The United States Supreme Court has issued a stay, putting the sale of Chrysler LLC to Italian automaker Fiat on hold. The Court gave no indication of when the stay might be lifted. Chrysler went into Chapter 11 bankruptcy on April 30, and serious questions have been raised about the federal government’s involvement with Chrysler since it began receiving federal money in the waning days of the Bush administration.
One of the issues before the Supreme Court is a fundamental issue I’ve gone on and on about: under what authority did the federal government ‘invest’ in Chrysler? The initial auto bailout came from Troubled Asset Relief Program (TARP) funds, which were intended by Congress to go only to financial firms. Using that money on auto companies was patently unconstitutional. Also before the court is whether it is proper for the federal government to force Chrysler’s investors and creditors to accept pennies on the dollar for what they are owed, and to give preferential treatment to certain creditors over others.
The right answer to all of these questions is, of course, that the federal government grossly overstepped its authority time and time again throughout this process, and the Chapter 11 bankruptcy process has been so tainted by improper federal involvement that it must be dismissed entirely and started again. Whether the court will rule properly, however, is anybody’s guess. In the new socialist America, I suspect that the improperly orchestrated bankruptcy will be affirmed by the court.
I weep for the republic.
Update June 9, 2009: As I predicted, the U.S. Supreme Court has declined to hear challenges to the Chrysler bankruptcy, thus allowing the tainted process to continue and clearing the way for the Fiat buyout.