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OBAMA PONDERS PREPACKAGED BANKRUPTCY: President-Elect Barack Obama‘s transition team is exploring a swift, prepackaged bankruptcy for automakers as a possible solution to the industry’s financial crisis, according to a person familiar with the matter (Bloomberg News). 
Obama’s team has already contacted at least one bankruptcy- law firm to say that Daniel Tarullo, a professor at Georgetown University’s law school who heads Obama’s economic policy working group, would call to discuss the workings of a so-called prepack, according to this person. “It creates the environment to deal with GM’s problems but limits government financial commitment,” said bankruptcy lawyer Mark Bane of Ropes & Gray in New York. In a prepackaged bankruptcy, an automaker would go into court with financing in hand after reaching agreement with lenders, workers and suppliers on what each would give up and on the business plan to be followed. The process might take six to 12 months, compared with two to five years if the automakers followed an ordinary Chapter 11 proceeding and worked out agreements under a judge’s supervision, Bane said. Automakers would have to depend on government financing to restructure in bankruptcy court and probably couldn’t attract private loans until they were ready to emerge from the process, Bane said.
LUGAR SAYS TIME LINE DIFFERS WITH BIG 3: U.S. Sen. Richard Lugar said the time line differs from the Chrysler bailout he authored in 1979 to the current Big 3 dilemma. Lugar told Howey Politics Indiana on Thursday that it took six months from the time President Carter proposed the bailout to the final $1.2 billion plan he and Sen. Paul Tsongas wrote passed both houses of Congress. “Clearly the potential is not as good with this one,” Lugar said. “The issues are not the same. There are needs of very large changes in management and the products they offer, and changes by the UAW.” Lugar said there is an “earnest” attempt in the Senate to see if $25 billion in Energy Department funds that were to help the Big 3 retool for production of more energy efficient cars could be used as the bridge loan, be repaid and “not compromise the development of energy efficient cars.” While Senate Majority Leader Harry Reid and House Speaker Nancy Pelosi asked the Big 3 to come back in December with detailed plans, saying, “We want them to get their act together. We are here to help,” Lugar said that whether such a plan “would fly in the House is dubious.”
WALL STREET BAILOUT FALTERS: Asked for his thoughts on the $700 billion Wall Street bailout, Lugar said he has “listened carefully to Secretary Paulson who revisited for leadership. program by program, decision by decision. While I have respect, I have the same feeling it isn’t really clear to them or rest of us how these programs are working.” Lugar added that the intitial idea of buying up mortgages “was not very good and was abandoned and probably for good reason. It became only a drop in the bucket due to the amount of time to evaluate mortgages one by one that would have delayed any injections.” He added that the shift toward putting money into the strongest banks. “But the largest banks have not increased materially the loans they are making,” Lugar said. “There’s no flow to the rest of the country. They are husbanding their funds.” Lugar added that as he drove into Washington on Thursday morning, he listened to news reports of another seismic drop on the Dow and acknowledged, “there generally is fright that the bottom hasn’t been reached. Where is the bottom? At what point do stocks and values go so low that people open their vaults?” Read the HPI Interview with Lugar in Monday’s weekly edition of Howey Politics Indiana.
UAW MAY END JOBS BANK: The UAW is negotiating the possible elimination of its controversial jobs bank and is considering other concessions to help Detroit’s automakers win low-cost loans from Congress, people familiar with negotiations said late Thursday (Detroit Free Press). Union officers from several locals said they did not know if the concession had been made but expected the jobs bank to be ended as part of a package of shared sacrifice when the automakers and UAW President Ron Gettelfinger return to Congress early next month. The jobs bank pays laid-off workers, sometimes for years. At a news conference at the UAW’s headquarters in Detroit on Thursday, UAW President Ron Gettelfinger would not say whether the union would be willing to give up the jobs bank if required by Congress as a condition of a loan bailout. When UAW autoworkers are laid off, they receive a combination of unemployment benefits and supplemental pay from their employer for 48 weeks. If they remain laid off beyond that, they move to the jobs bank, where the company provides about 95% of their pay and benefits. Until the most recent contract, people could remain in the jobs bank for years.
