This article raised my spirits this morning, though I admit that without seeing the details of their case I cannot judge their chances of success. It sounds like some conservatives with backbones (FreedomWorks Foundation, led by Dick Armey) will be challenging the constitutionality of the TARP by filing a lawsuit. With the Supreme Court’s current make-up, I am hopeful that rational minds will prevail and strike down the Bailout (in its current form, anyway) as unconstitutional. To me, apart from the staggeringly idiotic waste of money it represents, the TARP bailout has troubled me for its clear violation of the separation of powers, conferring unprecedented discretionary spending power to the executive branch with no Congressional oversight to date. Again, I am hopeful that this will kill the concept of the bailout in its current form as a federal institution, but $350 billion worth of damage is already done and who knows how much more of the second $350 billion will be spent before this lawsuit sees the light of day. And I’m sure that Congress will find a way to navigate through the Supreme Court’s ruling (whatever it may be) to resurrect the bailout in a new and “constitutional” form.
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As a law student, here's how I see it shaking down:
1. If the issue were about using TARP funds for direct recapitalization of companies, it might be found unconstitutional for going well beyond the powers established for any branch.
2. The court will probably not pick up the case, due to the timing and political nature of the bill. With the money spent, it's a moot issue. If the suit were filed to issue a cease and desist order on spending of TARP funds, it might work, but again, the court is going to have to stretch to make a decisive ruling here.
3. This falls into a grey area of powers, being neither explicitly enumerated nor precluded from executive or legislative power - in these cases, the executive has broader powers so long as it acts with the legislation's consent (I'll try to find the citation to Justice Jackson's opinion after class today).
In summary, it doesn't look good - Congress can pretty much do whatever it wants. If you were to challenge Reid's origination of the bill in the Senate, you'd have a better shot, but as its already been signed into law, it's a rough course.
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