Was the financial bailout legal?

Constitutional scholars are debating the legality of the $700 billion financial bailout, The Wall Street Journal reports.

The consensus seems to be that the Troubled Asset Relief Program was necessary to rescue the finance system, which got $475 billion. But opinions on the bailout of the auto industry are mixed.

TARP assistance was originally designated by Congress to go to “financial institutions,” the Journal reports.

“There is no suggestion that you can bail out any institution in the nation just because you’ve got the word ‘institution’ in the language,” one conservative scholar, University of Virginia’s Saikrishna Prakash, was quoted in the Journal.

But until a case like this comes before the courts, the legal debate continues.

Meanwhile, Treasury finalized its sale of Citigroup stocks today. The government is making a gross profit of $12 billion on its $45 billion cash investment in the banking company, the Journal reports.

The sale helps Treasury respond to criticism that the government became too involved in bailing out the banks, say the Journal.

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