NCPA - National Center for Policy Analysis


April 8, 2009

U.S. Treasury Secretary Timothy Geithner declared last week that some banks will receive huge amounts of new government Troubled Asset Relief Program (TARP) money even if they don't want it.  President Obama, Geithner, et al. tell us they do not want to run companies.  But when they fire chief executives, install new ones, remake boards of directors and force mergers, that is exactly what they are doing, says Steve Stanek, a research fellow with the Heartland Institute.

  • Geithner's announcement that his agency is conducting "stress tests" that could force banks to take more federal money comes just a week after leaders of the nation's largest banks met with Obama and told him they want to pay back the TARP money they have already received, not take more of it.
  • Last week, he announced he would decide, apparently with no firm guidelines, which companies -- including nonfinancial firms -- could pose "systemic risk" to the financial system; such a designation would give the government unprecedented powers to inject itself into any business it chooses, says Stanek.

All of us -- not just corporate executives and shareholders -- should be shocked and frightened by these actions, says Stanek:

  • The Constitution gives Congress, not the president, the power to appropriate money, yet trillions of dollars have been spent, borrowed and committed in the form of various guarantees without congressional approval.
  • The Constitution also blocks the government from interfering in private contracts; various court rulings since the 1930s have weakened the protections, and now the executive branch is shredding them.
  • In addition to recent attacks on (admittedly unjustifiable) contractual bonuses at American International Group, the administration has recently moved to impose unjustifiable mortgage "cram downs" that require lenders to rework loans.

These recent actions amount to a fundamental move away from individual rights and toward state corporatism -- better known as fascism, says Stanek.

Source: Steve Stanek, "Obama's moves a step toward fascism," Chicago Sun-Times, April 4, 2009.


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