White House calls a timeout on the auto bailout

Looks like taking money from the TARP fund to support an auto bailout isn’t as much of a slam-dunk as it appeared yesterday. It’s being reported this evening that the WH isn’t quite ready to pull the trigger on a bailout. From Reuters:

President George W. Bush said on Monday an announcement on a auto industry rescue was not imminent, leaving the industry’s fate clouded in uncertainty for a little longer.

Interestingly, this seems to correspond with the appearance of a story that popped from Heritage last night demonstrating that it would be illegal to use TARP money for anything other than financial bailout. The Heritage article reports:

More problematic, however, is Treasury’s lack of statutory authority to direct TARP dollars to the automakers. While the statute, passed by Congress in October, grants the Secretary extremely broad discretion to decide how to employ the funds, it clearly limits the recipients to “financial institutions.” The definition of that term is quite clear:

FINANCIAL INSTITUTION- The term `financial institution’ means any institution, including, but not limited to, any bank, savings association, credit union, security broker or dealer, or insurance company, established and regulated under the laws of the United States or any State, territory, or possession of the United States, the District of Columbia, Commonwealth of Puerto Rico, Commonwealth of Northern Mariana Islands, Guam, American Samoa, or the United States Virgin Islands, and having significant operations in the United States, but excluding any central bank of, or institution owned by, a foreign government.

This definition does not leave much room for interpretation.

Oooopsies. That’s a little hard to argue with, as Heritage states. Now I wouldn’t be surprised to see them try to pull it off anyway, but it would seem to me that they’d have to go back to Congress for a modification of the TARP bill, and based on the rejection of the Big 3 bailout in the Senate, I’d say the odds of such a mod would be pretty slim. But perhaps there are other shenanigans maneuvers that the WH can conduct to get around this restriction. I doubt there would be much reluctance to pull out the stops to get this done since President Bush seems bound and determined to make this happen.

It just gets more interesting every day, doesn’t it?