Indiana will no longer invest in bonds issued by banks and automakers who receive federal bailout money.

Bondholders are supposed to be at the head of the line for repayment if a company goes bankrupt. But State Treasurer Richard Mourdock says the government rewrote the rulebook for the Chrysler bankruptcy, leaving investors with 29 cents on the dollar. Mourdock says that cost state investment funds $5.6 million.

Mourdock has lodged an objection to Chrysler's restructuring with the bankruptcy judge hearing the case, making Indiana the only one of the automaker's creditors to do so.

Mourdock says the state won't sell bonds it already holds -- he says that would lock in losses. But he's ordering fund managers not to buy any more bonds from Chrysler, GM, or banks covered by the bailout.

Mourdock says the Obama Administration's handling of Chrysler's debt wiped out $896,000 in value from the state's investment of the proceeds from the 2006 lease of the Indiana Toll Road, and $147,400 from the Indiana State Police Pension Fund. Mourdock oversees both portfolios.

Mourdock says the Teachers Retirement Fund, which is administered separately, lost $4.6 million.