DONNELLY OUTLINES AUTO RESCUE: Funds already approved for U.S. automakers to produce more fuel-efficient vehicles could be tapped for operating expenses, Congressman Joe Donnelly said (Kokomo Tribune). During a teleconference Thursday, he said the discussions on a loan to General Motors, Chrysler and Ford in the next few weeks will be to allow the $25 billion already authorized go to keep the companies operating during the world fiscal crisis. A second $25 billion for research and development of fuel-efficient vehicles could be approved after President-elect Barack Obama takes the oath on Jan. 20, he said. “We’re waiting on the Senate,” Donnelly said. “My goal has been consistently to protect the jobs we have and create additional jobs.” Donnelly said he would not support a loan to the auto industry if Chrysler intended to merge with GM and was told by officials with both companies there was no intention to merge. Had a merger taken place, Chrysler would have been a brand under the GM banner, he said. Donnelly said Kokomo was the only transmission plant in the mix for the Chrysler brand and there was never talk of closing the plants locally. Donnelly’s 2nd Congressional District includes 15,000 automobile industry-related jobs, including 5,000 in Kokomo.
DUOH! WASHINGTON TWP. PASSES 69% PAY INCREASE: The Washington Township Board in Indianapolis passed a 69 percent pay raises for the trustee and township board on Thursday evening. The board took no public input and raised its pay from $2,200 a year to more than $3,600. The increase comes even though the township no longer administers fire protection, which shifted to the Indianapolis Fire Department.
3 FUNERALS SAYS FED RESERVE OFFICIAL: A funeral is under way for the U.S. financial system as it has existed for the past two decades, an official with the Federal Reserve said Thursday in Evansville (Evansville Courier & Press). But that certainly doesn’t mean the death knell should be sounded for the entire economy, said James Bullard, the president of the Federal Reserve Bank of St. Louis. Bullard was the keynote speaker at the Regional Economic Summit, held Thursday and today at The Centre. Bullard titled his speech “Three funerals and a wedding.” Three aspects of the American economy have died or at least appear moribund, he said. One is what economists call the “Great Moderation. Starting in the mid-1980s, the economy has tended to be far less volatile than in previous decades, he said. Some observers now think that stability has begun to flounder, but Bullard is not so certain. “The increased volatility would have to continue for a number of years before we could start to compare the current environment to the pre-1984 experience and pronounce the moderation dead,” he said. Another funeral has been that of the large investment banks that used to hold important positions on Wall Street, Bullard said. They took too many risks with investments — such as mortgage-backed securities — which few people truly understood. Because of those bad bets, the financial sector will have to absorb nearly $1.4 trillion in losses, according to the International Monetary Fund. Bullard said the government has established an orderly way of dealing with banks that fail. But it lacks a good method of doing the same for other types of financial firms. That is why the government has been driven to take exceptional measures during the current troubles. Of the first 47 companies on the S&P 500 list of financial firms, 31 have received assistance in some form or another from the government. The final funeral Bullard spoke of was of monetary policy — or the attempt to influence the economy through by raising or lowering important interest rates. The federal funds target rate has been lowered to 1 percent, Bullard said. In the future, it may go even lower. But that “may not be the most critical question,” he said. “The fact is, monetary policy defined as movements in short-term nominal interest rates is coming to an end, at least for now,” Bullard said. “It’s a funeral for a friend.”
Auto industry
TIPTON, KOKOMO HIT: Work has stopped on the hulking factory along U.S. 31 where more than 1,000 people were expected to build transmissions (Associated Press). About 1,500 workers, meanwhile, are on layoff this week from Chrysler plants less than a half hour north in Kokomo along the same highway. Those are just two of the troubles Indiana communities are facing as Detroit automakers try to persuade Congress to provide billions of dollars in loans to keep them afloat. Getrag Transmission Manufacturing LLC, which was building the $530 million plant near Tipton, filed for Chapter 11 bankruptcy protection this week. Work had stopped after Chrysler pulled out of a financing agreement last month. Getrag said the 900,000-square-foot plant, about 35 miles north of Indianapolis, is 80 percent finished. “Under the current economic conditions, I don’t think it will be completed,” said Jason VanAlstine, an economist at Indiana University Kokomo. “In the long run, it will be.”
Presidential
OBAMA TO NOMINATE CLINTON: President-elect Barack Obama plans to nominate Hillary Rodham Clinton as secretary of state after Thanksgiving, a new milestone for the former first lady and a convergence of two political forces who fought hard for the presidency (Associated Press). One week after the former primary rivals met secretly to discuss the idea of Clinton becoming the nation’s top diplomat, an Obama adviser said Thursday that the two sides were moving quickly toward making it a reality, barring any unforeseen problems.
JONES TO NSA: Former Marine commandant Jim Jones appears to be President-Elect Obama’s selection to head the National Security Agency, MSNBC is reporting. Jones has been working on a report on an alternative energy economy.
