TARP and the Automakers
[Guest post by DRJ]
The Congressional Oversight Panel was established to oversee the implementation of the 2008 Troubled Asset Relief Program (TARP). Thursday it released a report that questioned the Treasury Department’s authority to bail out automakers GM and Chrysler:
“The report, issued Wednesday, confirmed what CNSNews.com had previously reported: that the law which created TARP–the Emergency Economic Stabilization Act (EESA)–did not grant the government specific authority to use taxpayers’ funds to rescue the auto industry.
“EESA does not explicitly state that the TARP is available to provide assistance to the automotive industry (or to any specific industry except arguably the financial and banking industry),” the report finds.
What the law did authorize was the purchase of distressed, mortgage-backed securities and other financial assets based on those securities, from American financial institutions.”
The report indicates the government is unlikely to recover its investment in the automakers, and that:
“Congress, and ultimately the American taxpayer, have been ‘left in the dark’ concerning the details of Treasury’s review process and its methodology and metrics at a time when Treasury committed additional TARP funds to these companies,” it says. “The Panel recommends that Treasury provide a legal opinion justifying the use of TARP funds for the automotive bailouts.”
The Indiana State Pensioners challenged the Chrysler bailout on several grounds, one of which was that bailing out automakers was an illegal use of TARP funds. In June, the Pensioners filed emergency appeals of the Bankruptcy Court’s approval of the Chrysler sale to Fiat, but the appeals were not successful. The Second Circuit Court of Appeals issued a decision allowing the sale in June, followed in early August by the written opinion. The Second Circuit held that the Indiana State Pensioners lacked standing to challenge the legality of the use of TARP funds (pages 33 et seq).
Last week, the Indiana State Pensioners announced they intend to appeal the Second Circuit decision to the U.S. Supreme Court. This Congressional Oversight Panel report may make the Pensioners feel a little better about the merits of their appeal. Perhaps the Supreme Court will agree.
— DRJ
It seems likely that the SC will refuse to grant cert to the appeal on the grounds that the issue is now moot.
Steven Den Beste (99cfa1) — 9/12/2009 @ 1:23 amThe sale of Chrysler to Fiat may be moot but the Pensioners are seeking money damages. You don’t have to set aside the sale to satisfy a damages claim. In addition, I think the TARP matter is a Constitutional issue. The hurdle on that issue will be overcoming the Second Circuit’s ruling on standing.
DRJ (e06615) — 9/12/2009 @ 1:42 amActually, the Constitutionality of the issue should grant automatic SCOTUS cert.
Techie (482700) — 9/12/2009 @ 5:34 amI would like to know how the bankruptcy judge allowed the agreement to go forward when the agreement clearly turned the norm on its head.
The preference of those with a very low claim to those with a supposedly clear claim to some share of the assets.
Some, not all, secured bondholders versus the autoworkers unions.
davod (bce08f) — 9/12/2009 @ 6:16 amThe SC is going to find some way to duck this. Even if Indiana were awarded damages who would it come from? I doubt TARP has any provision allowing such.
So the pension funds would be going after the $2B or whatever it is that was left over to settle obligations.
This is going to be one of those cases of a wrong without a remedy, because the only possible remedy would have to flow through Congress, and that worthy body is currently a joke.
Soronel Haetir (2b4c2b) — 9/12/2009 @ 7:02 am[…] is full of fail, and that the blame lies with himself and his administration. The Spendulus fiasco, TARP auto bailout, Cash for Clunker’s unforeseen side effects—all of these were Obama initiatives that […]
In Denial « POWIP (e3a4cc) — 9/12/2009 @ 7:43 amI suspect that the case will be granted cert, but never see a published decision.
Congress and the President are too heavily invested in underwriting the UAW to allow an environment in which the auto bailouts can be legally suspect. (Note that I didn’t say politically suspect.)
Can we spell “settlement”? This sounds eerily like the “Sharon Taxman v. Piscataway” case, in which a potentially adverse SC decision was circumvented by a last-minute infusion of cash from an external source highly interested in maintaining the status quo.
Steve Levy (430f8c) — 9/12/2009 @ 7:49 amFor real individuals not buying crappy dirty socialist UAW thugmobiles is an opinion what would be a lot more far-reaching and impactful than anything your de-nutted and cowardly little Supreme Court could imagine doing I think.
happyfeet (71f55e) — 9/12/2009 @ 8:03 amOne use of a tarp is to hide things. Acronymal coincidence, or political dark humor by committee staffer types?
…except arguably the financial and banking industry
Okay, I’ll take the other side of that argument with a resounding NO. But that has to be ameliorated with big pre-argument NO to the govt types who have used the financial and banking industries to further their political agendas, as well as to feed their campaign funds, or an occasional sweetheart loan or two. I scratch your back, you’ll deposit your scratch in this account. I doubt you’ll see an uproar in the aisles to pull off the TARP. Bankers will always seek an edge, just like you’d do in whatever game you’re playing. They are “arguably” one of the most regulated industries we have. So whatever these bankers and financiers have done to get us to this credit crisis was under the direction or under the nose of the regulators, congressional watchdogs, and executive authorities. No love is lost on any of these perpetrators. They got the mine, and we get the…
political agnostic (bd307b) — 9/12/2009 @ 8:29 amDon’t those Indiana taxpayers and pensioners understand that their little piddling lives are not a matter of concern when great things are planned ? This is bigger than some poor little taxpayer. In fact, to use the term a White House “senior aide” used to describe Congressman Joe Wilson, they are “a pimple on the ass of progress.”
Mike K (addb13) — 9/12/2009 @ 8:50 am#10 Mike K.: This time, this time, the New Soviet Man will be a success!
I guarantee it.
EW1(SG) (edc268) — 9/12/2009 @ 8:57 amOh, and did anyone notice that SCoTUS already turned away California’s challenge to the district court panel’s requirement that the state draw up a release plan?
Soronel Haetir (2b4c2b) — 9/12/2009 @ 9:43 amEverytime I read something like this, I’m reminded of Pelosi’s pledge to clean out the “swamp” of corruption and have the most ethical congress ever.
It seems she got into the swamp, found herself ass deep in ‘gators and decided that she enjoys being there. In fact, she is doing all she can to breed more ‘gators.
GM Roper (85dcd7) — 9/12/2009 @ 10:12 am“I suspect that the case will be granted cert, but never see a published decision.”
This is the Orly Taitz school of legal process.
imdw (66f2a5) — 9/12/2009 @ 10:22 amIn other legal news, Eric Holder’s Justice Department finally appointed a team to look into the dismissal of charges against the black panthers in the voter intimidation case which it won earlier this year.
daleyrocks (718861) — 9/12/2009 @ 6:06 pmOne more thing, if you are a star witness against a Chicago pol (Blago), stay away from aspirin and, whatever you do, don’t allow them to transfer you to Stroger hospital.
Oak Forest Hospital does not have a trauma unit, but doctors were able to stabilize Kelly. Doctors later decided Kelly could be better treated at Stroger Hospital, where Kelly was taken about 5:15 a.m. Saturday and later died, Cook County hospitals spokesman Marcel Bright said.
Stroger, of course, is the political boss and Obama ally in Cook County. That would be like transferring the Godfather to Sollozzo Memorial for convalescent care.
Mike K (addb13) — 9/13/2009 @ 10:28 am