When Pensions Get Stupid - Must Be the Water in Indiana

Ok... On one hand, we have the former #3 auto maker in the United States. One that is privately held but is deep in debt and losing billions a year.

On the other hand, we have a few pension funds who own a very tiny sliver of Chrysler's debt. So tiny, that any less and it'd be less than 1%!!!

Now... Chrysler can go under, leaving the pension funds able to collect a few pennies on the dollar if they are lucky.

Or, Chrysler can be sold to Fiat and the pension funds and other secured debt holders given majority ownership, thus if not outright saving the investments, at least giving them time to sell off the new stock to recover more of the money than they would with a full bankruptcy.

Sounds like a no-brainer to me.

And therein lies the rub... it seems that the pension funds are managed by people with no brains.

Instead of looking out for the interests of the pensioners who would benefit from the funds, those mighty mental midgets instead chose turn down the stock in the new company.

They then turned down the 29 cents on the dollar that the rest of the bondholders accepted.

Now remember... those three funds only have $42.5 million invested in Chrysler bonds. The holders of the other $6.8575 BILLION in bonds were OK with the deal.

Instead, the three pension funds' greed caused them to file suit in Federal Court to STOP the saving of Chrysler! They kept losing but appealed all the way to the U. S. Supreme Court. The same court which today, stopped the sale of Chrysler to Fiat.

If Chrysler doesn't find some way to appease those paragons of fiduciary responsibility in Indiana this week, Fiat can and will likely give us all the finger and back out.

When that happens and the pension funds tank due to the actions of their managers, I sincerely hope that the investors/employees whose futures were in those funds and bonds do the same to the managers of the funds and sue the crap out of them.