Category Archive 'Chrysler Bankruptcy'

11 Jun 2010

Ruling By Decree

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We live today in a country differing from the America of the past in which the rule of law prevailed, and increasingly resembling one of the Latin American republics in which a strong man takes power and proceeds to set aside the law and his country’s constitution in order to rule by decree.

Yesterday’s Wall Street Journal reported that Barack Obama simply ordered BP to pay the salaries of all the oil workers laid off as the result of the drilling moratorium he himself had decreed. No due process, no court action, just an edict.

The Obama Administration ratcheted up its demands on Wednesday that BP PLC cover all costs stemming from the Gulf of Mexico oil spill, including millions of dollars in salaries of oil-industry workers laid off because of the federal moratorium on deepwater drilling.

The sudden increase in BP’s potential liabilities—along with growing evidence that even more oil than expected is gushing from BP’s crippled well—helped send BP’s shares plummeting almost 16% in New York, to $29.20. The stock has lost close to half its value, more than $82 billion, in the seven weeks since the spill started.

A second WSJ article reported that a coast guard admiral additionally ordered BP to pay hundreds of millions of dollars to construct berms. Once again, no legal process whatsoever had occurred. There is clearly no rule of law in this country. Even coast guard officers get to rule by decree.

Construction is about to begin on miles of sand piles designed to block oil in the Gulf of Mexico from hitting the Louisiana coast, but documents show the Obama administration approved the building of sand berms despite concerns from some of its own environmental experts.

The U.S. Army Corps of Engineers authorized the berms. Thad Allen, the Coast Guard admiral overseeing the spill response, ordered BP PLC to pay the hundreds of millions of dollars that officials estimate it will cost to build the structures.

In announcing his decision June 2, Adm. Allen said the berms would “effectively stem potential damage to these fragile shorelines.”

It can be impossible to obtain redress for these kinds of wholly illegal actions by public officials, even ones many levels below the President of the United States.

During the aftermath of Hurricane Katrina, New Orleans Mayor Ray Nagin and Police Superintendent Eddie Compass simply ignored legal considerations and issued an order saying: “No one will be able to be armed. Guns will be taken. Only law enforcement will be allowed to have guns.” They then used both New Orleans police and National Guard troops to confiscate private firearms refusing even to issue receipts.

When, months later, all this reached federal court, New Orleans denied having seized private firearms, then later denied having any still in its possession, and generally simply stonewalled. Only after three years of litigation, which New Orleans lost, did the city admit seizing guns and promise to return whatever private property remained in its possession.

Barack Obama lectured for 12 years at the University of Chicago Law School before running for the presidency, but that did not prevent him last year from simply brushing aside the entire body of bankruptcy law to subordinate the claims of Chrysler bondholders in favor of the interest of the UAW.

Members of his administration then proceeded to intimidate the victims with threats of using allies in the press to destroy their reputation. Most bond-holding creditors knuckled under, but three Indiana pension funds did go to court. The US Supreme Court voided a Second Circuit Court of Appeals ruling upholding the illegal cramdown, but also referred the case back to the Second Circuit instructing the Appeals Court to hold the matter moot. Thus, the Supreme Court acted to prevent Barack Obama’s action a legal precedent, but refused to do justice and make the Indiana pension funds whole. The law was theoretically preserved intact, despite Obama’s violation, but not actually enforced in the Chrysler bankruptcy.

We are developing an alternative system of government by fiat fueled by press-reported crisis, in which government officials assume the powers of dictatorship. So far, the courts have proven to be not only slow, but ineffective, defenders of the rule of law.

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