Posted on 06/04/2009 3:20:44 AM PDT by Man50D
A lawsuit from the state of Indiana challenging the constitutionality of using federal Troubled Asset Relief Program (TARP) funds for automakers, is headed to a federal appeals court.
While most public attention this week focused on the bankruptcy of General Motors, the U.S. Court of Appeals for the 2nd Circuit in New York halted the sale of Chrysler to Italian automaker Fiat Group, announcing it would hear arguments from the Indiana State Police Pension Fund, the Indiana Teacher’s Retirement Fund, and the Major Moves Construction Fund on Friday at 2 p.m.
Among the challenges the state is making to block the sale, is that using money from TARP is not constitutional because Congress only approved the use of that money for financial institutions such as banks, insurance firms and credit unions.
“The administration misappropriated funds because it is stated in the law this is for financial institutions,” Indiana State Treasurer Richard Mourdock told CNSNews.com. “Is Chrysler a financial institution? Clearly not.”
This case will almost certainly impact the GM bailout as well, Mourdock said.
“If TARP money can’t be used in this case, how can it be used in the General Motors case?” Mourdock asked.
U.S. Bankruptcy Court Judge Arthur Gonzalez ruled on June 1 that Indiana did not have the standing to challenge the use of TARP funds. The court of appeals issued a ruling late Tuesday accepting the case.
The Indiana petition to the court of appeals cited a U.S. district court decision in Texas. The ruling found merit in the constitutional argument, but dismissed the case for lack of standing to bring suit.
“On its face, this definition (of ‘financial institution’ under TARP) would not appear to include automobile manufacturers and the terms of the act do seem to limit the use of TARP funds to assisting financial institutions. (See 12 U.S.C. § 5211(a)(1) (authorizing the Secretary of the Treasury to purchase troubled assets, as defined by the act, from ‘financial institutions’),” the ruling in the case of Texans Against Governmental Waste and Unconstitutional Conduct vs. U.S. Department of Treasury said.
“Plaintiffs' arguments have even more persuasive force given that a bill, HR 7321, specifically designed to authorize the distribution of TARP funds to auto manufactures passed the United States House of Representatives,” the U.S. District Court ruling continued.
“Passage of that bill by the House, even though not ultimately enacted, raises the question of why was such a bill necessary if the Act already authorized the distribution of TARP funds to the auto industry?” the court continued.
President’s violation of federal law ‘breathtaking’
In their original court documents filed at the U.S. Bankruptcy Court for the Southern District of New York, the Indiana pension funds accused the president of acting illegally in efforts to take possession of Chrysler.
“The violation of federal law, including non-bankruptcy law, being directed by the Executive Branch in this action under the guise of its Troubled Asset Relief Program (“TARP”) is breathtaking,” the pensioners argued unsuccessfully in their motion to have the issue removed from the jurisdiction of the bankruptcy judge.
The Indiana pension funds added: “The Government’s action is not authorized by any statute, including TARP, and violates the unambiguous provisions of the Emergency Economic Stabilization Act (the “EESA”) and the Constitution of the United States.”
Chrysler and the Obama administration have continually said that a purchase by Fiat is the U.S. auto firm’s only chance of survival after filing bankruptcy. Fiat has the option of dropping the deal if the sale does not close by June 15.
White House Press Secretary Robert Gibbs said the administration has the authority under the Troubled Assets Relief Program, the $700 billion bailout approved by Congress and signed into law by President Bush last fall.
Congress approved and President Bush signed the law creating the $700 billion Troubled Assets Relief Program (TARP) last fall. The legislation specifically said the money could be used only for financial institutions such as banks, insurance firms and credit unions.
In December, the Senate rejected a House passed auto bailout package using non-TARP funds. In lieu of authorization, the Bush administration used TARP money to provide a $13.4 billion bridge loan to GM and a $4 billion loan to Chrysler.
In March, President Obama expanded the auto bailout to also include a government guarantee on the warranties for new cars sold by the two companies. He also forced the removal of GM CEO Rick Wagoner and announced that Fiat would be purchasing Chrysler.
This week, Obama announced the federal government would be spending another $30.1 billion on GM and taking ownership of 60 percent of the company as it moves into bankruptcy.
The Indiana suit also contends that the deal as structured, unfairly favors the interests of the company’s unsecured stakeholders ahead of the secured stakeholders, such as the Indiana pension funds. Unsecured holders are getting 59 cents on the dollar, while secured holders are getting 29 cents, Mourdock said.
“Hoosier retirees and taxpayers are being deprived of millions of dollars in their funds while a foreign corporation receives a windfall at no cost, this is not equitable,” Mourdock added. “I look forward to Indiana’s day in court, and I will continue to pursue my fiduciary responsibilities and my oath of office.”
The Indiana lawsuit is significant because it is the only litigation challenging the constitutionality of this auto bailout, said Andrew Grossman, senior legal policy analyst at The Heritage Foundation.
