Yesterday, Justice Ruth Bader Ginsburg rightly put a hold on the Obama Auto Task Force’s plan for selling Chrysler to Italian automaker Fiat  in order to take a closer look at the claims made by teachers and police officers that their rights as secured creditors were violated in the way this plan was put together.

As I've discussed in earlier posts, the question in all this is whether the Obama Administration had the right to violate established bankruptcy law to give unsecured lenders like the United Auto Workers priority in place of secured lenders like the Indiana pension funds who brought the case forward. According to established law, secured lenders have first priority in bankruptcy cases to recover debts owed to them.

Indiana State Treasurer Richard Mourdock also argued that the Treasury Department should not have been allowed to use money in the Troubled Asset Relief Program (TARP) to help Chrysler and General Motors reorganize.

David Skeel, a professor of corporate law at the University of Pennsylvania, says that the pension funds have a legitimate case:

"I'm very encouraged that they did decide to at least take a closer look because the one thing that nobody has really done yet is that. Everything has been so rushed from the minute the sale was proposed. It sure looks like the sale promises [the union] a fair amount more than they would get in a normal bankruptcy."

We can't choose to follow the law sometimes, and then sidestep it when it gets in our way. The rule of law is an important principle that should not be ignored when it is inconvenient. This case is just another example of Washington’s arrogance.  They chose to side with their political allies in the UAW over the rights of hard-working Americans.