Posted on 09/10/2009 3:18:04 AM PDT by Man50D
A report issued by the Congressional Oversight Panel (COP) tasked with overseeing the implementation of the 2008 Troubled Asset Relief Program (TARP) questions whether the Bush and Obama administrations had the legal authority to use TARP funds to bail out General Motors 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 Secretary [of Treasury] is authorized to… purchase, and to make and fund commitments to purchase, troubled assets from any financial institution,” EESA states.
The report notes that in the law Congress defined what a “troubled asset” and “financial institution” meant--definitions that did not seem to include car manufacturers.
“It defines a ‘troubled asset’ as ‘residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages…the purchase of which the [Treasury] Secretary determines promotes financial market stability,” the report states.
“A ‘financial institution’ is defined as: [a]ny institution, including, but not limited to, any bank, savings association, credit union, security broker or dealer, or insurance company, established and regulated under the laws of the United States or any State, territory, or possession of the United States…and having significant operations in the United States, but excluding any central bank of, or institution owned by, a foreign government.”
The report found that buying large amounts of auto company stocks or bonds might qualify as appropriate assets since then Treasury Secretary Henry Paulson determined that doing so was vital to financial markets, the auto company bailouts still might not be legally authorized under TARP because the automakers are not financial institutions.
“The next question is whether GM or Chrysler can be called a ‘financial institution’ under EESA. The language of the statute itself does not provide a clear answer,” says the report.
The Bush administration argued that a car company could qualify for TARP funds because of wording in the EESA that mentioned corporations “established and regulated under the laws of the United States or any State, territory, or possession of the United States…and having significant operations in the United States.”
The report notes that this view seems to contradict the law’s actual language, saying that Congress must have “had a purpose” in limiting the executive branch’s authority.
“Based on this interpretation, the term ‘financial institution’ means any institution organized under U.S. law with operations in the United States,” the report says. “This interpretation does not, however, seem to account for the phrase ‘including, but not limited to, any bank, savings association, credit union, security broker or dealer, or insurance company.’ It also would seem to lend little weight to Congress’s selection of the term ‘financial institution.’
“Congress must be presumed to have had a purpose in listing institutions that might typically be considered ‘financial’ institutions--banks, credit unions, broker dealers, and insurance companies.”
The report also questions whether the administration’s interpretation of EESA is worthy of judicial deference, a principle whereby courts give the executive branch the benefit of the doubt when interpreting ambiguous legal language.
“Whether Treasury would be due such deference in this case is not clear. Later Supreme Court opinions have suggested that an agency must use some authority that has been, either explicitly or implicitly, delegated to that agency by Congress and that the authority has been used under ‘circumstances that Congress would expect the agency to be able to speak with the force of law when it addresses ambiguity in the statue or fills a space in the enacted law’.”
Congress’ rejection of a bill specifically designed to bail out the auto industry brings that principle into doubt, the report said, because it showed Congress had decided not to bail out automakers.
“Congress’s explicit consideration of legislation that ultimately failed to pass creates a troubling question regarding the Bush Administration’s decision to ‘step in’ and rescue the automotive industry.”
Both Congress and the public have been “kept in the dark” by the Treasury Department, the report concluded, and Treasury must provide the panel with detailed, legal reasoning supporting its use of TARP funds.
“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.”
Geez. Where was this in 2008?
They have an intuitive grasp of the obvious.
So many bailouts, so little time.
Where did they claim the authority from for the “Cash for Clunkers” program?
This should be a good excuse to launch a class-action suit by the stock-holders and bond-holders who were coerced into “taking a haircut” to bail out and nationalize most of the auto industry. “Taking a haircut” in this instance, means rectal gang rape by the Administration and Unions.
Geez, one might expect that a silly notion like ‘legal’ has ANY bearing on what this socialist gasbag and his minions do to the fabric of America. It doesn’t...
It’s time to force government back within the confines of the Constitution.
The illegitimate “president” makes many, many illegal moves. Firing Mr. Wagoner and taking over General Motors like the Dictator he is was just one of them.
Watch this one. I believe this case has the potential to bring down the entire obuma administration. And Judge Zatkoff doesn’t take any guff from federal bureaucrats. I’ve seen him in action. He’s tough:
AIG and Fed Government: Constitutional Challenge of AIG Bailout Allowed to Proceed May 27, 2009
Posted on 05/27/2009 11:12:24 PM PDT by GoreNoMore
Trouble Brewing for AIG and Federal Government: Constitutional Challenge of AIG Bailout Allowed to Proceed Wednesday, May 27, 2009
ANN ARBOR, MI – Proclaiming that times of crisis do not justify departure from the Constitution, Federal District Court Judge Lawrence P. Zatkoff allowed the lawsuit against Treasury Secretary Timothy Geithner and the Federal Reserve Board challenging the AIG bailout to proceed. The lawsuit was filed last December by the Thomas More Law Center, a national public interest law firm based in Ann Arbor, Michigan, and attorney David Yerushalmi, an expert in security transactions and Shariah-compliant financing.
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