Friday, April 24, 2009

TARP = Nationalizing the Banks = Socialism

As if we needed another reason to think the TARP program was a bad idea, we now can say, with absolute certainty, that "bailing out" banks was really a way to nationalize them. Another link to HotAir with a story about a bank in Minnesota that "took" $361 million in TARP money it didn't really want. The bank is in good health, so it wanted to give the money back rather than deal with all the new strings that came with the money (most of which were not announced until after the money was doled out). It paid it all back, plus interest, plus it agreed to a Treasury demand that it cut its dividend from $.25 to $.05 per share in the first quarter. So, in order to allow this bank to give back it's public money, the bank had to screw its private investors. There's no reason for this other than to make it extra difficult to return the money it didn't need or want in the first place.

Couple this with the plan to convert TARP holdings of preferred shares into common-stock shares of banks who "fail" the "stress tests" designed and judged by the Treasury Department. So, the government designs the test, gives the test, judges the results of the test, and then assumes a massive voting share in banks that don't measure up to the government's standards. Imagine letting Barney Frank tell Bank of America what to do? Just recall what a bang-up job the government did with Fannie Mae and Freddie Mac.

There is simply no other way to look at this other than to say that the current administration is pursuing an industrial policy that is socialist - direct government ownership of significant parts of the economy.

America grew to greatness as a capitalist country. We will descend into mediocrity pursuing the current path.

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