The Obama administration is considering asking Congress to give the Treasury secretary unprecedented powers to initiate the seizure of non-bank financial companies, such as large insurers, investment firms and hedge funds, whose collapse would damage the broader economy, according to an administration document.
The government at present has the authority to seize only banks.
I would hope even leftist civil liberties outfits are starting to get a clue about this guy ..
And why do Libertarians vote Democrat so often?
So many questions and no answers (that make sense). The only one that makes sense to me is the Bible’s use of the term “great delusion”.
Don
Comrades, the revolution has begun, and not a shot fired, or a protest lodged!
Well, libraryjim #3, in all fairness, I don’t want to see shots fired, and there have been protests and will be more. What needs doing is for every congressional district to run a conservative in 2010. I’m not fussy about whether these are Republicans or conservative Democrats to challenge incumbent liberals. It’s important to take away the power leftists have right now to pas whatever they want to.
State ownership of the means of financial production. Hmmm…this is ringing a bell. Maybe Mr. Wilkins can refresh my memory as to what strain of political economy this springs from.
What a silly, if predictable, set of knee-jerk reactions!
Reading the comments, you’d think the Treasury were proposing ideologically driven nationalization of the financial sector, outright confiscation, or both.
Our legal system provides for taking control of (“seizing”) defaulting debtors’ property under many circumstances.
—If you default on your mortgage, the lender can seize your home by foreclosure.
—If you default on your car loan, the lender can seize the car by driving it away, a process known as self-help repossession.
—If your firm can’t pay its debts, any three creditors can put the firm in bankruptcy and ask the court to appoint a trustee to take control of the firm.
—If one of your creditors gets a court judgment against you, the sheriff can seize your property and sell it at auction.
—If your bank operates unsafely, its regulator can appoint a receiver to take control of the bank. There’s nothing radical about that: bank receivership has existed since the 1830s.
—If your insurance company is in danger of failing, its regulator can have a court appoint a receiver to take control of the firm.
—If your securities broker can’t meet its obligations, the Securities Investor Protection Corporation can have a court appoint a trustee for the firm.
—Last year, on the Bush Administration’s recommendation, Congress (belatedly) authorized the government to appoint a receiver for Fannie Mae and Freddie Mac if those firms faltered or had inadequate capital.
These mechanisms for seizing the property of defaulting debtors and faltering financial institutions are legitimate, prudent parts of our legal system. They involve no communist revolution, no assault on private property, no takeover by the comrades.
Nor does the Treasury proposal involve confiscating private property. If a faltering firm has assets remaining after the receiver has satisfied the firm’s debts, those assets go to the firm’s shareholders. Receivership isn’t perfect, but neither is foreclosure, repossession, or bankruptcy.
Sad to see the proposal (whatever its pros and cons) become a Rohrshach test for ignorance and political bigotry.
Sad to see a very intelligent liberal, who was outraged by the Bush administration’s alleged encroachment into civil liberties, find that authorizing government intervention in more and more industries is “ignorance and political bigotry.” There is a lot of that going around.
Sorry, I mean finding that protests against government intervention are ignorance and bigotry.
[blockquote]Our legal system provides for taking control of (“seizing”) defaulting debtors’ property under many circumstances. [/blockquote]
None of those examples you call out, Irenaeus, include the federal government assuming de facto ownership and permament operational control of the entity. Fannie and Freddie were already GSE’s, so your example is strained.
If the choice is between taking a big economic blow or having our nation’s financial and major manufacturing sectors turn into permanent wards of the State, I say let the mother burn. There are enough smart folks who know how to pick up the pieces, and precious few of them are in government jobs.
Katherine [#7]: [i]All[/i] defaulting firms face possible government seizure of their property, whether by a bankruptcy court, a sheriff, or a specialized receiver. These mechanisms provide orderly means for enforcing creditors’ rights. They also help avert broader harms (e.g., runs and panics) posed by the disorderly collapse of financial institutions.
