Thursday, March 26, 2009

Geithner to make power play before Congress today

It’s going to be a long day on the Hill as Treasury Secretary Tim Geithner outlines his plan to toss capitalism out the window. For some time, I have heard certain Republicans warn us of the Obama administration’s desire to increase the size and power of the government. Well, as much as I hate to admit it; Geithner’s scheduled proposal today to Congress is certainly evidence of that. Though this is obviously a reactionary response to the current economic crisis; the requests for regulations and mandates have clearly crossed the line. The thought of putting that much power in the hands of a Cabinet member scares the hell out of me.

According to an article in the Washington Post (see, this proposed plan is the most aggressive since The Great Depression. The focal point of Geithner’s argument to Congress (no doubt at the behest of President Obama) is the necessity for the government to assume the responsibility of imposing regulations and mandates on ALL large financial institutions. Bid a fond adieu to our long history of the laissez faire approach to business; the foundation of capitalism.

Although President Obama alluded to the need for additional oversight in other financial sectors other than banking; I never dreamed it would be of this magnitude. Among the proposed mandates is to pay workers based on seniority and eliminating bonuses for what they will deem as short-term gains. Does this include the elimination of commissions on sales as well? How far do they intend to go? This will all be monitored by a specified government agency. Many experts predict that the Federal Reserve will be the likely choice. Don’t they answer to Geithner? This is a man who has yet to fill key positions in the Treasury; among them a Deputy Secretary.

Along with the previously mentioned proposals; Geithner is asking for the right to seize any company that he feels has put itself in danger due to risky investments. Doesn’t the government have enough on its plate in regard to the economy without adding to it by assuming the management of large financial institutions? As part of the plan, the FDIC would take over the management of these corporations. FDIC chairman Sheila C. Blair is a strong proponent of this plan citing the FDIC’s record of salvaging financial collapses. And yet; not one instance was given. Also on board and scheduled to testify today is SEC chairman Mary Schapiro-it seems they all want a piece of the pie.

I have not been asleep for the past few years so I am aware of the state of the economy. However, to completely restructure, or eliminate our capitalistic system seems a bit drastic to me. It seems that Geithner’s power play may be an indication of the lack of faith the Obama administration has in its own plans. I pray that isn’t the case.

Geithner was quoted as saying: “Our plan will give the government the tools to limit the risk-taking at firms that could set off cascading damage.” It seems a little late to close that barn door. Beware the wolf in sheep’s clothing.

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