March 24, 2009

Unlimited Power To Take Over Non-Bank Financial Companies???

"I'm as mad as hell, and I'm not going to take this anymore!"--Howard BealeI'm with Howard Beale.From the Washington Post:
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.Besides seizing a company outright, the document states, the Treasury Secretary could use a range of tools to prevent its collapse, such as guaranteeing losses, buying assets or taking a partial ownership stake. Such authority also would allow the government to break contracts, such as the agreements to pay $165 million in bonuses to employees of AIG's most troubled unit. WHAT THE HELL?This is America.NO, NO, NO.This is insane. I can't believe it.And this, also from the Washington Post:
"Our system permitted a scale of risk taking that has caused grave damage to the fortunes of all Americans," Geithner said in testimony before the House Financial Services Committee. " . . . We must create a new resolution authority so that the federal government has the tools it needs to unwind an institution of the size and complexity of AIG." "UNWIND."That's the term for the government seizing control of a firm.
...Appearing on television news shows this morning, White House spokesman Robert Gibbs said the White House wants "resolution authority to go in and be able to change contracts, be able to change the business model, unwind what doesn't work."I keep thinking of all the Dems and fringe Left nutjobs and other kooks who railed against the Bush administration for its alleged power grab, yet this "unwinding" and "seizing" crap is no big deal. The Obama administration is tyrannical. It's a power grab like we've never seen. Let me be clear: I HOPE OBAMA FAILS. I AM MAD AS HELL, AND I'M NOT GOING TO TAKE THIS ANYMORE!

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