Friday, December 19, 2008

Picker on the Auto Bailout II
Mike Rappaport

Randy Picker has a new post on the legality of the auto bailout under TARP.  I continue to disagree with his argument.   

The statute says that the recipient of funds must be a financial institution, which is defined as an institution, including but not limited to, a list of classic financial institutions such as banks and insurance companies.

Randy’s argument comes down to this: we must understand the statute simply by focusing on the word “institution.”  If that includes an auto company, then they are covered.  I just think this is mistaken.  One must read a statute as a whole, and all the more so, one must read a provision as a whole.  A provision that limits funds to financial institutions, defined as institutions including but not limited to a list of classic financial institution should not be read the same as a statute that merely said funds are limited to institutions.

For my other posts on this subject, see here and here.

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Mike Rappaport



I agree with your Chevron analysis and that the key langauge is "Financial institution" vice institution.

Would you think the other recipients of the original $700B bailout would have standing to sue as they would be harmed directly by a diversion of funds, as opposed to 'taxpayer' type standing which would not see any litigation? There would be imminancy since any loss of funds could be harmful in the current economic situation. There would be a remedy since the courts could prevent the funds from being sent to the auto industry.

Posted by: Gregory Saybolt | Dec 19, 2008 7:44:23 PM

Greg: It has been a while since I looked at those cases, but my understanding is that merely potential recipients of money from the fund would not be good enough to justify standing.

Posted by: Mike Rappaport | Dec 23, 2008 11:27:52 PM