Legal Commentary

Eric Posner has a very nice post on Volokh asking whether the Treasury department has authority to bailout the auto industry after Congress rejected the bailout bill. The answer turns on the right interpretation of the term "financial institution" in the Troubled Assets Relief Program ("TARP").

As Eric notes, the text of the statute is unhelpful. Looking at analogous statutes, Eric makes a case that 'financial institution' in 31 U.S.C. 5312(2)(T) is defined to include "a business engaged in vehicle sales, including automobile, airplane, and boat sales." But he dismisses this application of the "pari materia" principle as question-begging -- rightly, in my view -- and instead emphasizes the purposive point that "how Congress understands 'financial institution' or any other term depends on what it is trying to accomplish" and that Congress left the details of who ought to get aid up to Treasury: Automakers'"financial health clearly matters to the resolution of the financial crisis, which is what TARP is for," such that "[w]ith Chevron deference to the Treasury?s reasonable interpretation, this would not be a hard case."

The post is reminiscent of Adrian Vermeule's point that we have a "Schmittian administrative law." There is no point in searching for a "legal" answer -- in the sense of parsing the text or legislative history for either a formal or purposive answer to the question. instead, one simply has to decide which decision-maker has the power to decide when the rule runs out -- that is, determine the shape of the "exception," in Schmitt's term.

Whom do we trust? Courts or Treasury? Does not the question posed in this context with these particular agencies -- i.e., a financial emergency being managed by bureaucrats who appear to be earnestly wonky in their efforts to get it right -- answers itself?