Legal Question in Constitutional Law in North Carolina

Re: The Constitutionality of the Federal 700B+ Financial Bailout

Soon after I posted my prior response I realized I had been a bit too dismissive of your claim that federal ownership of financial institutions was "socialist". It actually is in some respects. But the fact that something can be described as "socialist" doesn't mean it's unconstitutional, or even that it is unwise.

The word "socialist" can be used with varying degrees of accuracy to describe social security, public education, welfare, the FDIC, the FDA, the FCC and many other government programs, but they are all constitutional. Moreover, the large majority of Americans favor each of them, even though they may wish some were run differently.

Of course, whether something is constitutional does not depend upon how the majority feels about it. The bailout proposal does not violate the Tenth Amendment no matter how many people feel the same way you do about it.

Re: The Constitutionality of the Federal 700B+ Financial Bailout

Sorry, but I don't see a Tenth Amendment violation here. The bailout involves spending the federal government's money, which is indeed a power "delegated to the United States by the Constitution". (See Article I, section 8.) It would make no sense to argue that the power to spend the federal government's money was reserved to the states or to the people.

I don't see why you think that this plan "violates the balance between the three government branches", since you don't say which branch you think is gaining authority or which branch you think is losing it. Ordinarily, when the government spends money, the spending plan is contained in bills passed by Congress and signed by the president. That is what is happening here.

The Constitution does not forbid the government to own equity stakes in financial institutions (though there are good public policy reasons why it shouldn't, at least not permanently) or to own mortgages. I'm not sure this can really be called "socialist", either, unless you thinks federal ownership of *any* property amounts to socialism.

Bear in mind that the government plans to sell these assets once they have regained much of their value. Is hard to say how much the government will recoup or when this will happen, but it is not going to hold these assets permanently and is not going to lose anything approaching $700 billion. It could even manage to make a profit on the deal.

There may be problems with the plan, but I don't think the Tenth Amendment is one of them.