After months of pressure from the federal government to push down General Motors’s and Chrysler’s debt loads, a deal remains far out of reach. With the promise of further federal bailouts, no debt-holders wants to make concessions—accepting just 30 or 40 cents on the dollar, and much of that in possibly worthless stock—when holdouts could wind up paid in full. Bailout-free Ford announced yesterday that investors agreed to swap nearly $10 billion dollars in its debt for cash and stock, reducing its total debt burden by 28 percent. The price: …
Rule of law? Who needs it! That seemed to be the message of the Obama Administration as it seeks to maneuver around restrictions imposed by Congress on bailout recipients. As the Washington Post describes, the Administration is laundering money to bailout recipients by “set[ing] up special entities that act as middlemen, channeling the bailout funds to the firms and, via this two-step process, stripping away the requirement that the restrictions be imposed, according to officials.” The end result of this scheming is that measures like caps on executive pay and …
Ed Whelan has a strong column in yesterday’s Washington Post on the Attorney General’s attempt to suppress an Office of Legal Counsel opinion concluding that the pending D.C. “voting rights” bill is unconstitutional. (We share that view.) This is not, as the Post had put it previously, a case of different parts of DOJ having different opinions, but an end-run around the Department’s usual clearance process: Now, it’s legitimate, if exceedingly rare, for an attorney general to contest OLC’s advice…. But there’s a right way to overrule OLC, and then …
Chalk up a big loss for constitutional rule of law, thanks to an Obama Administration sleight-of-hand reported on the front page of today’s Washington Post. When the Executive Branch needs legal advice, it goes to the Office of Legal Counsel in the Department of Justice. OLC is like an in-house Supreme Court: it evaluates the constitutionality of pending legislation and issues binding opinions on the legality of different policy options. And like a court, OLC has a strong institutional memory and tradition; its legal opinions generally don’t change much from …
All bankruptcies are not created equal. For months, Heritage and other conservatives have counseled that the proper course for an ailing automaker is the same medicine as for any other sick company: the bankruptcy process. All along, industry shills and union activists have pooh-poohed that idea, claiming that bankruptcy filings would be the end of the industry—an argument that’s never made much sense. So it was a welcome surprise to many conservatives to see President Obama, no foe of big-government bailouts, speak in favor of automotive bankruptcies yesterday. The President’s …
The decision in the blockbuster case of Wyeth v. Levine is just out, and Lyle Dennison’s early commentary is here. To summarize: In an opinion by Stevens, joined by Kennedy, Souter, Ginsburg, and Breyer, the Court held that FDA approval of a drug’s labeling does not preempt state-law failure-to-warn claims. The plaintiff, Diana Levine, developed gangrene after her arm was injected with Phenergan, a drug manufactured by the defendant, Wyeth. Levine sued in Vermont state court, claiming that Wyeth had failed to provide adequate warning about the risks of the …
(Commentary by Heritage’s Brian Walsh) The Supreme Court yesterday decided not to consider an important case, Sorich v. U.S., on the meaning and scope of an exceedingly broad federal statute that has been used to prosecute a breathtaking range of conduct. Associate Justice Antonin Scalia again broke with the strict law-and-order stereotype often applied to conservative jurists by penning a trenchant dissent to the Court’s decision not to review the case. Scalia’s dissent also helps illustrate the dire need for federal criminal-law reform. Two decades ago, the Court overturned judicial …
An hour later than promised, General Motors submitted a restructuring plan to the Treasury calling for an additional $17 billion in government funds, on top of the $13.4 billion promised by the Bush Administration less than 2 months ago. Today’s request, if granted, would be $12.4 billion more than the company asked for in its last turnaround plan, sent to Congress in early December. In its 177-page summary, G.M. promises a return to profitability in 2 years via a “comprehensive” transformation of its business. To achieve that goal, the plan …
We don’t have the plan, yet, but we already know the bottom line: $5 billion. That’s how much money private-equity-owned Chrysler LLC wants from federal taxpayers to finance its “turnaround plan” submitted to the Treasury at 5 pm today. Chrysler’s previous turnaround plan, released less than 2 months ago, indicated the company would need about $3 billion on top of the $4 billion it has already received from the government. Cerberus Capital Management, the beleaguered automaker’s owner, refuses to invest any money in it. The Obama Administration, however, has been …
A small provision slipped into the stimulus (PDF) by Sen. Chris Dodd is making big waves in the banking and finance industries. The last-minute addition to the bill, which pretty much no one noticed until after the legislation passed both chambers, places sharp limits on bonuses available to top executives and other high-earners. How sharp? How about this: [Title VII, Section 7001] A prohibition on any compensation plan that would encourage manipulation of the reported earnings of such TARP recipient to enhance the compensation of any of its employees. So …
