Breaking Views

Supreme Court right to delay Chrysler-Fiat deal

With all that's on the line for American business, the nation's highest court is providing a welcome delay.

EMAIL  |   PRINT  |   SHARE  |   RSS
 
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all CNNMoney.com RSS FEEDS (close)
By Rob Cox and Richard Beales, breakingviews.com

(breakingviews.com) -- The railroading of secured lenders by the White House in Chrysler's reorganization raised troubling questions about the rights of U.S. creditors. That the highest court in the land has now signaled a willingness to consider the merits of arguments made by those opposed to the deal is good for capitalism -- not to mention democracy.

To be clear, the Supreme Court has not sided with the Indiana's state treasurer's contention that the subjugation of secured Chrysler creditors was illegal. Rather the court has delayed the transfer of Chrysler's assets to Italy's Fiat until the bench can decide whether it should hear Indiana's case.

But given the importance of the situation, this is a welcome delay. At stake is more than just whether Fiat starts making Alfa Romeos in Ohio this month or next. By putting the United Auto Workers' rights above those of secured lenders -- and in the process seemingly upsetting years of established bankruptcy law -- the government risked creating uncertainty about the rule of law, and perhaps discouraging those willing to put capital at risk in America.

The government may in fact have a reasonable case to make that the rapid restructuring of Chrysler and the apparently generous allocation of spoils to the union is for the greater economic good. The quick-fix version of Chapter 11 may get the company back in the business of manufacturing vehicles without the prospect of striking workers.

But because the biggest Chrysler creditors, who caved to the White House's plan, were recipients of more than $50 billion of bailout funds, their rubber-stamping of the restructuring plan hatched by Obama's auto task force had the potential to undermine faith in due process.

The Supreme Court was intended to act as an un-politicized check on the powers of the executive branch of government. So whatever the outcome, that the Supremes are taking a little more time to decide whether this case merits a full hearing is good not only for confidence in American business, but also for democracy. To top of page

Company Price Change % Change
Apple Inc 117.60 -1.02 -0.86%
Bank of America Corp... 17.10 -0.08 -0.47%
Huntington Bancshare... 10.11 -0.07 -0.69%
Kinder Morgan Inc 40.75 -0.04 -0.10%
Ford Motor Co 15.68 0.01 0.06%
Data as of Nov 25
Index Last Change % Change
Dow 17,814.94 -2.96 -0.02%
Nasdaq 4,758.25 3.36 0.07%
S&P 500 2,067.03 -2.38 -0.12%
Treasuries 2.26 -0.05 -2.16%
Data as of 12:48am ET
More Galleries
5 ways retailers are tracking you If you think pesky salespeople are invading your personal space, check out these 5 technologies that are tracking your movements throughout a store. More
Moto X vs. Droid Turbo: Which Droid should you buy? Motorola has made the two best Android smartphones this year. Here's how they stack up. More
My part-time job is a dead end, but it's all I can find CNNMoney profiles 4 of America's 7 million part-time workers unable to find full-time jobs. More
Worry about the hackers you don't know 
Crime syndicates and government organizations pose a much greater cyber threat than renegade hacker groups like Anonymous. Play
GE CEO: Bringing jobs back to the U.S. 
Jeff Immelt says the U.S. is a cost competitive market for advanced manufacturing and that GE is bringing jobs back from Mexico. Play
Hamster wheel and wedgie-powered transit 
Red Bull Creation challenges hackers and engineers to invent new modes of transportation. Play

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.