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#50051 - 12/13/09 03:38 AM Re: Free Markets, aka, State-sponsored capitalism, aka [Re: oenophore]
Daniel Offline
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Registered: 05/23/01
Posts: 1515
Originally Posted By: oenophore
To claim that this regulates interstate commerce is more than an extreme stretch as I see it. Then again, a Supreme Court that can produce Wickard v Filburn can produce any sort of abomination like that.


Wickard has been established law for a long time. It makes some sense that the Court doesn't want to get involved in drawing fine distinctions as to what is "interstate commerce" and what is not. It's far easier to manage a rule that says as long as something has some reasonable effect on interstate commerce, then it falls within congressional power. Most people don't know that the 1964 Civil Rights Act, which banned racial discrimination in places of public accommodation, was largely based on Congress's Commerce Clause power (upheld in Heart of Atlanta Motel v. United States).

Only in 1995 did the Supreme Court strike down a law as outside Congress's Commerce Clause power for the first time since the New Deal. In United States v. Lopez Congress claimed that it could regulate guns in public schools because violent crime causes damage which has costs and increases insurance rates, people would be less likely to travel in unsafe areas, and firearms in schools would make student scared which would affect their eduction which would affect the economy. This was too attenuated even for the Court, which found that the mere possession of a gun was not a commercial activity.

But TARP is clearly a commercial activity and has a substantial connection to interstate commerce (banks lend to out-of-state businesses which then buy and sell items across state lines, for example) and would seem to me to fall well within Supreme Court precedent.

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#50056 - 12/13/09 11:21 AM Re: Free Markets, aka, State-sponsored capitalism, aka [Re: Daniel]
oenophore Online   confused
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But TARP is clearly a commercial activity and has a substantial connection to interstate commerce (banks lend to out-of-state businesses which then buy and sell items across state lines, for example) and would seem to me to fall well within Supreme Court precedent.

How is TARP enablement a regulatory act?
Although I'm greatly tempted, I won't bore readers by ranting about the damage done to constitutional rule of law during the FDR administration.
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#50079 - 12/17/09 04:06 PM Re: Free Markets, aka, State-sponsored capitalism, aka [Re: oenophore]
Daniel Offline
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Registered: 05/23/01
Posts: 1515
Originally Posted By: oenophore
[i]How is TARP enablement a regulatory act?
Although I'm greatly tempted, I won't bore readers by ranting about the damage done to constitutional rule of law during the FDR administration.


How is non-discrimination under the Civil Rights Act a "regulatory act"?

Yes, some people argue that the Supreme Court's interpretation of the Commerce Clause has gone way beyond constitutional parameters. I'm just saying that TARP would seem to me to fall well within that current Supreme Court interpretation, whether one agrees with that interpretation or not. (And I won't bore readers as to why the Court doesn't want to get into deciding finer points of what is and is not "interstate commerce.")

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#50080 - 12/17/09 11:11 PM Re: Free Markets, aka, State-sponsored capitalism, aka [Re: Daniel]
oenophore Online   confused
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Ok Daniel, could there be anyone with sufficient standing to legally challenge TARP?
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#50087 - 12/18/09 04:48 PM Re: Free Markets, aka, State-sponsored capitalism, aka [Re: oenophore]
Daniel Offline
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Registered: 05/23/01
Posts: 1515
Originally Posted By: oenophore
Ok Daniel, could there be anyone with sufficient standing to legally challenge TARP?


That is a very good question, and I don't pretend to have a good handle on the answer.

For anyone else who may be reading (since oneo obviously knows about the issue), only parties with a direct stake in a controversy are allowed to sue; this is known as "standing." The idea is that those who have an individualized harm are the best people to represent the interests involved, and those with only tangential interests may not vigorously prosecute their cases which can lead to bad law or unjust results. In almost all cases, a "generalized grievance" isn't enough to get you into court; you have to show how you have been harmed and how the court can remedy that harm.

So who has suffered an individualized harm from TARP? The courts have, with a few exceptions, rejected the idea that misuse of taxpayer funds gives all taxpayers a right to sue ("taxpayer standing"). It seems doubtful that objecting members of Congress would have standing either, first of all because it would be hard for them to show how they have been harmed and second because they were deemed not to have standing even to challenge a statute that gave the president line-item veto authority. (Organizations and municipalities that lost funding due to the use of the line-item veto did have standing and won the case.) If members of Congress can't challenge the line-item veto, I think it's unlikely they could challenge TARP.

The Second Circuit found that a state pension fund lacked standing to challenge the use of TARP funds to finance the sale of Chrysler assets (p.33-40). The standing issue is mixed in with bankruptcy issues which complicates things, and the whole thing was vacated as moot by the Supreme Court so there's technically no precedent, but I think it does give an idea that finding someone with standing to challenge TARP would be difficult.

