Will the Supreme Court save the constitution?
 

The Supreme Court on Monday granted an emergency appeal asking it to halt the impending government-backed sale of Chrysler to Italian automaker Fiat.


http://www.foxnews.com/politics/2009...ler-sale-fiat/

Yoda

A member of the loyal opposition

See My Other Thread - What Should They Do?
 

If SCOTUS decides to hear the case, it will almost certainly have massive economic impact on the U.S. and even the world economies. But if they decide not to hear the case, presumably because not hearing it would be in the public interest, the rule of law as regards creditors in financial transactions will be changed significantly for a long time. Bankruptcy will never be the same if a third party can trump all the loan and security agreements held by legitimate creditors. By not adjudicating the case before them, SCOTUS will have "made law from the bench"...big time!

Interesting question. What do you folks think they should do?

My answer: SCOTUS should decline to hear the case because of the time required to adjudicate the case and the chance that the decision would be to uphold the rights of the claimants, effectively overturning the pre-packaged bankruptcies of both Chrysler and GM. It's quite apparent that the creditors of both companies would never agree to a Plan of Reorganization by themselves, and without debtor-in-possession financing in place, both companies would have to shut down and probably have to be liquidated. As offensive as the involvement of the government was in arranging the pre-packaged Plan of Reorganization, it wouldn't have happened without their involvement.

But SCOTUS should make it abundantly clear to the Congress that laws need to be enacted to prevent or preclude actions such as taken by the Fed to trample the legitimate rights of creditors in "the public interest" that occurred in the Chrysler and GM bankruptcies. It's a question of whether we really want to be a democracy...or a benevolent dictatorship. The scary thought is that we have to rely on the U.S. Congress to decide.

You began a thread titled "A Game of Chicken" on this subject VK......I would ask you a game of chicken between WHO ?

As you know I am very very suspicious of our current President, but I never questioned his "smarts". Is this an early on game of "chicken" simply to test how much he can get away with ?

In my opinion they must hear the case; as you say somewhere that they cannot turn their back on their responsibilities of the law ! At least I am hoping that is the case.

So far the "system" has worked.

The current administration, filled with savvy attorneys, decided to try a slam-dunk on the bankruptcy laws. Some other folk, also having savvy attorneys, filed their request for emergency stay of a lower court decision to SCOTUS. Justice Ginsberg, who takes such stay requests for that particular region, granted the stay based on the sufficiency and legality of the request. At center stage within the application for a stay were matters of law which were believed left unresolved in the lower court's action, including: 1) the perceived illegality of TARP fund usage, 2) the failure to protect "absolute" debtors; and 3) ongoing and future lawsuits for product liability. For a better understanding of what is on the table, see http://www.scotusblog.com/wp/the-blo...ysler-package/ which also has the briefs and summaries.

So, a "liberal" justice acted in a way that will have heavily upset the White House. If ever there was an example that SCOTUS justices are indeed independent, this was it.

SCOTUS will not get into a political tug-of-war with the White House or Congress. SCOTUS will not take an action counter to the law, and then ask Congress to write new laws so the Executive Branch doesn't break the law again. SCOTUS cannot demand either of the other two branches do anything other than follow the law-of-the-land, as interpreted by the Court.

If the matter takes "too long" for the Administration or Chrysler or Fiat, that's tough. It just means they should have done it right the first time. If rights were trampled on, or laws broken in haste, that's why parties can seek redress in court, and that's what several have done.

So, the current administration is acting no different than the previous one(s), in that it is charging into actions with the subtlety of a rhino in a teashop, and acting more like a dictator than a Chief Executive - - and in doing so, is finding out that the US is not a dictatorship.

Not all cases which SCOTUS decides need involve oral argument or the opportunity to provide additional briefs. That is SCOTUS' choice whether to accept more filings or not. SCOTUS can summarily rule - either by a single-justice order or an entire-bench order - to let the matter stand, or kick it back to the 2nd Circuit Court of Appeals with direction. Just because the current administration is in a hurry or Chrysler & Fiat huff and puff will not matter. That's the beauty of our system of government. Indeed, the Founding Fathers were smart guys!