The firms to which the Treasury proposal would apply are, as best I can tell, already subject to bankruptcy proceedings or the like. Thus the proposal does [i]not[/i] make more types of firms subject to government seizure. It would replace a potentially slow and haphazard bankruptcy proceeding with a faster, more efficient receivership. In the case of insurance companies, it would provide a rapid, unified alternative to putting an insurer through 50 state receiverships.
Given the speed at which financial institutions can fail and financial crises can arise, it makes sense to have an efficient, expeditious process for handling the failure of large financial institutions.
(I have grave concerns about financial bailouts, all the more so in the case of nonbank firms. But the government has been doing that since last summer. In any event, it’s not the aspect of this proposal that elicited the silly talk about comrades and confiscation that I criticized in #6.)
As for your personal comment, I’m fiscally and culturally conservative, pro-life, and support strong law enforcement, free markets, free trade, and limited government. The views I’ve voiced over the years on T19 and Stand Firm are consistent with those principles. By the generally accepted standard of American politics (e.g., how Americans self-identify when asked their views), I’m a political moderate.
Political bigotry = noting collectivist goals and behavior in liberals
[i] None of those examples you call out, Irenaeus, include the federal government assuming de facto ownership and permanent operational control of the entity [/i]
Nor does the receivership aspect of this proposal. Receivership involves [i]temporary[/i] control pending resolution of the failing firm’s liabilities.
Never in American history (so far as I can recall) has financial institution receivership involved permanent government control.
Elections – General AND Primary – produce consequences. Yet again we are recipients of another gift given us by 53% of the voters who visited this plague upon us by their fascination with the bright, shiny object – HopenChange. Let’s all sing another round of The Internationale to celebrate the gift we have been given!
[i] Political bigotry = noting collectivist goals and behavior in liberals [/i]
Political bigotry includes misrepresenting a proposal because you don’t like the person offering it.
Political bigotry includes the inconsistency of principle (if not outright hypocrisy) that treats a proposal differently if it comes from Geithner than from Paulson—so differently as to rant about comrades and radical confiscation.
Irenaeus, I second the comment that points out that government interventions such as you describe are aimed at the orderly payment of debts and possibly dissolution and disbursement of remaining assets. We are embarking on a course (and I agree this predates the current administration) of intervention in which government, not bankruptcy courts, tries to manage theoretically going concerns. Whether this is the Bush administration or the Obama administration, careful consideration of where we are headed with this is not ignorance or bigotry. If you meant a particular comment, please say so in the future.
I am glad to hear you are a “moderate” in politics. I know you are a Christian in theology, but I could not necessarily have told that you are a moderate politically based on your comments. I don’t read them all, of course, so I no doubt have missed things. We have become accustomed, over the last eight years, to ugly personal charges being thrown at the country’s leadership. I don’t think, either then or now, that disagreement with the policies proposed by either administration necessarily qualifies as ignorance, bigotry, or anything other than honest disagreement.
I also agree that there doesn’t seem to be much difference between Paulson policy and Geithner policy, except that this plan offered by Geithner was according to reports considered and rejected by Paulson. There is not, as far as I can tell, a “Republican” financial community and a “Democratic” financial community. People seem to move in and out of banking, investment, and regulatory positions, and the whole group appear quite inbred. TARP I was sold as a way to rescue the credit system from imminent collapse. I became reconciled to it only when I read a column by Steve Forbes urging that it be done. Is it working? Hasn’t it, in fact, been expanded to include lots of things we didn’t think we were going to do when Congress passed the original funding (over the objections of many conservatives)?
Katherine [#15]: There’s much to criticize in the financial rescues we’ve seen since last summer. Here are some thoughts in response to a question you asked me on an earlier thread.
