Can You Put Cars Under the Tarp?
If the car czar bill is dead for now, the question then becomes whether Treasury can fund the car industry under the TARP. Bloomberg is reporting a Treasury e-mail this morning stating the Treasury is prepared to act while Congress is out of session. The natural question becomes whether General Motors and the other car companies can be squeezed into the definitions set forth in the Emergency Economic Stabilization Act of 2008.
The critical definition is for “financial institution.” We might think that the car companies are clearly not financial institutions—put to one side their separate finance arms like GMAC—and therefore aren’t eligible for funds under the EESA. But the actual definition of financial institution is stunningly broad:
(5) FINANCIAL INSTITUTION.-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 operative term is “institution” which is otherwise undefined. Perhaps we should head to the dictionary, as the Supreme Court does frequently, so try the online version of Merriam-Webster:
2 a: a significant practice, relationship, or organization in a society or culture <the institution of marriage> ; also : something or someone firmly associated with a place or thing <she has become an institution in the theater> b: an established organization or corporation (as a bank or university) especially of a public character
That would suggest that universities are eligible under the TARP—that is good news to hear given the recent performance of university endowments—but I’m not sure what that means for the car companies. That would seem to make a great deal turn on the public character notion.
What should we make of the identified list of entities in the EESA definition? It is certainly true that all of the entities listed in the including-but-not-limited-to clause are what we would traditionally think of as financial institutions. One could easily imagine that a court looking for some limiting principle to the otherwise open and ill-defined “institution” would latch on that list to limit the scope of eligibility and thereby exclude the car companies.
But that said, I think that all of this suggests that there is a fair amount of open territory here and that it would not be surprising, especially in these times, for Treasury to rush in. And then the question kicks in what level of deference which Treasury be entitled to in interpreting the language of the EESA? That is a Chevron question—not about oil, but about how courts interact with agencies—and that is a question for the administrative law folks.