The Rule of Law and the Auto Bailouts: A Conversation with Todd Zywicki

with Todd Zywicki

This episode of Liberty Law Talk is a conversation with George Mason School of Law Professor Todd Zywicki about the blatant violations of the federal bankruptcy code and the breach of the rule of law by the Chrysler bailout. Professor Zywicki stresses that the Chrysler bailout abandoned the bankruptcy code’s clear and known rules regarding creditor interests that derive from the code’s 19th century origins. This allowed for the sinister use of the public trough by special interests that benefited from the bailouts. Moreover, Professor Zywicki highlights the fallout in corporate bond markets from the subversion of the legitimated process for corporate bankruptcy worked by the Obama administration. In short, borrowing costs and bond yields for companies similarly situated to Chrysler or General Motors have increased as investors fear being given short shrift to special interests that might receive favorable treatment by the federal government if such a company experiences distress or potential bankruptcy.