SHARP CONSIDERED AS ENERGY SECRETARY: Phil Sharp, who for 20 years represented Indiana’s 2nd Congressional District, which included Bartholomew County, is one of the leading candidates for Secretary of Energy in the administration of President-elect Barack Obama, according to the Associated Press. Sharp, who twice defeated 6th District Rep. Mike Pence, R-Ind., of Columbus, in 1988 and 1990, was mentioned as a leading contender for the energy post along with Kansas Gov. Kathleen Sebelius and Dan Reicher, director of climate change and energy initiatives at Google. The former Hoosier legislator serves as the president of the nonpartisan think tank Resources for the Future in Washington, D.C.
IU PROF HELPING WITH TRANSITION: An Indiana University law professor who helped President-elect Bill Clinton make the transition to power in 1992 before serving in his administration has joined President-elect Barack Obama’s transition team (Indianapolis Star). Dawn Johnsen is a member of Obama’s Department of Justice Review Team, but it’s unclear what her role will be. Under transition team policy, she can’t speak publicly about her role. Johnsen served on Clinton’s transition team in 1992 before holding key posts in the Justice Department under Clinton from 1993 until 1998, when she came to IU.
Indiana Governor
DANIELS ON GOP ‘WATCH’ LIST: Washington Post blogger Chris Cillizza lists Gov. Mitch Daniels as No. 4 on his “Republicans to Watch” List: 4. Mitch Daniels: Even as Obama was pulling off a stunning win in the Hoosier State at the presidential level, Daniels was cruising to reelection by 18 points. At the end of the campaign, Daniels pledged in a television ad that he would never run for another office but even if he stays true to his word, his experience in 2008 makes him a valuable commodity for Republicans. While Daniels’s ties to George W. Bush won’t help him — he served as the director of the Office of Management and Budget from 2001 to 2003 — his electoral success in a critical Midwest battleground means Daniels has a seat at the table. Also listed from top to bottom: Louisiana Gov. Bobby Jindahl, South Dakota Sen. John Thune, Mitt Romney, Virginia Attorney Gen. Bob McDowell, South Carolina Gov. Mark Sanford, U.S. Rep. Eric Cantor, Utah Gov. Jon Huntsman Jr., Mississippi Gov. Haley Barbour and California Insurance Commissioner Steve Poizner.
Congress
COLEMAN LEAD DWINDLES IN MINNESOTA: U.S. Sen. Norm Coleman has seen his lead dwindle to just 129 votes over Democrat Al Franken in the Minnesota recount on Thursday (MSNBC). The recount is expected to take more than a week.
SENATE PASSES JOBLESS EXTENSION: With no end in sight to economic bad news, President George W. Bush is about to ensure that millions of laid-off workers won’t see their unemployment checks disappear as the year-end holidays approach (Associated Press). Bush is expected to sign into law an extension of jobless benefits as early as Friday. Earlier in the year, Bush expressed doubts about further benefit extensions, but he came to support the legislation as new figures showed new claims for jobless aid had reached a 16-year high.
CILLIZZA SUGGESTS BAYH VULNERABILITY: Anita Dunn, one of Barack Obama’s closest political advisers, is returning to her media consulting practice — bypassing the chance to serve in the first Democratic White House in nearly a decade (Cillizza, Washington Post). She will return to her firm — Squier Knapp Dunn — and begin the process of readjusting to the soap-operatic world of political consulting. Dunn’s biggest client heading in the 2010 election is Indiana Sen. Evan Bayh who some Republicans believe can be beaten — we’re skeptical — with the right candidate. (Gov. Mitch Daniels, anyone?) (HPI Publisher’s Comment: There is no way Daniels will challenge Bayh in 2010).
Indiana General Assembly
BRODEN TAKES MRVAN FISCAL POSTS: The new Democratic leader of the Indiana Senate has dropped Sen. Frank Mrvan, D-Hammond, from a pair of committee posts that will play a key role in writing the next state budget (Times of Northwest Indiana). Senate Minority Leader Vi Simpson, D-Ellettsville, announced Thursday that Sen. John Broden, D-South Bend, will replace Mrvan as the ranking Democrat on the Appropriations Committee. Broden also takes over for Mrvan on the State Budget Committee, a House-Senate panel that reviews revenue forecasts and has final approval over construction projects. “It’s just a natural transition,” Mrvan said, adding that he wasn’t disappointed. “I made a lot of friends over the past few years and can still ask for things, especially the money for the Little Calumet flood program.”
State
131,000 KIDS STILL NEED HEALTH INSURANCE: About 131,000, or 7.9 percent, of Indiana’s children don’t have health insurance, according to a report released yesterday (Associated Press). In “Left Behind: Indiana’s Uninsured Children,” Families USA, a Washington, D.C., consumer-advocacy group, noted that about 95 percent of those young people come from families in which at least one parent works. The group also said that about 48 percent of the state’s uninsured children may be eligible for the Hoosier Healthwise insurance program. Last month, the state Family and Social Services Administration announced an expansion of its children’s health insurance program.
