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Crony Capitalism Update

"We're not bound by the same laws as you are" Edition

If anyone out there had any questions as to why the Automaker and Financial Bailouts stank on ice, here's a little reminder.

Gangster Government at Treasury?

By:Michael Barone | The Washington Examiner

If this article by professors at Harvard Law School and Indiana University Business School is correct (hat tip to Paul Caron's taxprof blog and Glenn Reynolds's Instapundit), the Treasury acted contrary to law when it ruled that post-bankruptcy General Motors could utilize $45 billion in pre-bankruptcy net operating losses to reduce any corporate income taxes it may owe. The article is entitled "Can the Treasury Exempt Its Own Companies from Tax? The $45 Billion GM NOL Carryforward," and the authors' answer is No.

"Treasury solved this problem by issuing a series of "Notices" in which it announced that the law did not apply. On its terms, § 382 states that the NOL limits apply when a firm's ownership changed. That rule, the Treasury declared, did not apply to itself. Notwithstanding the straightforward and all-inclusive statutory language, GM would be able to continue to use its NOLs in full after the Treasury sold its stock.

The Treasury had no legal or economic justification for these Notices, which applied to Citigroup and AIG as well as to GM. Nonetheless, the Notices largely escaped public attention, though they had the potential to transfer significant wealth to loyal supporters (the UAW). That it could do so illustrates the risk involved in this manipulation. We suggest that Congress give its members standing to challenge such manipulation in court."

This Red Queen approach to the law cannot be allowed to stand.

The levels of uncertainty which have been introduced into our foreign policy, our regulatory schemes, and the law itself are inimical to the long term interests of the Republic.

UPDATE: Glenn "Instapundit" Reynolds on 0bama Administration lawlessness:

All I can say is, you expected respect for legal niceties from a Chicago machine politician? Hey, Rube!


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Comments (19)

There is no uncertainty in ... (Below threshold)
jim m:

There is no uncertainty in regulation.

This administration will impose regulations that make it expensive, perhaps even cost prohibitive, to do business. However, there is an absolute certainty that it will grant a waiver to those regulation to anyone who provides them with the cash/services needed.

Where did all the media wat... (Below threshold)

Where did all the media watchdogs go? Were they replaced with pod people on Jan. 20, 2009?

though they had the pote... (Below threshold)
jim m:

though they had the potential to transfer significant wealth to loyal supporters (the UAW)

Anyone who doesn't see this as an out and out bribe to the democrat party should take a second look at how much the UAW donates to dem candidates.

The levels of uncertaint... (Below threshold)
Jay Guevara:

The levels of uncertainty which have been introduced into our foreign policy, our regulatory schemes, and the law itself are inimical to the long term interests of the Republic.

And to the short-term interests of Barry and the Democrat Party, who don't seem to grasp that uncertainty is why the economy is moribund.

Everyone is waiting to see what policy they will adopt next, knowing only that it will be hare-brained, which leaves so many possibilities ...

So where's the liberal outr... (Below threshold)

So where's the liberal outrage about a corporation evading taxes?

Someone should remind Government Motors that "paying taxes is patriotic!"

Steve Wynn was great on the... (Below threshold)
recovered liberal democrat:

Steve Wynn was great on the Fox/Luntz focus group friday night. Steve was asked what should the government do? He said, get the hell out of the way. Stop with the over regulation. Lower taxes. Don't raise taxes. Get out of the health business. He said his employees, which he said he values greatly, are seeing their standard of living going down and can't do any more than he is already doing. The whole group said they would love to work for him and agreed with him. Yet later about half said that the "rich" needed to be taxed more. I as a businessman, if corporate and personal rates go up I will do my best to get what I can legally out of the country. I don't think I am alone in my thinking. I have already been incorporated out of state to avoid the state income taxes in this state. It's the total uncertianty that is what is holding me back and most small business from hiring and expanding. One thing is certain though, the Obamalala regime is coming after us. And, if he and they aren't stopped and soon we are in trouble.
p.s. Wynn admitted to voting for Obamalala.

"p.s. Wynn admitted to voti... (Below threshold)

"p.s. Wynn admitted to voting for Obamalala"

What a marvelous business model.

This is how the government ... (Below threshold)
Jeff Blogworthy:

This is how the government destroys competition and creates monopolies. The very things that leftists ignorantly claim are the "flaws" of capitalism.

