You see the automotive industry sub-crisis within the wider economic recession/ depression ratcheted up a few decibels last week. Roughly 800 Chrysler dealerships were axed from their automotive family. One day later, roughly 1,100 GM dealerships were disinherited from the GM clan. Such purges were unprecedented in any context. The fact that such separations were mandated at the executive level within the Federal Government as a pre-condition to economic assistance bespeaks volumes of how far out on shaky ground the Obama Administration now finds itself!
Never in US history has anything similar occurred. The executive ruling powers of a presidency (or monarchy) have their validity for actions in the legal fiction of “quo warranto” - medieval Latin for “by what right, or prerogative (do you do this?).” Such powers are “legal fictions” in that they are not natural laws like gravity. Rather they have been made up over time and were created via enactments of a body of law as constrained by some over-riding constitutional document. The United States’ Constitution defines the Legislative Branch in Article I, the Executive Branch in Article II, and the Judicial Branch in Article III. I can already see constitutional challenges looming on the horizon for so much of what the Obama administration has done, and far more coming from where the administration appears to be headed.
Our constitutional document may be dynamic, but no blank checks are granted to any branch –the roles of each are defined. The 27 words of the tenth amendment are also critical here: “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.” Just because actions, policies, or events have occurred; doesn’t mean they will stand the tests of time, or the court challenges. Silence gives consent only to the point when parties object and eventually seek remedy in our court system. Does it seem logical that ALL of the roughly 2,000 dealerships will simply roll over and accept “death from disinheritance” simply because someone in the Executive Branch said they must for their auto producing parents to get some of Uncle $ugar’s money to stay in business?
Where is it written that the Executive Branch has the power to demand this of the selected dealerships? Where is it written that the Executive Branch can terminate Corporate Executives, or demand that they resign from their positions? Where is it written that the Executive Branch can terminate Corporate Boards of Directors, or demand that they resign from their positions? Are such events not the results as determined during the normal course of a bankruptcy? - not the pre-requisites to such a filing? How can one troubled auto company be given one timeframe for compliance while another (albeit larger one) receives a longer and presumedly more generous one?
It was the arrogance of the American auto giants which brought them to this sorry point in their history. Their belief that the public would buy whatever they chose to manufacture proved false. The public bought their cars elsewhere and the American big three saw their market share erode. Motown’s days as the center of the Earth’s automotive world are forever gone. Uncle $ugar’s arrogance in “fixing/ saving” this industry will prove no more effective than the selective and arrogant approach already underway in the AIG bailout(s) and the wider financial services sector! The Obama Administration will soon find itself needing a far more “bailout friendly” Supreme Court - if they should ever hope their actions to date will not be overturned!
I’m Fred Cederholm and I’ve been thinking. You should be thinking, too.
Copyright 2008 Questions, Inc. All rights reserved. Fred Cederholm is a CPA/CFE, a forensic accountant, and writer. He is a graduate of the University of Illinois (B.A., M.A. and M.A.S.). He can be reached at firstname.lastname@example.org.
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This story was published on May 18, 2009.