Ed Morrissey at Hot Air has a post this morning about the ongoing negotiations between Chrysler and the government regarding bankruptcy. It's a complicated post, but the basic idea is that the pressure the government is putting on the secured creditors is contrary to the 5th Amendment. According to the article:
"The Supreme Court long ago recognized, however, that a secured creditor's interest in specific property is protected in bankruptcy under the Fifth Amendment. Louisville Joint Stock Land Bank v. Radford, 295 U.S. 555, 594 (1935). That case involved a Depression-era statute that was intended to help bankrupt farmers avoid losing their land in
mortgage foreclosure . The statute in Radford provided that the bankrupt debtor could achieve a release of the security interests either (i) with the lender's consent, purchasing the property at its then appraised value by making deferred payments for two to six years at statutorily-set interest rates; or (ii) by seeking from the bankruptcy court a stay of the proceedings for up to five years during which time the debtor could use the property by paying a rent set by the court, which payments would be for the benefit of all creditors, with a purchase option at the end of that period. Id. at 856-57."
That's more words than I want to think about, but we need to pay attention to this. One of the problems with our current government is that there are NO checks and balances on the power of the federal government right now. The news media is not acting as a check and Congress is not acting as a check. This is dangerous to us as a country. According to the article at Hot Air, the purpose of the ruling by the Supreme Court was to prevent the government from paying off politically-connected unsecured creditors ahead of the senior creditors. That is exactly what President Obama is attempting to do. Keep in mind the amount of money the Democrats receive from Unions and the discussion of how to handle Chrysler becomes one of political patronage--not of economics.
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