Rule of Law at Risk in Chrysler Bailout

It's easy to lose our heads in these perilous economic times. This is especially true since the car companies occupy such a large place in local affairs. Chrysler's bankruptcy is looming large in the public's eye, and here "money interests" are being pounded relentlessly for their supposed greed and intransigence. The Obama Adminstration is pushing a plan that would turn over a large chunk of the Company to the UAW, largely at the expense of secured creditors---including pension plans---who loaned Chrysler money. In the event of a bankruptcy, the Law says that they should be repaid first---with others standing in line, to see if there is anything left over. Lost amid all the clamor surrounding the auto companies and their woes, is the fact that there is a more honorable alternative to stiffing secured creditors in favor of political cronies.

The constitution requires payment of just compensation whenever private property is taken for a public purpose. If the Obama Administration is pushing secured creditors (such as the pension plan bond holders) aside for unsecured stakeholders (like the UAW), the alternative to setting aside the rule of law seems clear: use public money to pay off the secured debt (or, at least as much of the secured debt as they'd get if the Company were liquidated). This would have the effect of actually following the law, while at the same time making clear that it is the Government---and not the private parties involved---who is calling the shots.

JEFFREY CAMINSKY, a veteran public prosecutor in Detroit, Michigan, specializes in the appellate practice of criminal law and writes on a wide range of topics. His books include the science fiction adventure novel The Star Dancers, the exciting second volume in the Guardians of Peace-tm series, The Sonnets of William Shakespeare, and the acclaimed Referee’s Survival Guide, a book on soccer officiating. All are published by New Alexandria Press, and are available on Amazon, as well as directly from the publisher.