FSSA PLANS CALL CENTER CHANGE: Changes in the way the Indiana Family and Social Services Administration administers benefits could greatly reduce workload at the Marion call center, state officials say, and could also simplify the application process for people seeking benefits (Marion Chronicle-Tribune). Starting in January, the FSSA will increase the period of time between required food stamp certification for its clients from six to 12 months (and to 24 months for the elderly and disabled). The state agency estimates making certification less frequent would eliminate 260,000 client interviews a year, or 21,667 a month. Also, households that receive benefits but do not have food stamps will not be required to have an interview. Instead, there will be a mail-in process, thus eliminating about 130,000 interviews annually. Paper applications will be simplified; the current application for benefits such as food stamps and health coverage is 16 pages long, and the new application will be six pages. “Hopefully it decreases the volume there and at our other call centers,” said Mitch Roob, secretary of the FSSA. Roob doesn’t expect the changes will cause a reduction of staff at the Marion call center, which currently employs about 390, but he also doesn’t expect a significant increase in employees.
INDIANA TOP MERCURY EMITTER: Three Indiana power plants have landed on an environmental group’s tally of the 50 facilities in the nation that emit the greatest amount of poisonous mercury into the air and water (Indianapolis Star). Together, the 50 plants last year released about 20 tons of mercury, which can cause permanent damage to brains, kidneys and developing fetuses, according to a report from the Environmental Integrity Project, a nonprofit that advocates for stricter enforcement of environmental regulations. “Many of the nation’s dirtiest and oldest power plants continue to operate,” said Ilan Levin, senior attorney with the group. “We need a strong national rule that mandates 90 percent reduction from every power plant.” The group dubbed 12 states, including Indiana, the “dirty dozen” because they had the most plants on the Top 50 list.
IU SPENDS $500K ON SAMPSON FIASCO: Indiana University’s legal bills have reached almost a half-million dollars in the NCAA infractions case related to former men’s basketball coach Kelvin Sampson (Associated Press). Through July, IU had spent $497,646 on outside legal counsel specializing in NCAA issues, including $211,034 for work done starting in April. More bills, related to the school’s September response to the NCAA’s charge of “failure to monitor,” are expected.
SOLDIER TO BE EXECUTED AT TERRE HAUTE: A former Army cook convicted of multiple rapes and murders is set to die next month in what would be the U.S. military’s first execution in nearly 50 years (Terre Haute Tribune-Star). The military said Thursday that former North Carolina soldier Ronald A. Gray is to be executed Dec. 10 at the federal prison complex in Terre Haute, Ind. Gray was arrested in connection with four slayings and eight rapes in the Fayetteville, N.C., area between April 1986 and January 1987, while he was stationed at Fort Bragg. He was convicted of murdering two women. President Bush approved Gray’s execution in July, and a month later Army Secretary Pete Geren set the execution date and ordered that Gray be put to death by injection.
Cities
NEW ALBANY PASSES BUDGETS: The New Albany City Council voted 7-1 last night to adopt a 2009 budget that includes about $1.5 million in cuts, most of them ordered by the Indiana Department of Local Government Finance (Louisville Courier-Journal). The decision was hailed by some council members, while representatives of Mayor Doug England’s administration indicated that the reductions were so deep that it might be difficult to stick to them next year. During a work session on the budget before last night’s meeting, Shane Gibson — city attorney and a member of England’s financial team, which has been considering cuts — said the budget numbers are “extremely tight and in some cases may be unworkable.” For example, no money for overtime is included in the fire department budget, he said. “There’s no way we’re going to go through a year with no overtime,” Gibson said.
ST. JOHN OBJECTS TO DYER ANNEXATION: St. John officials were on the other side of the dais during a public hearing Thursday night as they objected to a proposed annexation effort by the Town of Dyer (Times of Northwest Indiana). Dyer is proposing to annex more than 3,000 acres south of town, which would affect 1,400 property owners. St. John had planned to eventually incorporate some of that same land. St. John and three property owners recently annexed into St. John filed two written objections added to the record. St. John Town Manager Steve Kil read a prepared statement of opposition on behalf of the town. “St. John believes that the annexation is simply a land grab which will impose additional tax burden responsibility on property owners not interested in being within the Dyer corporate limits,” Kil said.