“The administration lacks legal authority,” Grossman told CNSNews.com. “If the authority is as broad as the administration and some lawmakers say, then it is unconstitutional. Congress cannot pass the buck and give unlimited power to the executive.”
“This is the Indiana teacher’s retirement fund and the police pension fund -- government employees,” Grossman continued. “None of these are hedge fund holders, or the people the president tends to speak so ill of. These are people with middle class jobs.”
More of this “lack of standing” crap.
Who has more standing than those directly affected by this clowncorps actions?
I was wondering where the lawsuits were.....
Good for Indiana!
I have been asking my Congressional reps for two months—what is the Constitutional authority for the Executive branch to do these bailouts?
What is the Constitutional authority for Obama to guarantee car warranties and incentives? That requires an authority to spend money, which has not yet been granted by Congress.
What is the Constitutional authority to spend TARP money which Congress itself specified only for financial institutions, not approved for car companies?
Bush was wrong and so is Obama. These bailouts are wrongheaded, wasteful,break longstanding laws, and are unconstitutional.
You can do your part—call your reps and ask them these questions. I’ve told mine that they need to reassert their authority, as only Congress can approve the spending of money—the Executive branch cannot grant itself that power.
These car bailouts are fascism. The government was not constituted to run private businesses. It is incapable of doing so.
And under a Marxist muslim like our present resident of the White House, these companies will fail while political power of the White House is increased, all the while being paid for by our tax money. We are paying for our own enslavement.
This is the camel’s nose under the tent. The line has to be drawn now. In 130 days we have seen how this President, with his warped view of America, can not be trusted to be the guardian of the Constitution and of our values.
First time Indiana voted dem in the presidential race since 1964 I believe. If I had to guess I bet the cop vote split 50/50 while the teacher vote was more like 80/20. I wonder how they feel now.
I hope this makes it through the courts.
Good for Indiana!
Our Constitution is very specific. It limits the executive branch's rights to those enumerated therein. ... That's why in 1952, when President Harry S. Truman tried to seize control of the U.S. steel industry during a debilitating strike, the Supreme Court made him back down. ..."
The business daily concludes by asking "Next stop: Federal court?"
Well, Good for Indiana. It's time for the states and people of the United States to stop the Federal Goverment from falling into Marxism. If Congress or the Supreme Court won't stop Obama from this unconstitutional seizure of GM, it's up to the States and people to stop him. IMHO, this is an impeachable offense.
I hope Indiana cops and teachers do get screwed hard by the Chrysler bankruptcy. It will serve them right for electing a communist and incompetent fraud as President.
I think a lot of the vote came from Gary, IN which is right beside Chicago. Indiana borders Illinois.
BFL
It sure looks to me like these plaintiffs have been deprived of property without due process of law. Same could be said of any shareholders as well. I think this is far from over. There is a judge somewhere that will make a stand on the rule of law. If not, we will have just seen the beginning of the end of America.
Absent the assurance that the rule of law will prevail, why would ANYONE ever invest in America again?
More on Obama's unconstitutional seizure of GM here:
'We call it theft' (Kenyan Obama's illegal takeover of GM)
http://www.freerepublic.com/focus/f-news/2263876/posts
Glad to see that the State of Indiana is challenging the illegal bailout with TARP funds as well as the unprecedented reshuffling of creditors in bankruptcy.
Is it correct that Fiat is being given 20% of Chrysler ?
Yes they are, and therefore they will take the screwing...
DITTO. Please Ping (or Freepmail)me when you find another article challenging the Obama administration on these important legal and Constitutional issues. Same goes for all Freepers. I am eager for the mainstream media to cover the legality of the Government takeover of GM.
We can't rely on the Republicans and Democrats in Congress to fight this. The States and other aggrieved creditors must sue and appeal this through the Court system all the way to the Supreme Court. The Supremes should have stopped Obama from making this unprecedented decision by the Executive Branch. They must now be forced to rule.
Go here:
http://online.wsj.com/article/SB124405461535882071.html#printMode
Use this case to challenge his legality to be President and force him once and for all to provide his long form birth certificate. If he isn't legally President, this is all over with.
Correctomundo. A radical-left Speaker of the House and radical-left Senate majority-leader are now running the Country with the most radical Executive Office in our Country's history. The President's wife and Secretary of State are radical lefties. The President even installed a Democrat liberal former WH chief-of-staff to run the CIA. From Capitalism to Marxism. From American Supremacy to World Multiculturalism. From Freedom to Tyranny. That's where we're headed.
We have to get the word out to the people. So far we have World Net Daily and the Courts working on getting possession of the birth certificate. The Democrats, Republicans, The Supreme Court Justices, and state-conrolled media are not exercising their Constitutional Responsibility. We have to encourage those who can get Obama to produce his birth certificate. The American citizens must be informed who these people are who could hide this horrible truth. They will impeach Obama and this time there will be no Independent Prosecutor. The process will fly through Congress and the Supreme Court. We have between now and Federal elections of 2010 if that long to get the word out. Otherwise,we are doomed.
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