Is An Automaker a “Financial Institution”? You Decide
Posted June 9th, 2009 at 10:21am in Enterprise and Free Markets 
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Yesterday afternoon, Supreme Court Justice Ruth Bader Ginsburg issued an order delaying the sale of Chrysler’s assets to a new firm controlled by Fiat, in order to more fully consider claims by a group of Indiana pension funds that the process violated federal law. A key argument made by the Hoosier funds is that the federal government can’t use the Troubled Asset Relief Program, TARP, to bail out Chrysler (or General Motors for that matter). As explained here last December, the question comes down to whether a car maker is a “financial institution.” Chrysler and the federal government say yes, it is.
Is the government right? You decide. Here’s how the TARP law defines “financial institution”:
FINANCIAL INSTITUTION.—The term ‘‘financial institution’’ means any 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, the District of Columbia, Commonwealth of Puerto Rico, Commonwealth of Northern Mariana Islands, Guam, American Samoa, or the United States Virgin Islands, and having significant operations in the United States, but excluding any central bank of, or institution owned by, a foreign government.
Chrysler and the government say the word “financial” doesn’t really mean anything, and the list of types of financial institutions is really just so much mumbo-jumbo. So they say, a “financial institution,” once the troublesome words are taken out, can be “any institution… established and regulated under the laws of the United States or any state…”
It shouldn’t take a law degree to work this one out, just some common sense. Unfortunately, that’s something that’s in short supply in Washington, D.C.
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5 Responses to “Is An Automaker a “Financial Institution”? You Decide”
Eric, Florida on June 9th, 2009 at 10:21am said:
How stupid are the American taxpayers when they bail out industries (financial or otherwise) that charge us that cost to pay that bailout back in the form of increases in service costs and fees, which goes back to Congress as a “pay back”, which plans to spend it again instead of retiring debt or cutting taxes. Nice new way to force a tax on the taxpayers.
J.C. Hughes, Texas on June 9th, 2009 at 10:21am said:
Heck! I’m a financial institution. Along with keeping some of my taxed earnings, I’ll spend that and any bailout money to support the weakened economy. TARP in and of itself is a government interventionist farce. Although the spirit of Jame’s question is understood, all it asks about is the color of leaves while overlooking an established root rot.
mark elder, texarkana texas on June 9th, 2009 at 10:21am said:
Too Frusterated!
I am so angry yet numb from being so angry at the mafioso style of extortion that our federal government is partaking in under the leader ship of an illegal president and the statist run congress and senate. The whole while our government media turns a blind eye and deaf ear upon it all I am so angry that I am going to bed and pray that perhaps God will bring a fog across the river in order for us to escape this naked communist in the white house…And his demonic cohorts on capital hill and their minions in extra large crooked business and clollege acedemia. But Lord I pray for intervention this very night and that you shed your grace on America and future generations once again..
Barb -mn on June 9th, 2009 at 10:21am said:
As the president pushes for mandated college education?
Continued indoctrination of dummying down and limiting thinking.
The actions and words of the college educated running the country are an example. Limitless thinking people will get a much higher, efficient and effective education at a more reasonable cost through life’s experience.
This is an example of law understood one way but can be suited to bias any way.
Edite , Canada on June 9th, 2009 at 10:21am said:
One has to be very concerned about the optics regarding the “new” clunker car” proposal for America. It sounds eerily reminiscent of the old Soviet clunker, LADA. Do we really want that?