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
Bank of America Corp... 14.90 -0.35 -2.30%
Apple Inc 95.52 -0.08 -0.08%
Facebook Inc 71.74 -0.91 -1.25%
General Electric Co 25.16 0.02 0.06%
Ford Motor Co 16.77 -0.25 -1.45%
Data as of 12:28pm ET
Index Last Change % Change
Dow 16,461.68 -101.62 -0.61%
Nasdaq 4,333.58 -36.19 -0.83%
S&P 500 1,919.59 -11.08 -0.57%
Treasuries 2.49 -0.06 -2.46%
Data as of 12:43pm ET
More Galleries
For sale: Steve McQueen's 1967 Ferrari The red 1967 sports car is expected to fetch millions at auction. More
The 13 most WTF gadgets From the weird to the gross, these 13 gadgets will make you wonder why they even exist. More
Best-loved cars in America These cars and trucks topped J.D. Power's APEAL survey, which measures how much owners like their new vehicles. 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

Market indexes 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. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.