Over the past 9 months, policymakers responded to problems ad hoc. They did not accurately size up the magnitude of the problem. They did not develop plans adequate for resolving the problem if it turned out worse than expected. They did not articulate and apply a clear, consistent set of principles for dealing with faltering financial institutions (e.g., no bailing out shareholders). Nor did they propose the sort of reforms needed to avert future crises. In a rational world, you fix the roof while the sky is blue, but out political system doesn’t work that way: you need a crisis to overcome those who say “if it ain’t broke, don’t fix it.†We need to put needed reforms in place now, even if we phase them in gradually. Dealing with toxic assets is important, and Geithner’s plan may help. But correcting toxic incentives is at least equally important.
PS: I fought for decades to curtail government subsidies and increase market discipline in the financial sector. The rash of bailouts may well have swept that all aside. Reestablishing meaningful market discipline will be difficult.
[i] There doesn’t seem to be much difference between Paulson policy and Geithner policy, except that this plan offered by Geithner was according to reports considered and rejected by Paulson [/i]
Paulson made a receivership proposal on Nov. 20 in [url=https://treas.gov/press/releases/hp1285.htm] a speech at the Ronald Reagan Presidential Library[/url]:
“Regulators did not, and still don’t, have the authority to administer receivership-like proceedings for non-depository institutions that fail, as they do for commercial banks. The Bear Stearns situation exemplified something former Federal Reserve Chairman Greenspan has pointed out: the real issue is not that an institution is too big or too interconnected to fail, but that it is too big or interconnected to liquidate in a timely and orderly fashion.”
[blockquote]Nor does the receivership aspect of this proposal. Receivership involves temporary control pending resolution of the failing firm’s liabilities.
Never in American history (so far as I can recall) has financial institution receivership involved permanent government control. [/blockquote]
And never in American history have we had an extra-constitutional national healthcare plan. But these fascisti are going to make a play for it, just like they’re making a play for the financial sector.
Further, I searched in vain for the word “temporary” in the linked article. Can you help me find it? Moreover, if this is just routine receivership, then what’s the Executive Branch doing meddling with it? Why the end-run around the usual process but to inject politics into A – the go/no-go decision and B – the post-takeover operation of these firms?
As with your protestations about Fannie and Freddie, I find your bromides less than soothing here.
Enough federal arrogation of power. Butt out.
You know, I hate to bring it up since it’s not part of the discussion per se, but Irenaeus mentioned it first – being pro-life, yet supporting Obama. So, yes, not necessarily politically moderate.
This is absolutely one of the most dangerous ideas ever floated in the United States. It must be defeated.
Thank you for your answer, Irenaeus.
[i]If this is just routine receivership, then what’s the Executive Branch doing meddling with it?[/i]
Receivership authority doesn’t grow on trees. You need Congress to enact enabling legislation. The Treasury is planning to make a legislative proposal.
_ _ _ _ _ _ _ _ _ _ _ _ _
[i] Why the end-run around the usual process? [/i]
There is no end-run. The question is what process should apply.
Bankruptcy courts are not designed to deal quickly with a huge financial institution failure. Receivership is more efficient and much faster.
_ _ _ _ _ _ _ _ _ _ _ _ _
[i]Political bigotry = noting collectivist goals and behavior in liberals[/i]
A drive-by swipe in the grand manner of Susan Russell.
_ _ _ _ _ _ _ _ _ _ _ _ _
[i] This is absolutely one of the most dangerous ideas ever floated in the United States [/i]
Read comment #6.
PS: We’ve had a national bank receivership statute since 1864, and it has worked well. Life goes on.
_ _ _ _ _ _ _ _ _ _ _ _ _
[i]Being pro-life, yet supporting Obama[/i]
As do an overwhelming majority of the world’s orthodox Anglicans. Don’t kid yourself about the political views of Global South Anglicans.
Which, Irenaeus, is why I am being confirmed this Paschal Vigil into the RC Church. But I’m interested as to why you think just because others in the religious arena are pro-choice that that should affect your views – you certainly put much serious thought into other areas, why not this one? You say “pro-life,” but vote for someone who saw no need for medical care for babies born alive. I guess I’ve come to believe (after many years of saying “I never would have an abortion myself, but I can’t speak for anyone else – that’s their decision”) that the RC Church is correct when they say the sanctity of human life underlies all other considerations. That sanctity is why we are concerned about wealth distribution and economies and taxes, etc. Without that foundational idea of “made in the image of God” why does the rest of all this matter?
