Wednesday, May 13, 2009

Obama Challenges Rule of Law

The WSJ nails it. 

The rule of law, not of men—an ideal tracing back to the ancient Greeks and well-known to our Founding Fathers—is the animating principle of the American experiment. While the rest of the world in 1787 was governed by the whims of kings and dukes, the U.S. Constitution was established to circumscribe arbitrary government power. It would do so by establishing clear rules, equally applied to the powerful and the weak.

Fleecing lenders to pay off politically powerful interests, or governmental threats to reputation and business from a failure to toe a political line? We might expect this behavior from a Hugo Chávez. But it would never happen here, right?

Until Chrysler.

The close relationship between the rule of law and the enforceability of contracts, especially credit contracts, was well understood by the Framers of the U.S. Constitution. A primary reason they wanted it was the desire to escape the economic chaos spawned by debtor-friendly state laws during the period of the Articles of Confederation. Hence the Contracts Clause of Article V of the Constitution, which prohibited states from interfering with the obligation to pay debts. Hence also the Bankruptcy Clause of Article I, Section 8, which delegated to the federal government the sole authority to enact “uniform laws on the subject of bankruptcies.”

The Obama administration’s behavior in the Chrysler bankruptcy is a profound challenge to the rule of law. Secured creditors—entitled to first priority payment under the “absolute priority rule”—have been browbeaten by an American president into accepting only 30 cents on the dollar of their claims. Meanwhile, the United Auto Workers union, holding junior creditor claims, will get about 50 cents on the dollar.

(9) Comments
Posted by Owen at 1222 hrs
Politics + Politics - General

  1. So where are the lawsuits?

    Posted by .(JavaScript must be enabled to view this email address) on May 13, 2009 at 1918 hrs


  2. There are no lawsuits because many of the secured lenders received TARP money.  They were strong-armed into “voluntarily” giving up their rights.

    Take money from the government and the government owns you.

    Posted by Steve on May 14, 2009 at 0335 hrs


  3. While I agree with the WSJ article on its merits, the right has little credibility on the rule of law.

    Really, Obama should have just found a hack attorney to write a legal brief that ignored, well, everything, and said it was ok to do this. Then we could write about it’s best not to look back at what was done during a national emergency.

    Posted by .(JavaScript must be enabled to view this email address) on May 14, 2009 at 0602 hrs


  4. So where are the lawsuits?

    BO has probably threatened any judge that would allow a suit.

    Posted by .(JavaScript must be enabled to view this email address) on May 14, 2009 at 0655 hrs


  5. The mainstream media wouldn’t do it. So we are trying to get your important messages to the American people. 23 This post is a suggested read at, http://aresay.blogspot.com/

    Posted by Aresay on May 14, 2009 at 0729 hrs


  6. ATV,
    Right schmight.  The whole idea of immediately comparing ledgers is not only wrong, it cements the topics in to idealogy. 
    2 things: 
    Bush was constantly put through the wringer for illegalities, Obama has not been to date.
    The primary rationalized defense of illegal Bush policies was that Clinton did it so why not Bush while Clinton supporters did the same thing for Clinton before him about the first Bush.

    I am not left, therefore I supported Bush, therefore I am already wrong for arguing about anything Obama does?  The only topic more serious than this that Bush has been blamed for was deregulation.  However, deregulation was largely a cooperative Congressional topic.  I firmly believe the lynch pin legislation that so seriously damaged the housing market was politicizing race concerning home loans.  Well you can’t make a lending institution give out a high-risk home without backing it up.  My wife has worked in a bank her entire adult life, the last 3 in a lending center.  Most banks made very few high-risk loans that were not immediately sold to the Government(Fannie/Freddie).  Did they make a lot of money?  Of course, banks make most of their money from fees not holding on to loans and collecting the interest.  They made most of those high-risk loans because they were told to, and they did it because the risk was taken away.  Wouldn’t you?

    All that and my main point is, do not give our President a pass just because he is the same party you vote for.  If he is wrong, he is wrong and serious wrongs need to be righted or at least talked about enough where the administration will at leastconsider not going further in to the wrong.  Why do you think the Republican party is in such a shambles?  Enough conservatives saw how wrong Bush was on many issues that the Republican party in general lost their majority, but everyone was just so busy defending their side no matter the topic (in general anyway, I know there are many exceptions on both ‘sides’.  This was not an attack on anyone, or at least I did not mean it to be).

    Posted by .(JavaScript must be enabled to view this email address) on May 15, 2009 at 1047 hrs


  7. Buy a bond, depend on the rule of law in case of bankruptcy, get screwed by 0bama.  Sounds like a winning recipe \sarcasm.

    If you think this is bad, wait until GM goes.  Too bad they didn’t do it a few years ago….they could have restructured out of this in decent shape IMHO.  Now, we the taxpayers will be subsidizing the union pension plans forever.

    Posted by The Asian Badger on May 15, 2009 at 1139 hrs


  8. Tuerquas, I think you miss my point. Right now there is a debate raging on another topic, on which the right side of the spectrum is ignoring the fact that certain actions taken during a national emergency were clearly illegal. Policy makers had attorneys draft legal opinions of very, very poor quality to provide cover, but those efforts may get them disbarred.

    The point is that partisan hacks on both sides often make these “principled” arguments about the rule of law, or the sanctity of legislative or referendum-driven actions vs. using the courts, or anything else they can find when it suits their purposes. However, if the rule of law or the results of a referendum don’t follow their wishes, those principles are often jettisoned without a second thought.

    There is nothing wrong with having a political philosophy and I agree 100% that wrong is wrong regardless of the letter after the name. Unfortunately a lot of people, including most commenters on this blog, violate these principles in pursuit of partisanship.

    Posted by .(JavaScript must be enabled to view this email address) on May 15, 2009 at 2109 hrs


  9. ATV, if your point was sarcasm, I apologize I did miss it.

    ...the right has little credibility on the rule of law.

    The above is what was misled me.  After that sentence, I took your second paragraph as a serious defense of the current administration, sorry.

    There is nothing wrong with having a political philosophy and I agree 100% that wrong is wrong regardless of the letter after the name. Unfortunately a lot of people, including most commenters on this blog, violate these principles in pursuit of partisanship.

    I agree wholeheartedly with every word.

    Posted by .(JavaScript must be enabled to view this email address) on May 18, 2009 at 1124 hrs


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