Jacob Sullum

In case anyone wants to argue that G.M. and Chrysler are financial institutions because of their car loan divisions, it's worth noting that GMAC and Chrysler Financial are no longer wholly owned subsidiaries of the automakers. A consortium of investors owns a controlling interest in GMAC, while Chrysler Financial became an independent company in 2007.

At any rate, a manufacturer with a finance division clearly is not what Congress had in mind when it authorized TARP. By the same logic, all businesses that extend credit, including department stores, jewelers, cosmetic surgery practices and neighborhood bars would qualify as financial institutions eligible for TARP money.

President Bush himself, while urging Congress to approve loans to G.M. and Chrysler, repeatedly rejected suggestions that he use TARP funds for that purpose, saying the money was intended for the financial sector. Now he has reversed himself, confirming that he views the law as clay to be molded for whatever purpose is at hand.

President-elect Obama, who claims to have a less expansive view of executive power and a greater respect for the law than his predecessor, has not weighed in on the propriety of Bush's plan to help the automakers, instead urging the White House and Congress to work together on a loan package. But if Obama, under pressure to keep the nearly bankrupt carmakers afloat, resorts to unilateral action when he takes office, we will know his promises of change were empty.

Jacob Sullum

Jacob Sullum is a senior editor at Reason magazine and a contributing columnist on Townhall.com.
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