Pragmatism outweighs principle

When it comes to debt collection, there is principle and there is pragmatism.

From the standpoint of principle, State Treasurer Richard Mourdock had a legitimate point to make, objecting that secured debt would take a back seat to unsecured debt in plans for Chrysler's bankruptcy.

The secured debt was in the form of bonds; the unsecured debt was in the form of union contracts and pension promises.

Mourdock's undoubtedly right that under longstanding law secured debt should take precedence.

But from the standpoint of pragmatism, the state treasurer's efforts to derail the Chrysler bankruptcy made no real sense.

For starters, the expected loss to three state pension plans that owned Chrysler bonds was $6 million.

Legal fees to challenge the bankruptcy cost the state $2 million.

Then there's the fact that liquidation, which is what Mourdock was seeking on behalf of the secured creditors, could have given the pension funds less than the 29 cents on the dollar they were being offered.

And finally, there's the enormous cost the state would have faced if Chrysler's property had been liquidated.

Some estimate that to be in the tens or even hundreds of millions when the lost tax revenues and jobless benefits to those thrown out of work were tallied up.

The speeded up bankruptcy, with Fiat stepping in as a buyer of a leaner Chrysler, is far from perfect.

And Richard Mourdock is right that some troubling legal issues have been raised and precedence set.

But in the world of debt collection, if principle and pragmatism are forced to square off, pragmatism will come out on top every time.

It's not a matter of doing what is perfect; it's a matter of doing what is possible.

In this case, what's possible is a leaner, stronger, re-vitalized Chrysler and what's preserved are hundreds of Hoosier jobs. - J.R.[[In-content Ad]]