My opinion
 

SCOTUS must hear the case and must uphold the constitution. Otherwise, capitalism cannot survive and neither can our representative republic. America, as we knew it, will die. Every part of the constitution will be subject to being ignored by any dictator who wants to including the present one. I would go so far as to say that if SCOTUS does not uphold the constitution, we may have seen our last free and open election.

God Bless the SCOTUS.

God help America

Yoda

A member of the loyal opposition

Good Analysis
 

Steve's analysis of the situation is a good one.

I'm guessing that if SCOTUS does anything, it will do it quickly in order to avoid cratering the bankruptcies underway and the financial ruin that would cause. Ruling in favor of a couple of creditors with minimal amounts of debt due them at the expense of worldwide financial disaster seems an easy choice to me. Of course, they could do nothing. They are not required to hear the case and adjudicate it. It'll be interesting to see if the justices that we view as "conservative" join the "liberal" Justice Ginsburg in the defense of the Constitution and rule of law.

Bucco, my "chicken"metaphor was probably not the best I could have chosen. I guess what I meant was SCOTUS playing chicken with their defense of the Constitution as opposed to the financial disaster that is likely if they choose to become involved.

SCOTUS works under a predicable schedule, and since the 2nd Circuit Court of Appeals decision has been stayed, SCOTUS will most likely just add this matter to it's normal Friday discussion session.

There's been a lot of rhetoric about "defense of the Constitution and rule of law," but its doubtful that many have read the briefs from the parties. I've a lot of confidence in SCOTUS to do the "right thing" according to the law, and no matter what SCOTUS decides to do or not do, there will be unhappy people who are not interested in "the law," but are more concerned about their political point of view.

UPDATE: Well' they were "unpredictable," and finished the matter with an affirmation of the 2nd Circuit COA decision.

For more info, see http://www.scotusblog.com/wp/categor...-and-opinions/

Update.
"Supreme Court clears way for Chrysler's Fiat sale"
http://news.yahoo.com/s/ap/us_supreme_court_chrysler

I am not concerned about Chrysler being sold. Many Auto companies have gone out of business in my lifetime and we have survived. I am gravely concerned that the administration can void contract law as it sees fit ti DICTATE. This was not addressed that I can see. Time will tell.

Yoda

A member of the loyal opposition

I find this decision very troubling but have to read more to see if I am looking at this from the wrong angle.

These are very very troubling times in this country with ramifications to be felt for a very very very long time !

Similarities??
 

Frankly, I'm surprised by SCOTUS decision not to decide. In thier two-page ruling, SCOTUS said the law placed a heavy burden on the dissident bondholders to prove why circumstances required their judicial intervention: "The applicants have not carried that burden." That not only sounds like a big cop-out to me, but surely leaves open the long-term effect of the trampling of creditor's rights by powerful forces, like the government, abrogating both contract and bankruptcy law. If the lower appeals court decision doesn't address this problem, bad precedents will have been set that will effect us for decades to come.

The capital markets are not stupid. If they find that there's uncertainty that their contracts will be enforced under the law of the land, they will simply avoid situations where such risk exists--like avoiding the extension of loans to finance the operations of large corporations. Such companies will find new sources of credit, maybe more sovereign loans like from China, if anyone thinks that's a good idea. But the changes resulting from the two auto company bailout/bankruptcies will have their effect. As I've said before, credit officers at many lenders (the Indiana teachers and police retirement funds, almost certainly) will be applying the old idiom, "Fool me once, shame on you; Fool me twice, shame on me".

I'm trying to recall the circumstances of the litigation surrounding the Bush-Gore election. Wasn't that another case that seemed to call out for the more careful review that SCOTUS might have provided? But in the circumstances of a long and high profile delay in the certification of the election, SCOTUS took an easy way out by either not hearing the case or ruling in a pretty shallow way. Am I remembering correctly? (I'm certainly not attempting to reopen any discussion on the outcome of that election. Rather, I'm trying to determine any similarities of the "boldness" of the court in deciding to hear cases that are very important, although highly politically charged and subject to certain time pressures.)