[i]Which, Irenaeus, is why I am being confirmed this Paschal Vigil into the RC Church[/i]
I trust you have better reasons than avoiding Obama supporters. The overwhelming majority of the world’s Roman Catholics also support Obama.
[blockquote]Receivership authority doesn’t grow on trees. You need Congress to enact enabling legislation. The Treasury is planning to make a legislative proposal. [/blockquote]
Duh. Please don’t be obtuse. We know this. The question is why the Executive wants control over this at all instead of usual judical channels and typical receivers. It smacks of political manipulation and that ain’t good.
Like I said, why do you let others that are pro-choice and declare themselves Christian influence your views so much? One primary reason that I am joining the RC Church is because of the Church’s understanding of the sanctity of life, an understanding that the Episcopal Church in particular has forgotten. No matter what individuals may think or say or vote on, the Church herself stands firm. Why do you think it’s to avoid Obama supporters? I don’t go around asking who voted for whom. Do you? And do you get answers?
There is a petition that a hundred thousand just signed in a single day protesting Notre Dame’s invitation of Obama to give the commencement address and receive an honorary law degree. See [url=http://blogs.telegraph.co.uk/damian_thompson/blog/2009/03/24/notre_dame_has_chosen_prestige_over_truth_by_inviting_obama_says_bishop?com_num=20&com_pg=2 ]Damien Thompson’s blog[/url] with a link to the petition.
[i] Duh. Please don’t be obtuse. We know this. The question is why the Executive wants control over this at all instead of usual judical channels and typical receivers. It smacks of political manipulation and that ain’t good [/i]
You really are insulting. My comments #6, 10, and 23 already give cogent substantive reasons for authorizing receivership—reasons good enough for Secretary Paulson to endorse it [#18].
_ _ _ _ _ _ _ _ _ _ _
[i] Why do you let others that are pro-choice and declare themselves Christian influence your views so much? [/i]
I do nothing of the sort. I’m simply pointing out that a majority of the world’s theologically conservative Christians support Obama despite his views about abortion.
Irenaeus – Ah, the magic word “despite”! “Despite” revoking the Mexico City policy, “despite” removing the federal funding ban from embryonic stell cell research, “despite” what will be next? Once again, what does all the economic decision making and desire to help those hurting financially mean when there is no sanctity of life underlying these causes (not for politicians, I mean for people of faith)? And I guess because of the times we live in, I would need definitions for “theologically conservative” and numbers for “majority” with sources (not that I don’t think you’re incorrect, but I’m from Missouri). And once again, why should you or I or anyone of faith care what the “majority” support when they are supporting something so anti-life? I don’t understand why you think that is a valid argument.
Branford [#30]: You keep twisting my words.
PS to #31: Congratulations on turning one-fourth of the posts of this thread to a different subject.
If you look at your comment #10, you first mentioned “pro-life.” But you are right, that is not the thrust of this thread and I apologize for going off track.
RE: “Political bigotry includes misrepresenting a proposal because you don’t like the person offering it.”
I like Obama. I think he’s a very nice guy — much different from what I thought of Clinton.
Nope — I don’t like his “proposals” because they’re socialist and extend the power of the State ever further in violation of the Constitution.
RE: “Political bigotry includes the inconsistency of principle (if not outright hypocrisy) that treats a proposal differently if it comes from Geithner than from Paulson—so differently as to rant about comrades and radical confiscation.”
Well — the same rants occurred over the Bush bailout package too, so why Irenaeus has mentioned political bigotry, if that’s his definition of same, I don’t know. They simply don’t apply when Republicans have been loudly castigated on these threads when they support the *proposals* as well. So either we all “simply don’t like” the masses who voted for the first bailout, or there’s a principle involved in our dislike of the *proposals* that those who are collectivists are offering.
