Ed’s post about the senior creditors of Chrysler talks about the ironic twists that the Constitution could impose on President Obama and Treasury Secretary Timothy Geithner. Not surprisingly, King’s all over this, too. Let’s start with what’s happened today in the ‘brokered’ bankruptcy:

Lauria, who accused the White House of threatening the creditors withn humiliation at the hands of the White House press corps, has filed a motion to halt the administration’s machinations on behalf of the UAW in the Chrysler bankruptcy. Lauria and his allies claim that the Obama administration has violated the Constitution in their bid to devalue the senior creditors’ holdings on behalf of junior creditors, and have some precedent to support the allegation.

King cites Irwin Stelzer’s NY Post article on what’s at the heart of Lauria’s lawsuit:

Obama is pressuring the some 20 “speculators” who are holding out to accept the crumbs that he’s offering. But there is more here at stake than the money immediately involved. As George Schultze, managing member of Schultze Asset Management, a hedge fund, told The Wall Street Journal, “This is about contract and bankruptcy law, and upholding agreements, which is important in the grand scheme of things.”

In Ed’s commentary, he wonders if President Obama didn’t know about this precedent or if he didn’t care about it:

One might think that a Constitutional scholar like Barack Obama would have already known that, but either this precedent escaped him or he doesn’t care about it at all.

Here’s some information about a SCOTUS ruling that appears to be directly on point with President Obama’s strong-arm tactics:

14. Justice Brandeis noted that the “essence of a mortgage” is the right of the secured party “to insist upon full payment before giving up his security [i.e., the property pledged].” Radford, 295 U.S. at 580. In invalidating the statute, the Court stated that “[t]he bankruptcy power…is subject to the Fifth mendment,” and that the pernicious aspect of this law was its “taking of substantive rights in specific property acquired by the bank prior to the act.” Id. at 589-90 (emphasis added). Thus, Congress could not pass a law that could be used to deny to secured creditors their rights to realize upon the specific property pledged to them or “the right to control meanwhile the property during the period of default.” Id. at 594. That is precisely what the Treasury Department would have Chrysler do here, with respect to the Chrysler Non-TARP Lenders’ property rights that were acquired prior to the enactment of TARP.

TRANSLATION: Secured creditors come first, regardless of whether a president attempts to strongarm those secured creditors with public humiliation, which is, I believe, what President Obama is attempting to do. In fact, I questioned whether this administration cares about the Constitution in this post. Here’s what Judge Andrew Napolitano said about Timothy Geithner’s attempted shortcutting the Constitution:

The Constitution basically says that if the government wants to take time or freedom or money from someone or something, it must sue for it. It cannot just give itself the authority to do so via legislation.

The Constitution was created to prevent Banana Republic ‘justice’. If the justices take the Constitution at face value, which isn’t a guarantee, the court will hand President Obama a humiliating defeat. This would be a harsher defeat than a legislative defeat because it would be the SCOTUS telling President Obama that he can’t use his bully pulpit to browbeat unpopular creditors into an unconstitutional ‘agreement’.

I won’t pretend that that type of a ruling would cause his staunchest allies to support President Obama less. They’d likely take this as a rallying cry. However, I’ll bet that independents would question President Obama’s integrity following a SCOTUS smackdown like this.

ADDITIONAL NOTE: This is what happens when you combine a Chicago machine politician with a power-hungry union.

Technorati: Bankruptcy, Secured Creditors, Fifth Amendment, TARP, President Obama, Tim Geithner, Chrysler, Unions, Constitution, Chapter 11

Cross-posted at California Conservative