Monday, April 06, 2009

Obama's Plan to Bring Corrupt Cronyism to Nationalized Businesses

You can take a politician out of Chicago but you apparently cannot take the Chicago out of a politician!!

This is truly frightening:

Obama Wants to Control the Banks
There's a reason he refuses to accept repayment of TARP money.
Wall Street Journal
APRIL 4, 2009

Here's a true story first reported by my Fox News colleague Andrew Napolitano (with the names and some details obscured to prevent retaliation). Under the Bush team a prominent and profitable bank, under threat of a damaging public audit, was forced to accept less than $1 billion of TARP money. The government insisted on buying a new class of preferred stock which gave it a tiny, minority position. The money flowed to the bank. Arguably, back then, the Bush administration was acting for purely economic reasons. It wanted to recapitalize the banks to halt a financial panic.

Fast forward to today, and that same bank is begging to give the money back. The chairman offers to write a check, now, with interest. He's been sitting on the cash for months and has felt the dead hand of government threatening to run his business and dictate pay scales. He sees the writing on the wall and he wants out. But the Obama team says no, since unlike the smaller banks that gave their TARP money back, this bank is far more prominent. The bank has also been threatened with "adverse" consequences if its chairman persists. That's politics talking, not economics.

Think about it: If Rick Wagoner can be fired and compact cars can be mandated, why can't a bank with a vault full of TARP money be told where to lend? And since politics drives this administration, why can't special loans and terms be offered to favored constituents, favored industries, or even favored regions? Our prosperity has never been based on the political allocation of credit -- until now.
And if you think the above is foolish scaremongering, read this:

Geithner May Oust Executives at Banks Needing ‘Exceptional’ Aid
By Jesse Westbrook
Blomberg NewsApril 6, 2009

Treasury Secretary Timothy Geithner said he’s prepared to oust executives and directors at banks that require “exceptional” assistance from the U.S. government.

“If in the future, banks need exceptional assistance in order to get through this, then we will make sure that assistance comes,” while ensuring taxpayers are protected, Geithner said yesterday in an interview on the CBS “Face the Nation” program. “Where that requires a change in management and the board, then we will do that.”
And this:
U.S. Plans Key Role In Naming GM Board
Government's Sway Over Firms It Aids Is Topic of Debate
By Peter Whoriskey and Kendra Marr
Washington Post
Wednesday, April 1, 2009

The Obama administration will play a key role in reshaping General Motors’ board of directors over the next six months, potentially giving it even greater control in the management of the storied American manufacturer.
The president’s auto task force plans to consult with the company as it replaces a majority of its board, a White House official said. The board today largely consists of the current and former chiefs of major U.S. corporations such as Coca-Cola, Ernst & Young, Pfizer and Eastman Kodak. It is not known which of the 12 board members will leave.

The president said Monday that “the United States government has no interest in running GM.” But in practice it is already exerting tremendous influence over it, a situation that has triggered fierce debate over how much power the government should wield over the companies that it aids.

Kent Kresa, 71, GM’s new chairman, said yesterday that company officials will seek to replace a majority on the board by August, as the automaker moves to restructure operations.
It was "Crony Capitalism" (PDF) that was most directly responsible for the collapse of mortgage giants Fannie Mae and Freddie Mac which precipitated the broader financial disaster. People like Rahm Emanuel, now Obama's White House Chief of Staff were rewarded by Bill Clinton with a lucrative seat on the boards of these companies where they could vote themselves huge bonuses and direct that the companies make large campaign contributions, mostly to Democrats.

Now, Obama wants to extend the same corrupt practice to businesses which are taking federal bailout dollars. Rewarding friends and punishing enemies is the old politics as usual that Obama swore he would end. While you can take a politician out of Chicago you apparently cannot take the Chicago out of a politician!

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