Obama administration shows blindness to rule of law, penchant for thuggery
By Rick Saunders
The Contracts Clause of the United States Constitution can be found in Article 1, Section 10 and admonishes that no state shall enact any law “impairing the Obligation of Contracts.” That provision has served as one of the foundation stones for the Constitution’s respect for contractual agreements and the obligations thereunder between and among the parties to the contract, and reflect the Founding Fathers’ parallel respect for the rule of law. Indeed, the Contracts Clause is but one of many cited for the proposition that ours is–or until January 20, 2009, was–a nation of laws and not men.
Yesterday, George Mason University law professor Todd Zywicki noted, in The Wall Street Journal, that the Obama administration’s heavy-handed tactics in the Chrysler bankruptcy not only makes a mockery of the Contracts Clause, but also undermine in the worst way the principle of the rule of law that has guided this great nation for more than two hundred years. One particular point:
The Obama administration’s behavior in the Chrysler bankruptcy is a profound challenge to the rule of law. Secured creditors–entitled to first priority payment under the “absolute priority rule”–have been browbeaten by an American president into accepting only 30 cents on the dollar of their claims. Meanwhile, the United Auto Workers union, holding junior creditor claims, will get about 50 cents on the dollar.
The absolute priority rule is a linchpin of bankruptcy law. By preserving the substantive property and contract rights of creditors, it ensures that bankruptcy is used primarily as a procedural mechanism for the efficient resolution of financial distress. Chapter 11 promotes economic efficiency by reorganizing viable but financially distressed firms, i.e., firms that are worth more alive than dead. Violating absolute priority undermines this commitment by introducing questions of redistribution into the process. It enables the rights of senior creditors to be plundered in order to benefit the rights of junior creditors.
First, the term “browbeaten,” in this case, is a bit of an understatement. Second, I couldn’t help but notice the “R” word. Ah, redistribution — music to the administration’s ears.
Anyway, here’s a translation: first priority secured creditors of Chrysler will now, thanks to the Chicago machine tactics used by the Chosen One’s operatives, have their claims (i.e., dollars) redistributed to the United Auto Workers union. The less secured are allowed to plunder the monies of the more secured. The only thing missing is James Gandolfini and an ill-fitting pleather jacket. Hey, youse guys help me now, I help youse guys later on . . . bada-boom . . . bada-bing.
Even more troubling, however, are the circumstances surrounding the administration’s dictate that Chrysler sell its assets to the Italian automobile company Fiat. We now learn, in more detail, of the troublesome potential that the Obama-mandated sale of Chrysler assets to Fiat will result in a direct benefit to–wait for it–Libya and Libyan strongman Moammar Gadhafi.
Yes, Virginia, the same Gadhafi who made a speech glorifying the candidacy of Barack Hussein Obama at this time last year. That speech was carried by the Al Jazeera television network on June 11, 2008, and was later translated by The Middle East Media Research Institute (MEMRI) and found to include this following gem:
All the people in the Arab and Islamic world and in Africa applauded this man [Obama]. They welcomed him and prayed for him and for his success, and they may have even been involved in legitimate contribution campaigns to enable him to win the American presidency.
Really? Aren’t foreign nationals prohibited from contributing money to the campaigns of American presidential candidates? Isn’t that what the rule of law says?
Then again, what does Gadhafi know of our Federal Election Commission? By all accounts, however, it’s probably more than this administration knows of the Contracts Clause and the Constitution.
But when you’re Barack Obama . . . bada-boom! . . . bada-bing! . . . who cares!?!
Rick Saunders is a freelance writer who splits his time between endeavors in southern California and the American southwest. He began writing for America’s Right in December 2008. Jeff Schreiber started America’s Right in January 2008.