Say Anything Blog

So much for checks and balances.

The Obama Administration argued Monday that no court, including the Supreme Court, has the authority to hear a challenge by Indiana benefit plans to the role the U.S. Treasury played in the Chrysler rescue, including the use of “bailout” (TARP) funds. The Indiana debt holders, U.S. Solicitor General Elena Kagan wrote, simply have no right to raise that issue, thus putting it out of the reach of the courts. ...

Although arguing that the courts may not rule on the validity of Treasury’s decision to shore up a new Chrysler company with funds from the Troubled Assets Relief Program, the Solicitor General did argue that those funds may go to a troubled auto company, and not just to banks or other regular financial institutions, and the Indiana benefit funds had contended.

“The Treasury has determined that TARP funds may be used to purchase assets from automobile companies when necesssary to prevent those companies’ failure or major disruption from disrupting the stability of the Nation’s economy and financial markets.”

Chrysler had received $4 billion in TARP funds before filing for bankruptcy.  The new company will receive more and, in return, the U.S. government will become a part owner of NewChrysler, the surviving company.

In arguing that the Indiana benefit funds do not have “standing” to challenge Treasury’s use of “bailout” money to rescue Chrysler, the Solicitor General noted that the bankruptcy judge had found that those debt holders cannot show any injury to their interests from the sale deal and, even if they might experience some injury, it cannot be traced to the Treasury’s role.

The idea that the funds that are Chrysler’s creditors can’t show injury to their interests is more than a little ludicrous.  Under the bankruptcy plans Obama structured, the federal government and the UAW are rewarded with huge stakes in the company while the bond holders get back a fraction of what they invested into the company.

I don’t care how you cut it, that’s damages.

Justice Ginsburg has ordered a temporary block on Obama’s deal for Chrysler while the court reviews the case setting up what could be an embarrassing moment for Obama.  If the Supreme Court nixes this deal, it will be Obama’s first big defeat policy-wise.  And it would be a big, fat, high-profile one to boot.

Let’s hope that the Supreme Court has more respect for the rule of law and property rights than the Obama administration has shown to this point.