I'm still not sure there is understanding of the role of SCOTUS in the judicial pyramid. SCOTUS does not operate as a Court of First Review. If the record shows that the lower courts operated properly, then SCOTUS doesn't get involved.

In this situation, the 2nd Circuit Court of Appeals was the appellate review of the U.S. Bankruptcy Court's decision. If there is one thing COA justices dislike, it's having their case accepted for SCOTUS review, as unless there is a competing decision in another COA, that insinuates they missed something significant. These COA justices are darned good jurists, and any one of them could sit on SCOTUS and do a credible job, so "mistakes" are rare (but they do happen). The biographies of the 2nd Circuit COA are at http://www.ca2.uscourts.gov/judgesmain.htm

Liberal or conservative, or whatever political spin anyone wants to take, no four SCOTUS justices thought there was enough "wrong" with the 2nd Circuit COA decision for SCOTUS to take the case.

Is the Indiana pension fund blameless?
Buying Chrysler debt as late in the game as they did was a highly speculative investment. What happened to their fiduciary responsibility to Indiana's taxpayers?
Indiana's treasurer, Richard Mourdock, has had his investment/gamble in Chrysler backfire on him-- not once, but repeatedly --and will probably lose his job in the next elections.

Gamble...And Other Stuff
 

I haven't read when Indiana made their investment. If they did buy the debt at a deep discount (in order to get a higher yield), they maay have been anticipating a bankruptcy, but with the protections provided by their loan and security agreements, maybe they didn't anticipate a discount to the face vaue of the notes that was forced on them by the government.

Were they blameless? To the degree that they found that they couldn't rely on their contractual rights, they were blameless. To the degree that they chose to make an investment that represented more risk than should be assumed by a pension fund, they can be blamed for not fully anticipating the risk they were taking.

It's doubtful that the state treasurer will lose his job over this investment. It's probab;y a very small percentage of the total funds he has fiduciary responsibility for investing. It's pretty common for fiduciaries like him to invest a small portion of funds in higher risk investments like troubled debt, junk bonds or leveraged buyout funds in order to achieve a higher yield on the funds invested.

Question for Steve...it has been my understanding that SCOTUS has the option to hear or not hear cases appealed to them from the lower appeals courts. But it's been my understanding that they weren't required to take all cases where it was apparent that the lower court judge erred, or where there was an inconsistency between how similar cases were adjudicated in different appeals courts. My understanding is that they can still decline to hear a case, even though judicial error or inconsistency is apparent--probably because the issue was not of a level of legal importance to justify the involvement of SCOTUS. Am I right or wrong?

Rather than do a lot of text quotes, the Rules of the Supreme Court are at http://www.supremecourtus.gov/ctrule...ofthecourt.pdf and most of the rules are less than 1/2 page long.

Rule 10 describes what kind of cases SCOTUS is intended to hear. It's very straightforwarrd and does not give SCOTUS free rein to play in every legal arena,

Rule 14 is concerned with the "Questions Presented for Review." This rule is probably the most important, since it identifies exactly what question(s) the petitioner believes are issues of law which are either in conflict or so vague as to lead to confusion. To appreciate the significance of the "questions," the following URL is the SCOTUS docket page for the "Hartford Case" being appealed to SCOTUS and which Judge Sotomayor participated in the COA decision. (see: http://origin.www.supremecourtus.gov/docket/08-328.htm ) The URL gives the case history and identifies the "Questions Presented." Please click the "Questions Presented" to see how limited the questions are. SCOTUS will limit its action to only answering those questions, as opposed to taking on every possible legal irregularity in the matter.

So, even though there may be a hundred legal irregularities in a case, if the petitioner doesn't present a particular irregularity as a Question Presented For Review, then the "non-questioned" legal irregularity doesn't matter as it in fact is not being appealed.

That's the abbreviated description of how it works.