, “If successful, the lawsuit would have shut down Chrysler. Chrysler directly employs about 5,000 people in the city of Kokomo alone, and is responsible for tens of millions of dollars in annual tax revenue for the state, as well as over $3 billion in supplier business. The lawsuit would have destroyed these jobs and this revenue at the worst possible moment: in mid-2009, Howard County unemployment was approaching 20 percent. One think tank estimated that 100,000 jobs in Indiana alone depended on quick and orderly proceedings for GM and Chrysler.”

And Buttigieg added, “Had the treasurer won the lawsuit, then Indiana would have actually received less money than in the agreement he was protesting. In the rescue negotiated between the government and the other 99 percent of the bondholders, Indiana pensions were to receive 29 cents on the dollar.

“The federal court found that in liquidation, the pensions would have recovered far less. Indeed, one likely reason the suit was rejected was that in bankruptcy court, a plaintiff is not entitled to bring a case actually demanding less money than he is already receiving. For this reason, the lawsuit itself would seem to conflict with Mourdock’s fiduciary responsibility as treasurer.”

When my Franklin College intern Brittany Brownrigg asked Mourdock why he purchased the Chrysler junk bonds, he responded, “We bought those bonds hoping to be a part of their success. Yeah, absolutely I would do it again and I would have no choice but to do it again.”

Mourdock acknowledged the case has become a “double-edged sword.” Some of you will admire his stand on principle, even if it could have cost the state tens of thousands of jobs. Others will see him as a political opportunist, taking a swing a President Obama at a time he orchestrated the GM and Chrysler bankruptcies instead of allowing them to slide into oblivion.

“I probably have more name recognition than anyone who has ever served as state treasurer because of my involvement with the Chrysler bankruptcy last year,” Mourdock said. “It opened up the topics I get to talk about. It allows me to talk about the big picture of the economy, not just in Indiana or the United States but globally.”

Mourdock said that he believes his involvement with the Chrysler case will be a benefit to his campaign.

“I think that is very much going to play in our favor. I think most Hoosiers were opposed to seeing our pensioners getting ripped off, which is exactly what happened.”

In a speech at the Democratic Convention last Saturday, Buttigieg saw the issue playing differently.

“For most of us in the Hoosier State, impatience is an unfamiliar mood, because we by nature are patient people,” he said. “Our state was built on three great disciplines — the discipline of the farm, the discipline of the factory, and the discipline of the family — each inspiring patience in its own way.”

“We have run out of patience for ‘get rich quick’ schemes, wild speculation and reckless investments,” he continued. “No one can explain to me why the incumbent treasurer put our trust money in junk bonds and mortgage-backed securities, as if our state pensions were some kind of Wall Street hedge fund.”

So, Hoosier voters, you have an interesting decision to make about who will be our next treasurer.