The Liberal Attack on the Constitution - Bankruptcy

To establish an uniform Rule of Naturalization, and uniform Laws on the subject of Bankruptcies throughout the United States;

Article I Section 8 - The U. S. Constitution

 The Chrysler Corporation bankruptcy provides us with a clear case of the Obama administration disregard of the Constitution.  The United States Constitution gave Congress the power to establish “uniform laws” for bankruptcy in order to establish an absolute level playing field for business throughout the United States rather than a hodgepodge of laws changing from state to state.  This was deemed a necessary function to promote commerce and prevent fraud.

On January 22, 1788, writing in Federalist 42 of the Federalist Papers, James Madison, the principle author of the Constitution, stated:

The power of establishing uniform laws of bankruptcy, is so intimately connected with the regulation of commerce, and will prevent so many frauds where the parties or their property may lie or be removed into different States, that the expediency of it seems not likely to be drawn into question.

Since the ratification of the Constitution Congress has written the bankruptcy laws of the United States and revised them when deemed necessary.  Over 200 years of legal history, precedence and case law have set the standards of bankruptcy cases.  One of the absolute principles is secured debtors get first priority of payment under the “absolute priority rule”.  President’s Obama’s plan for Chrysler’s bankruptcy takes that case law and tosses it out the window for a simple political payoff to the United Auto Workers.  Instead of the rule of law we now get rule of the special interests.

Under President Obama’s plan, the secured creditors are to accept only 30 cents on the dollar while the UAW, having a lessor position claim in the preceedings, would get 50 cents on the dollar.  This “bumping” of an inferior position to the priority position flies against all bankruptcy law, legal precedent and case law.  For a purely political reason, President Obama believes he has the authority to ignore rule of law.  He may have been a Constitutional Law Professor but pity the students who learned the Constitution from him.

This disregard for the rule of law is something we would expect from some tin-horn third world dictator.  This is not behavior worthy of the holder of the highest office in the free world.  It demonstrates a complete lack of regard for both the rule of law and the Constitution, reducing any thought of both to nothing more than one more political consideration.  If this behavior is to be indicative of his entire term, then our American Republic is in grave peril unless the Federal Court reigns him in.

Aside from the Constitutional considerations there are profound reasons from an economic point of view to kill this in the courts.  If secured debtors no longer obtain their historic “first in line” position in Chapter 11 cases, it will have a chilling effect of business borrowing.  Hundreds, perhaps thousands of businesses both large and small that would have qualified for financing may now have that credit dry up because creditors have to reassess their risk.  Without that credit, business that would have otherwise survived may now find themselves bankrupt as well.  Everyone of them that fails will take American jobs with them.

President Obama and his team have firmly demonstrated once again that they are totally incompetent on economic matters.  This team has no more idea of what makes the economy operate than my Yorkshire Terrier.  Economic incompetence, Constitutional disregard, a belief that they can run everything by dictatorial decree.  Was “change you can believe in” supposed to mean the complete dismantling of our way of life?  The voters need to wake up.  This must be ended before it ends our nation.