Looks like some Indiana pension funds are headed to the Supreme court after Appeals Court Refuses to Block Chrysler’s Sale of Chrysler to Fiat.
These pension funds are losing their rear ends. They bought $42.5 million of Chrysler debt in July 2008, at 43¢ on the dollar and the Government is giving out 29¢ on the dollar, a or 33% loss and roughly $28.7 million.
What is most interesting in this New York Times article is this in referring to the billions in government money Chrysler has already received, coming from TARP and other bail out funds:
That program “is not a gigantic slush fund,” Glenn Kurtz, a lawyer for the funds, said Friday.
A lawyer for the government responded that the Treasury Department was given wide latitude by Congress to decide how to spend the bailout money.
I guess the Appeals court decided the TARP money is a slush fund since they ruled against the Pension Plaintiffs.
Yeah, kinda' saw the writing on the wall on this
Pension Funds are handed over to VC groups or IBanks to manage.
I actually just had a debate with someone who is in the biz over this.
Cerberus got the shaft in the Chrysler BK deal.
I expect even more pensions to implode over the GM BK.
Naked Capitalism is having guest posts, right now from Pension pulse, who is a watchdog on pensions.
On EP, we have barely breathed a mention on retirement in the United States (and lack thereof) so if you are up on this topic area, a good overview post on the stats of pensions, 401ks and how basically the people who are about 55 or younger don't have jack shit to retire on...
would be a great, informative piece. (hint, hint).
I think there's a reason for that
"On EP, we have barely breathed a mention on retirement in the United States (and lack thereof) so if you are up on this topic area, a good overview post on the stats of pensions, 401ks and how basically the people who are about 55 or younger don't have jack shit to retire on..."
I think the reason for that is the number of us who are 55 or younger, and can do the math, and realize that investing in tangibles is the only route to retirement that makes sense anymore. That means paying *off* the debts first, not going into debt in the future, getting a small (1/4th acre/family does the trick) place and instead of all that stupid visual impact landscaping, plant your favorite plant-based foods that will grow in your climate without water.
That's the route to retirement, not betting on a stock market that has had three crashes in three decades.
Maximum jobs, not maximum profits.
Maximum jobs, not maximum profits.
Pension funds and private equity firms
It's interesting to note that pension funds provide much of the financing for all those "leveraged buyout" deals by private equity firms; union pension funds and state pension funds - perhaps inadvertently? - funding more unemployment and the dissolution of corporations.
I suspect someone, or more some people, at Cerberus profited from those credit default swaps written against the Chrysler debt/bonds. That is usually the way it works.
Cerberus itself doesn't have a particularly sterling track record - they lost almost $2 billion to that Bernie Madoff scheme - and Snow, while quite rich, didn't get that way from brilliant business development or creat - more from the destruction of business. And Quayle....no comment needed on that draft-evading "super patriot"....
Thanks for the NC link
Just to throw out that pension funds operate differently from 401K's.
Pension funds provide direct investment in companies whereas 401's fund stocks or mutuals funds.
GM was funded by several pension funds (being a blue chip company). As I understand how the creditors will be paid in the BK, these pensions will be hit hard.