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.