This is how the governme... (Below threshold)
jim m:

This is how the government destroys competition and creates monopolies.

Yes. Because monopolies can be much more easily controlled by the government. obama has already made it perfectly clear that he hates the free market and would prefer a command economy. Creating government approved monopolies is the fasts way for him to accomplish this .

As the liberals like to say... (Below threshold)

As the liberals like to say when no one is listening, "Things would be better if we could be like China."

"though they had the pot... (Below threshold)
Art W:

"though they had the potential to transfer significant wealth to loyal supporters (the UAW)"

"Potential" is not the same as actual reality, but what am I doing suggesting that to the fact-challenged, reality-challenged likes of Sir Rodney Graves, the prince of factless posts.

And here I thought tax breaks were a good thing to teabaggers. Oh, wait, the potential recipients of good fortune aren't fat white Republican men. Off with their heads, I say -- off with their heads!

Art W as usual, brain dead ... (Below threshold)

Art W as usual, brain dead and clueless.

This regime did transfer billions to their pals in the UAW and banking institutions by ignoring bankruptcy laws or openly giving it to them by 'forgiving' loans.

Treasury has been leading the charge to redistribute wealth as directed by the (P)resident.

Art W,By the way, ... (Below threshold)

Art W,

By the way, how was the prom?

Wolf"Where did all... (Below threshold)
retired military:


"Where did all the media watchdogs go"

They are busy reading Sarah Palin's emails. BTW havent heard much from them on that front have you.

Art W

"the prince of factless posts.

Rodney thankfully he has the king of factless posts title safely locked up and is only threatened by the likes of Chico, and a few other trolls.

One more example of Obama's... (Below threshold)
Jim Addison:

One more example of Obama's propensity to rule by fiat and decree and regulation, in direct contradiction to the letter of the law.

EPA regulates "greenhouse gases" when it is specifically denied authority to do so by Congress. DOJ ignores the laws it wishes, and enforces those it wishes while refusing to prosecute criminals whose victims aren't favored.

NLRB makes up new law out of thin air. FCC regulates things not in their charter or authority.

This is how dictators rule.

Mr. Graves,As an i... (Below threshold)

Mr. Graves,

As an investor, I learned a long time ago to drop or steer clear of any industry that our federal government moved into and/or decided to highly regulate. All they do is prop up the zombies who can't compete on a level playing field and make it that much harder for my company to do well (and for me to do well as a stockholder).

Our government is neck deep in the student loan market, the mortgage housing market, banking, reinsurance, automobiles, airlines, healthcare... I could go on and on, but thats enough to make the point.

I cringe whenever I see a USPS ad (paid for with my tax dollars) to compete with the likes of FEDX and UPS (private enterprise). Isn't having a monopoly on my mailbox enough? Guess not, as USPS is still going broke.

I'm sick and tired of our government picking winners and losers in the market-place. And as for the TBTF banks, I say let the entire rotten structure go bankrupt... and let the chips fall where they may. There are thousands of private community banks that would step into the breach and fill the void.

Our government will never get it right if they continue to intervene, and not let the markets clear, and our economy will continue to be sluggish and grow at less than potential (or regress even further) until Washington gets over their socialist notion that they can manage our economy better than millions on individual entrepreneurs and citizens acting in their own best interest.

I thought the last Bush administration had no business sense, but our current one is just horrific comparatively. Its chalk full of academics, lawyers, and various career political hacks who have never had to make a payroll or run a business at any point in their lives.

8 is the number quoted that I hear as the percentage of this administration that has prior business experience... thats the lowest percentage of any administration in the history of our country. Dang! Any wonder why there are no jobs being created by private enterprise in America today? They see the same things I do in respect to government meddling, capitol crowding out, and stifling regulation... its FUBAR... and they are on a hiring strike. 2012 can't get here soon enough.

Semper Fidelis-

The world according to Bruc... (Below threshold)

The world according to Bruce:

Citizens Act, Governments React, the Military Defends.

Fill in the details as you will; but in a nut shell, thats all there really is...

Semper Fidelis-

Since when do laws even app... (Below threshold)
Caesar Augustus:

Since when do laws even apply to Democrats??

Ceasar Agustus @ 18,<... (Below threshold)
Rodney Graves Author Profile Page:

Ceasar Agustus @ 18,

Since about 1783.






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