But again, this is just an armchair analysis from someone with just enough knowledge on the topic to be wrong about it.

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#50088 - 12/18/09 06:08 PM Re: Free Markets, aka, State-sponsored capitalism, aka [Re: Daniel]
oenophore Online   confused
Carpal Tunnel

Registered: 09/24/01
Posts: 5962
Loc: 212 land
But again, this is just an armchair analysis from someone with just enough knowledge on the topic to be wrong about it.

Thanks; I guess this is the most we could get out of you without being sent a bill. I recall reading of someone trying to sue the federal govt. on the basis of this constitutional clause:

No money shall be drawn from the treasury, but in consequence of appropriations made by law; and a regular statement and account of receipts and expenditures of all public money shall be published from time to time.

He claimed that this was violated by so-called black budgets for intelligence agencies. After years of working his way up the judicial line, the Supreme Court ruled that he didn't have standing to sue. So it seems that Congress and the president can pass unconstitutional statutes immune from judicial review.
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#50089 - 12/18/09 07:24 PM Re: Free Markets, aka, State-sponsored capitalism, aka [Re: Daniel]
alicex4 Offline
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What about the individual Chrysler dealership franchise owners that lost their dealerships due to the TARP monies?

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#50101 - 12/19/09 12:39 AM Re: Free Markets, aka, State-sponsored capitalism, aka [Re: alicex4]
Daniel Offline
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Registered: 05/23/01
Posts: 1515
Originally Posted By: alicex4
What about the individual Chrysler dealership franchise owners that lost their dealerships due to the TARP monies?


They might have a problem showing causality. I'm not that knowledgeable on bankruptcy stuff (not really knowledgeable at all, actually), but if Chrysler goes under then wouldn't they all lose their dealerships and so be no worse off?

In the Second Circuit case (again, which technically has no precedential value), the court concluded that because the plaintiff couldn't show that they were worse off with the TARP intervention than they would have been otherwise, they hadn't suffered harm:

"At oral argument, the Pensioners touted the value of the collateral at 'around $25 billion' and complained that the value received pursuant to the Sale was a tithe of the actual asset value and an inadequate return on their investment. However, the Indiana Pensioners' argument ignores the bankruptcy court's finding that, in the absence of another buyer, the only viable alternative--liquidation--would yield an even lower return than the one achieved through the sale funded by TARP money....

"Since 'the Indiana [Pensioners] will receive [their] pro-rata distribution of the value of the collateral,' they simply 'cannot allege injury in fact.' Id. The release of collateral for fair (but less-than-hoped-for) value is not injury in fact sufficient to support standing." (pp.39-40 from the link in my prior post)

If the dealers would have lost their dealerships anyway, then it's hard to see how there would be any remedy from declaring TARP unconstitutional. But again, I don't place a whole lot of confidence in my analysis; I'm just thinking off the cuff here.

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#50103 - 12/19/09 01:05 AM Re: Free Markets, aka, State-sponsored capitalism, aka [Re: oenophore]
Daniel Offline
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Registered: 05/23/01
Posts: 1515
Originally Posted By: oenophore
After years of working his way up the judicial line, the Supreme Court ruled that he didn't have standing to sue. So it seems that Congress and the president can pass unconstitutional statutes immune from judicial review.


It looks like the case was United States v. Richardson, where the Court rejected taxpayer standing. That doesn't mean that no one has standing, even if I don't know who would qualify. But once one got past the standing issue, there would be the state secrets issue to contend with.

It's been a long time since law school, but I hazily recall that the problem of no one having standing could happen in certain private sector disputes, not just challenging various statutes. And there are many people who think that the Court's standing rules are too strict--that if there's a good argument that some government action is unconstitutional, then it's perverse to claim that no one has standing to bring the challenge, and there are people with a sufficient (if tenuous) interest to vigorously litigate the case.

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#50106 - 12/19/09 12:01 PM Re: Free Markets, aka, State-sponsored capitalism, aka [Re: Daniel]
oenophore Online   confused
Carpal Tunnel

Registered: 09/24/01
Posts: 5962
Loc: 212 land
In the above link (United States v. Richardson,) one reads, "In dissent, Justices Potter Stewart and Thurgood Marshall insisted that a citizen ought to be able to challenge the failure of the government to carry out an affirmative constitutional duty without any showing of personal harm."
One of the flaws of the US Constitution is its brevity, allowing doctrine to shape many a judicial decision pertaining to it. Doctrine is purely up to the justices and changes as they are changed. I, for one, can live with that as long as the doctrine isn't "anything goes."
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