PrintApril 28, 2009
Geithner, UAW, and Obama's idea of free enterprise
This is a remarkably disheartening piece by Larry Kudlow writing at The Corner. You must read the whole thing to get the full import of his thoughts on "Bailout Nation" - where TARP II is actually a second federal budget and will be used to basically nationalize the big banks (which means the whole banking system).
But more than this, it is the skewed vision of the president and his advisors about what a free market actually is and how they seem unable to separate politics from policy:
What is going on in this country? The government is about to take over GM in a plan that completely screws private bondholders and favors the unions. Get this: The GM bondholders own $27 billion and they're getting 10 percent of the common stock in an expected exchange. And the UAW owns $10 billion of the bonds and they're getting 40 percent of the stock. Huh? Did I miss something here? And Uncle Sam will have a controlling share of the stock with something close to 50 percent ownership. And no bankruptcy judge. So this is a political restructuring run by the White House, not a rule-of-law bankruptcy-court reorganization.
Meanwhile, top Obama adviser Valerie Jarrett opened the door wide on CNN yesterday to bank nationalization and CEO firings. Unfortunately, my take that the economic stress tests are a political stalking horse for more government ownership, more government control of the banks, and more government disruption of shareholder rights and normal corporate governance looks to be coming true.
Treasury Secretary Geithner, subject of a long and flattering piece in the New York Times , will be running this program despite the fact that he is in bed with the very banks he should be regulating:
Yes, he missed early signs of the crisis. But he was altogether too cozy with the New York banks, especially Citibank - and Robert Rubin along with Sandy Weill. In fact, at one point Weill asked Geithner to be Citi's new CEO. And Geithner joined the board of a Weill-run non-profit to help inner-city high-school students. There were numerous lunches and dinners with Rubin and Weill and other Wall Street luminaries.
With Geithner running the Treasury and the potentially criminal enterprise called TARP, is his incestuous relationship with Wall Street bigwigs a perfect example of the fox guarding the henhouse? Was he too cozy to keep a critical eye on the very institutions that blew up later?
With government in charge of the banks, the potential for political mischief is incredible. And I make no distinction regarding party. Candidates who seek loans might be denied. Credit information on companies may be shared with political appointees who could use it to blackmail companies who don't toe the line and pony up at election time.
This is dangerous, reckless, and of course, totally at odds with what America is all about. And yet the voices that have been raised in organized opposition have been branded racist or kooky.
A world turned upside down, indeed.
Hat Tip: Ed Lasky