RE: “A drive-by swipe in the grand manner of Susan Russell. ”
Nope — just expressing my views as you have, Irenaeus in your huffing about “political bigotry.” Whenever someone expresses their dislike of liberal policies, you use hyperbolic terms to describe their motives as in “political bigotry” and “ignorance.” But it does seem to have rankled since you’ve offered three comments about my definition of your calling protests of these actions “political bigotry.” Rich irony. I stand by my definition of your term — it’s beautifully accurate, since it perfectly captures your sensitivity of liberals’ policies being disliked and criticized by conservatives.
Branford:
RE: “So, yes, not necessarily politically moderate.”
He’s a politically moderate as I am a political moderate or like I’m a theological liberal. ; > )
Irenaeus is a political liberal, and orthodox “conservative” Christian. It’s a pity that he’s chosen to describe his political views — clearly expressed on these threads over the years — as “moderate,” rather like DC Toedt and John Wilkins calling themselves “orthodox Christians.”
One has merely to go back and read all of his comments on political matters and one sees it quite clearly. I used to take the time to go do that regarding DC’s and John Wilkin’s theologically leftist screeds, but after a while it became pointless, since everbody knew already.
I expect that’s already happened with Irenaeus both about his theological orthodoxy and political liberalism.
Before leaving the off-topic topic, I have to say I’ve talked to people in other parts of the world, and they “support” Obama for reasons that relate to his international media image. Actual evaluation of his policy proposals and performance doesn’t enter in, yet, and it may never, since many people know little to nothing about these things.
Irenaeus, it’s the precedent of the auto bailouts and the talk about bailouts of other sectors which makes me so worried about this proposal. If the legislation carefully specifies only financial institutions that will be good. So far, careful crafting of legislation has not been a hallmark of this Congress and White House. The White House, in the middle of a major financial crisis, has not even turned its attention to nominating all of the support staff at Treasury, preferring to focus elsewhere. We’ve got a massive spending bill already passed and a massive spending budget, and I’m supposed to trust them on this extra money and authority. I don’t.
[url=http://online.wsj.com/article/SB123793811398132049.html]Here[/url] is an opinion piece by Peruvian economist Hernando de Soto which makes all kind of sense to me. I have not, despite my MBA, been able to understand all of these derivative securities (my professional experience was not in tax or banking). De Soto points out that the problem is, as I have been thinking for a while, that these derivatives are so far removed from the actual assets they represent that their meaning and risk can no longer be reasonably evaluated. He suggests systemic changes.
[blockquote]You really are insulting. My comments #6, 10, and 23 already give cogent substantive reasons for authorizing receivership—reasons good enough for Secretary Paulson to endorse it [#18]. [/blockquote]
And we all remember the brilliant job Hank Paulson did with TARP, don’t we? A little bit like Jeffrey Dahmer giving your restaurant a good review.
I could summarize it, but I think it’s better to read all of [url=http://www.aei.org/publications/filter.all,pubID.29555/pub_detail.asp]Peter Wallison’s takedown[/url] of this supremely bad idea.
[url=http://www.nypost.com/seven/03232009/postopinion/opedcolumnists/why_bams_bank_fix_wont_work_160845.htm]Stephen A. Myrow,[/url] who was involved, says that a public-private partnership like the one now proposed was considered by the Paulson team and rejected.
Jeffersonian [#37]: More twisting and turning, this time with cannibalism spicing up the usual ad hominem argument.
Peter Wallison opposes equity injections and bank-type regulation here (both reasonable points), not receivership.
_ _ _ _ _ _ _ _ _ _
[i] A public-private partnership like the one now proposed was considered by the Paulson team and rejected [/i]
Katherine [#38]: The PPIF is (as I understand it) a different proposal, under which banks could choose to sell bad assets to the PPIF.