Federal Follies – Current Edition

Tuesday brought another fun day of our federal government at work working on appearing to be working. The highlights:

FALL NOW, HEAL LATER was the apparent message as the United States Supreme Court upheld the sanctity of the law that allows debtors to screw creditors. The decision capped roughly a day of anxiety over the pending sale of what’s left of Chrysler to Fiat. Justice Ruth Bader Ginsberg on Friday issued a stay, the Legalspeak equivalent of “Hold on while we take a look.” What the court looked at was a claim by pension fund folks in Indiana that they were being screwed over more than was reasonable and customary in the Chrysler bankruptcy settlement. And looking is all the Supreme Court did, saying only that the sale could go forward without ruling on the merits of the Hoosier’s claims. The idea at the court is that a claim someone else’s action will cause harm is best settled by letting things happen and sorting them out later.

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SUCH A DEAL WE’VE GOT FOR YOU 789 Chrysler dealerships heard when a federal bankruptcy judge said Chrysler could terminate their franchises. The New York Times reported that Chrysler offered during the lengthy hearing to find others who would take the unsold inventory of dealers who got the judge-blessed axe; the AP reported the offer was good until Monday. Whether all this agida amounts to a future for a Chrysler governed by Fiat’s fiat remains to be seen. When Fiat left the U.S. market the last time, wags said the company’s name was really an acronym for Fix It Again Tony.

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NO RUSH TO JUDGMENT HERE was evident in New York when Ahmed Ghailani told a federal judge he was innocent of charges in connection with the August 17, 1998 bombing of U.S. Embassies in Kenya and Tanzania. Nabbed in Pakistan in 2004, he went to the Bush administration’s Land of the Judicially Undead at Guantanamo Bay, Cuba in 2006. On Tuesday he became the first Gitmo inmate to be tried in the United States civilian court system. Republicans have howled that trying Gitmo folks in the United States would be dangerous, inviting terrorism. No howls about the United States detaining someone for five years without a trial were readily available, nor were plans on what to do if the Tanzanian is acquitted.

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PAYING THEIR DEBT TO SOCIETY, or at least the U.S. Treasury, ten big banks got permission to pay the feds back $68.3 billion they got under the TARP (Troubled Asset Relief Program). That program dipped into taxpayer wallets to cover losses banks took on loans to anything breathing and complicated derivative deals whose sole purpose seemed to be generating gigantic executive commission and bonus payments. Part of the rules for getting TARP coverage included rules limiting executive compensation and other restrictions. Of course, with the TARP dough back with Uncle Sam, the big banks are free to go their way, promising to sin no more. It’s all part of a new government financial tool called a Belief Swap – banks promise to believe government threats to regulate them in return for the government believing banks will reform.

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