President Obama made a move recently to expand the powers of the Treasury Department in seizing firms beyond the limited scope of banks and financial institutions as was previously authorized. I have to wonder if anyone stopped for a moment to think about this one but I’m sure the answer is a resounding “No”.
The WaPo reports on the desperation:
The Obama administration is considering asking Congress to give the Treasury secretary unprecedented powers to initiate the seizure of non-bank financial companies, such as large insurers, investment firms and hedge funds, whose collapse would damage the broader economy, according to an administration document.
The government at present has the authority to seize only banks.
Giving the Treasury secretary authority over a broader range of companies would mark a significant shift from the existing model of financial regulation, which relies on independent agencies that are shielded from the political process. The Treasury secretary, a member of the president’s Cabinet, would exercise the new powers in consultation with the White House, the Federal Reserve and other regulators, according to the document.
The administration plans to send legislation to Capitol Hill this week. Sources cautioned that the details, including the Treasury’s role, are still in flux.
Treasury Secretary Timothy F. Geithner is set to argue for the new powers at a hearing today on Capitol Hill about the furor over bonuses paid to executives at American International Group, which the government has propped up with about $180 billion in federal aid. Administration officials have said that the proposed authority would have allowed them to seize AIG last fall and wind down its operations at less cost to taxpayers.
The administration’s proposal contains two pieces. First, it would empower a government agency to take on the new role of systemic risk regulator with broad oversight of any and all financial firms whose failure could disrupt the broader economy. The Federal Reserve is widely considered to be the leading candidate for this assignment. But some critics warn that this could conflict with the Fed’s other responsibilities, particularly its control over monetary policy.
The government also would assume the authority to seize such firms if they totter toward failure.
So we’re still running on the “too big to fail” model which has proved to be unsuccessful thus far in stemming economic damage. The problem is that President Obama seeks to prop up failure by taking money out of your pocket to do so. Instead of allowing a failing company to enter bankruptcy, the public will now be owners reminiscent of Hugo Chavez’s policies in Venezuela.
People fear the concept of bankruptcy but it is there for a reason. Take General Motors for example. The government loaned/gave them billions of dollars to continue operating a few more months. The issue is that the core reasons why GM was in such dire straights were never addressed. If GM ends up filing bankruptcy they will have the opportunity to shed union contracts, renegotiate numerous other contracts and have the right to actually terminate positions which are now union protected. Therefore, after bankruptcy GM would emerge as a much more healthy, efficient company which might have a chance at making a profit. As they’re standing, they’re still in dire straights but now it’s on your dime.
Instead, President Obama led by his incompetent Treasury Secretary will be seizing companies which are failing in order to prop them up and preserve the failed status-quo. The obvious issue, of course, is what do we do 3 or 6 months from now when these companies are still failing and we still own them? Obama isn’t going to close them, instead we’ll end up with taxpayer-owned companies which are losing money. Welcome to AIG among others.
In fact, is Obama oblivious to the fact that this is exactly what we did with AIG and look where we are now? AIG is still losing money and we’re all screaming about their bonuses. Do we think it’s going to be any different moving forward every time Obama’s socialist government steps in to interfere with capitalism?
There is a cure if you want it.
In other news, the Zogby polling organization is showing a healthy trend for the country:
The honeymoon is over, a national poll will signal today as President Obama’s job approval stumbles to about 50 percent over the lack of improvement with the crippled economy.
The sobering numbers come as the president backpedals from two prime-time gaffes – one comparing his bowling score to a Special Olympian and another awkwardly laughing about the economy, which prompted Steve Kroft of “60 Minutes” to ask “are you punch-drunk?”
Pollster John Zogby said his poll out today will show Americans split on the president’s performance. He said the score factors out to “about 50-50.”
Some polls show Obama coasting with a 65 percent job approval, but not in Zogby’s tally.
“The numbers are going down,” Zogby told the Herald. “It’s not because of the gaffes, but a combination of high expectations and that things aren’t moving fast enough with the economy.”
As for the president’s love of the limelight, it could backfire, according to a media watcher.
“I thought he overexposed himself weeks ago,” said Tobe Berkovitz, associate dean of Boston University’s College of Communication.
So we’re heading downhill with regard to Obama’s approval ratings as Americans watch the incompetent circus happening in Washington. There is hope for change away from Obama’s socialism.