Last week the Treasury Department bought a $5 billion stake in GMAC as part of a plan to transform the lender, formerly the financial arm of General Motors, into a bank holding company. The New York Times reported that GMAC wanted to become a bank mainly so it could be considered a “financial institution” and thereby qualify for money from the $700 billion Troubled Asset Relief Program (TARP).

Yet the Treasury used TARP funds to invest in GMAC. In other words, if the Times has the story right, GMAC received TARP money so it could be eligible for TARP money.

This paradox highlights the lawlessness of the Bush administration, which has ignored statutory restrictions on TARP and treated it as a slush fund for politically favored supplicants. Although he has strongly criticized President Bush for flouting the law and exceeding his constitutional powers, President-elect Obama has applauded the latest manifestation of that tendency.

via The TARP That Covers Everything: The GMAC bailout highlights the lawlessness of the Bush administration – Reason Magazine.