Monday, December 15, 2008

Post-Partisan: Unexpected and Early


Though the Senate rejected related automaker bailout legislation Thursday night, GM and Chrysler want to tap funds from October's Trouble Asset Relief Program (TARP) law for short-term loans.

The law:
  • TARP Section 101 authorizes the Treasury Secretary "to purchase, and to make and fund commitments to purchase, troubled assets from any financial institution."

  • Section 3(5) of TARP defines "financial institution"--in relevant part--to mean (emphasis added):
    [A]ny institution, including, but not limited to, any bank, savings association, credit union, security broker or dealer, or insurance company, established and regulated under the laws of the United States or any State, territory, or possession . . . , and having significant operations in the United States.
  • And "troubled assets" are defined--in relevant part--in TARP Section 3(9) as:
    (A) residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages, that in each case was originated or issued on or before March 14, 2008, the purchase of which the Secretary determines promotes financial market stability; and

    (B) any other financial instrument that the Secretary, after consultation with the Chairman of the Board of Governors of the Federal Reserve System, determines the purchase of which is necessary to promote financial market stability. . .
Question: When is an automaker a "financial institution"?

Answers: Outcome:

Inspecting the books will take a few days. But an auto bailout through TARP is close to a done deal. Bush caving confirms that the era of big and interventionist Republican government will be second (to the war on terror) as the President's most consequential legacy.

1 comment:

bobn said...

I'm not sure I'd describe this as Bush caving. It's more on the order of trying to make this disaster appear as it it were off the increasingly long "catastrophes on Bush's watch" list.

"nosiree, them auto folks didn't go BK while *I* was president! It was all Osama's - oops, Obama's - fault!"