Which section of the U.S. Constitution gives the federal government the power to bail out banks? If you don't know, it could be because no constitutional authority exists for such an action. It is all too common for both Congress and the executive branch to ignore that the Constitution limits what they can and cannot do.
A number of constitutional scholars, including former New Jersey Supreme Court Judge Andrew P. Napolitano and Robert A. Levy (who spearheaded the recent successful suit to overturn Washington, D.C.'s unconstitutional ban on gun ownership), have argued that the bank bailout scheme is unconstitutional. In a recent article in the Legal Times,Robert Levy stated: "The federal government has no constitutional authority to spend taxpayers' money to buy distressed assets, much less to take an ownership position in private financial institutions. And Congress has no constitutional authority to delegate nearly plenary legislative power to the Treasury secretary, an executive branch official." (This violates the separation of powers provisions of the Constitution.)Full Story.
UPDATE: Our Banking Bailout Lawsuits
Under the Rules of the Supreme Court of the United States our application to enjoin the further transfer of public funds to A.I.G. or any other private company under the $700 billion bailout plan was automatically delivered to Justice Ruth Bader Ginsburg, the Circuit Judge for the Second Circuit.
Justice Ginsberg denied the application on October 21, 2008, a full seven days after our emergency application was filed. We did not learn of her decision until we called the Court on Thursday, October 23.
However, under the Court’s Rules, we then had the right to resubmit our application to a Justice of our choice who could then rule on the application himself or refer the application to the full court for a determination.
We chose Justice Antonin Scalia. Last Thursday, October 23rd, we submitted our application to him by overnight Express Mail.
Click here for a copy of our letter to Justice Scalia.
We are pleased to announce that Justice Scalia has distributed our application to the full Court, which will decide the matter at a conference on November 14, 2008. Click here for the SCOTUS docket sheet. At that time the Supreme Court could either issue a restraining order against the Government or deny our application. The restraining order would stop the transfer of public funds pending an expedited determination of the Government’s authority to use public funds in aid of decidedly private undertakings. If the application is denied, the full $700 billion money could be spent while the main case proceeds, eventually determining the underlying question of the Government’s authority to use public funds in aid of private undertakings. Full Story.