The Fed is constitutional. Proponents of a central bank have been winning that argument since the time of the Founders. The Supreme Court dealt with the question as far back as 1819 in Marbury v. Madison.

I used to challenge my students with the question, “How can we have paper money if the constitution speaks only about coining money?” Because Congress has extensive powers regarding money. A concise and readable article on these topics, written by a professor with no ax to grind, is at:
http://www.geocities.com/CapitolHill/Senate/3616/flaherty3.html

BTW…were you able to accuse the president of such action without being jailed? Go visit a great country like China….where one of the first things you are whispered by your aquaintences is to not say anything bad about the leadership.

Also, it’s only an unconstitutional taking if there wasn’t just compensation in return – how much is an otherwise totally abandoned debt worth? Can we chuck a few GM shares in their general direction?

Yes, it was a joke.

It’s a similar article, but the commentary is useful and no-one has to worry about the Heritage Foundation, just Rupert;

http://online.wsj.com/article/SB122895623197196549.html

Also, I would tend to agree with other posters who have argued that there is no taking where you have the CEOs of each company confirming that holders of existing debt will be wiped out in a matter of weeks without aid.

Clearly someone has been smoking Repbubican Study Group talking points recently. I suggest you lay it off — science has proven it destroys your brain cells.

That goes in my file on why I believe zoning boards and housing associations are Nazis too lazy to march.

(No, I’m not invoking Godwin’s Law, just using an accurate metaphor.)

Maybe you could link to the Wall Street Journal and the constitutional commentary their story contains rather than attracting critics of Heritage Foundation per se.

For example, the are for warrantless, baseless border searches of electronic devices which is plainly a violation of the 4th amendment to the Constitution in the name of combating “terrorism”. They are willing to throw out probable cause because it is too much of a burden for border agents or Homeland (In)Security. See http://www.techdirt.com/articles/20080710/1531421643.shtml

Last month I got fined for parking my 2002 Mercedes Benz on my driveway. Why? Apparently you’re no longer allowed to park your own business vehicle on your driveway according to my County’s Zoning Board. You can park it in a garage, on a side yard, or behind your house… but not your own driveway. Oh, and if your wife works with you in the same business get ready to carpool. I got fined $300 plus $105 in ‘trial fee’ for parking my own car on my own driveway.

I’m going to wait six months on this one. If I still feel as angry about it then as I do now, I’m going to declare total outright war. By the way folks, this anti-Constitutional policy is being enacted in both Republican states and Democratic states.

It’s all a matter of making citizens pay for the government’s debts in whatever means and ways possible.

There really is only one question for me:
Is there any possibility of the Constitutionality argument having any impact here?

No. So it doesn’t matter.

Surely you must be kidding with that description of Heritage. The Heritage Foundation is conservative think tank headed Edwin Feulner, formerly staff head of the House Republican Study Committee. Hardly “just plain folks”.

Lenders of last resort lending to companies in perilous condition routinely do so under first-in-line terms and conditions. This constitutional argument is little more that speculative saber rattling.

You misunderstand the point. The issue for this specific discussion topic is whether the other creditors could sue the US government on the basis of their being harmed because their senior position got pushed behind that of the government.

The answer to that may be “no”, because the bailout would have not harmed, and may have even helped the creditor’s position. Even if the only result was that they got another month’s worth of payments before the fit hit the shan, they would have a tough time proving their case.

A case would require them to show that they were hurt by the government’s actions in some measurable way (dollars and cents), and they would probably have a tough time doing that. If they would have been wiped out anyway, no harm done to them. The government would probably argue that the possibility of preventing a meltdown made it worthwhile policy that didn’t compromise the position of the creditors.

Welcome to extra-constitutional government, now it can reach out and touch everyone.

You may be going a bit far there. The country’s origins involved a fairly similar issue, which was so controversial that it is the subject of Article VI of the Constitution.

Back then, many of the various states and the national government created under the Articles of Confederation were up to their eyeballs in debt, the dollar was next to worthless and the US had zip for a credit rating. With the new Constitution, Hamilton dreamed up the idea of having the new federal government take over this debt by creating a Bank of the United States that could sell bonds to pay off the debt, instead of defaulting on it.

The states that had already paid off their debts weren’t happy with this, because they were going to have to pay taxes to cover the cost of Hamilton’s plan, but he managed to pull it off.

As a result, he established the US’ reputation for paying its bills, because taking the debts away from the states didn’t give them a chance to default, which would have made the US look like the 18th and 19th century equivalent of a third world country.

Repaying the bonds gave the US a worldwide reputation for having a credible treasury that would keep its promises, which in turn allowed the US to borrow money at low interest rates, making it a stronger country. Not bad for a bunch of rebellious rabblerousers who had tossed a pile of tea into Boston Harbor.

Don’t talk about something which you know nothing about. The Heritage Foundation has been very critical of George W. Bush and this administration on most major issues. Here’s a shocker: President Bush is not a conservative. He never was, and never will be.

The Heritage Foundation is a conservative institution that advocates conservative values. (most of which this administration does not represent)

Really? Exactly how much do you think the giveaway, err, bailout, would have to be for GM and Chrysler to survive?

$15B is pissing in the wind. They’ll burn through this money servicing their debt and keeping the voice mail and elevators going during business hrs for 2 months.

It’s either “just a scrap of paper” or it isn’t.

One more example of right-wing hypocrisy.

The question you ask could be rightly posed to investors in Washington Mutual and Wachovia. Both those stocks went to zero because of the inability for those institutions to market-price MBS instruments they held and hence bankruptcy. Yet they held $billions$ in real estate and stocks.

Why do those outfits go bankrupt while investors in Citibank (hypothetical buyer of Wachovia, which itself tried to go tits-up last week) Merril Lynch, and JP Morgan get to benefit – at least in the long term – from these dirt-cheap midnight sweet-heart deals that let them buy hundreds of billions in assets and deposits for pennies on the dollar?

Welcome to extra-constitutional government, now it can reach out and touch everyone. Perhaps that will be a blessing in disguise.

Right. If that’s true, then the existing lenders have no case, because they lost nothing.

The alternative is a bankruptcy filing. If GM or Chrysler filed, they would probably go into Chapter 7, wiping out the value of many of these obligations. The creditors are helped, not harmed, by the bailout, because it delays or avoids the liquidation scenario.

Another alternative would be for the government to get these creditors to sign subordination documents, that clearly put the creditors in back of the government. If the creditors refuse to sign, no money from Uncle. Of course, that would involve playing chicken, and so far, the government has done a lot of crowing. Maybe too much crowing.