ELKHART FIREFIGHTER SUES: A female Elkhart firefighter is suing the city in federal court, alleging she was passed over for two promotions because of her gender (South Bend Tribune). Lt. Kristi Sommer, 38, a 12-year veteran of the department, alleges that then-Chief Richard Snell did not recommend her to the city’s Board of Safety for promotions to assistant battalion chief or captain, in April and May 2007, respectively, despite her being qualified for the jobs. Instead, he recommended male firefighters who were less qualified, her lawsuit alleges.
HOOSIER PARK HOSTS CHARITY BENEFITS: Hoosier Park Racing and Casino will host several holiday events and programs to benefit local organizations, including Madison County’s Alternative Giving Drive, United Way, the local Salvation Army toy drive, and Second Harvest Food Bank (Anderson Herald-Bulletin). The final weekend of thoroughbred racing — Saturday and Sunday — will benefit the United Way. For every $10 donated to the United Way through a mutuel teller at Hoosier Park, patrons will receive a complimentary lunch buffet with a minimum value of $9.95 to be used on a return visit. Patrons will be limited to four lunch buffet coupons each.
Counties
LaPORTE VOTE FRAUD PROBED: Two instances of possible voter fraud in the Nov. 4 election have been turned over to La Porte County Prosecutor Robert Beckman (Michigan City News-Dispatch). Election Board attorney Ralph Howes said Wednesday that one case is the matter of a woman who allegedly bragged that she had also voted in Florida while she was at the courthouse in Michigan City on Nov. 3, as reported here earlier. The other case involves a man who voted absentee, then went to the polling place at the Michigan City Area Schools Administration Building polling place on election day and voted again, Howes said. “In this case it was an oversight on the part of the one of the election clerks,” Howes said. The voter’s name was coded in the voting books as having voted absentee, he said, “but the clerk evidently didn’t catch it and the man voted twice.”
TRASH TO GAS PLANT APPROVED: By a 14 to 4 vote, the Lake County Solid Waste Management District approved a 20-year garbage contract with Powers Energy One of Indiana (Post-Tribune). The move means that Powers Energy will be the disposal site for garbage collected in any Lake County city that joins in the contract agreement. Powers Energy plans to, rather than bury the garbage in a landfill, convert it into ethanol at the rate of about 70 gallons per ton of garbage.
TRAILS COMING TO LAKE: Lake County will have “a pretty good year” for bike trails in 2009, a regional trail advisory committee was told Thursday (Post-Tribune). The Northwestern Indiana Regional Planning Committee’s Ped, Pedal and Paddle Committee met Thursday in the pavilion at the newly dedicated Portage Lakefront and Riverwalk for Cornucopia 2008, a rundown of active bike trail projects from representatives of communities, agencies, and consultants working on a total of 45 projects in Lake, Porter, and LaPorte counties. “We’ll have three construction projects and a whole lot of acquisitions,”said Craig Zandstra, assistant superintendent for the Lake County Parks and Recreation Department. Zandstra reported on the status of more than $4.1 million in trail projects by his department, for which almost $3 million in federal and state funds have been allotted under Transportation Enhancement, Recreation Trails, Surface Transportation, and other programs.
DLGF APPROVES ST. JOE BUDGET: The Indiana Department of Local Government Finance finally has certified St. Joseph County’s 2008 budget, and now the county treasurer will be able to prepare tax bills (South Bend Tribune). Certified numbers released late Thursday afternoon indicate the tax rates will go down in some taxing units and up in others.
Townships
RDA ISSUES ‘UNFUNDED MANDATE’: Trustee Frank Mrvan said Thursday he will agree to fold the township’s Dial-A-Ride bus service into a regional system operated by the Regional Bus Authority only if the RBA is fully funded and able to offer free rides or reduced fares to those who need them (Times of Northwest Indiana). Last week the Northwest Indiana Regional Development Authority directed the RBA to take over fixed-route transit systems by June 30 and on-demand service like Dial-A-Ride as “expeditiously as practical.” For Mrvan, the practical matter is the question of funding. “It sounds like an unfunded mandate,” Mrvan said. The only encouraging piece to the puzzle he’s heard recently are comments by state Rep. Linda Lawson, D-Hammond, he said Lawson this week told The Times a top concern is preserving local bus service. “I’m going to try to reach out to her,” Mrvan said.
Economy
TERRE HAUTE COMPANY LAYS OFF 100: A Terre Haute company that makes plastic film plans to lay off about 100 workers next month, citing a larger than normal seasonal drop in orders (Associated Press). Bemis Co. vice president Melanie Miller says customers who have seasonal business were unwilling to place their orders early, as they have in previous years. One of the company’s major products is plastic overwrap for packages of bottled water. Bemis employs about 1,000 workers at its Terre Haute plant. The layoffs will be effective Dec. 1.
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