CONTENTIONS contributor Francis Cianfrocca explains what is at stake in the U.S. Supreme Court on the Indiana pension funds’ case:
Chrysler’s managers want the sale to go through, because they’re desperately concerned about the survival of the firm, in a market that plainly has no need whatsoever for the vehicles they can produce. And the White House is also concerned to ensure the survival of Chrysler, again against all economic logic, because they want to pay off the UAW. For Chrysler and for Obama, it was necessary to screw the bondholders, because otherwise Chrysler would run out of time. Obama had another consideration in mind, which was the looming bankruptcy of GM (which has now taken place). He wanted to set a pattern for a swift, relatively clean bankruptcy, at least partly to demonstrate to American businesses that there’s a new sheriff in town.
But then there is that whole “rule of law” thing — which is why the Obama team hit a bump in the road. It never occurs to them, I suppose, that people with legal rights might not be bullied into giving them up.
And perhaps this will wake up Congress as well, which is coming around to the realization that they have ceded a huge amount of power to the Executive Branch that has bought two companies, directed liquidation plans, ordered hundreds of car dealerships to be closed, and fired and hired new management — with nary a peep from Congress. Now that all those irate owners of closed dealerships have started to squawk, Congress has awoken from its slumber and wants to get in on the action.
It may just be that the unbridled exercise of presidential power is going to be curtailed. One thing is clear: the more scrutiny of the GM and Chrysler deals, the less the Obama administration will like it. After all, it is one of the least popular things they’ve tried.