December 20, 2008

Through an institution, strictly

It's always seemed to me that the lip service paid to "strict construction" is often little more than a matter of occasional convenience for political conservatives who are clambering for ways to somehow justify their preexisting agendas.

In the case of the recent announcement by the president that he will appropriate funds allocated by the so-called TARP statute* to assist the Big Three automakers, that agenda also includes holding union workers almost entirely responsible for those corporations' woes.

In short, the perfect opportunity for conservatives to toss their otherwise dearly beloved "strict construction" or even "plain meaning" under the bus in furtherance of political point scoring.

To those ends some conservatives, in particular this Heritage Foundation fellow, seem to believe they've caught the federal executive branch red handed, breaking the law.

And a number of conservative bloggers are gesticulating breathlessly toward the Heritage Foundation analysis — such as it is — in support of the proposition that the Big Three auto companies are not "financial institutions" for the purposes of the TARP.

Except they don't need to be. From the federal statute:
The term "financial institution" means any institution, including, but not limited to, any bank, savings association, credit union, security broker or dealer, or insurance company, established and regulated under the laws of the United States or any State, territory, or possession of the United States, the District of Columbia, Commonwealth of Puerto Rico, Commonwealth of Northern Mariana Islands, Guam, American Samoa or the United States Virgin Islands, and having significant operations in the United States, but excluding any central bank of, or institution owned by, a foreign government.
The Heritage Foundation fellow makes much of the "bank, etc." language in his attempt to exclude the automakers from the definition of "financial institution."

Trouble is, "financial institution" is itself defined as "any institution including but not limited to," and only then does there follow that deliberately incomplete list of institutions that most people would recognize generally as "financial institutions."

The operative word, therefore, is "institution," which isn't limited by the adjective "financial." And "institution" is further modified by "any." That's a lot of institutions, and those ones are explicitly "not limited to" the several types of financial institution enumerated.

The statute goes on to describe "any institution" as one "established and regulated under the laws of the United States or any State," and "having significant operations in the United States."

Sounds an awful lot like General Motors et al, doesn't it.

* The Emergency Economic Stabilization Act of 2008.


3rd Way said...

GM is partially a financial instution. A huge chunk of their profits come money made lending to consumers by their financial arm (GMAC).

Terrence Berres said...

Last I heard, GM had sold a majority stake in GMAC to Cerberus, which controls Chrysler. GMAC has been trying to raise enough additional capital to become a bank holding company, in the belief that would be required for it to receive TARP funds. Of course, that was Wednesday, in an era before the perceived meaning of the statute had evolved to meet the needs of changing times.