Geithner Wants Power To Nationalize Non-Bank Financial Companies

The liberals will claim this isn’t nationalization, but c’mon. The government seizing companies and running them? That’s nationalization, even if we can believe claims from the Obama administration that it’d just be temporary.

Treasury Secretary Timothy Geithner is asking Congress for broad regulatory powers to seize non-bank financial companies, a bold move to further expand the Treasury’s power over the financial industry.
The proposed legislation will allow the government to purchase assets, guarantee liabilities, and buy an equity interest in a large array of financial services companies if they pose systemic risk to the financial system.
“The objective is to promote long-term value and growth for shareholders, companies, workers and the economy at large and to reduce the risk of financial rises that the current one from occurring again,” Geithner plans to tell the House Financial Services Committee this morning.

So why would anyone assume that the government, which barely manages to run the Post Office on a day to day basis, can run these troubled companies better than the people already running them? Why would we assume that a government take over of these companies is preferable to, say, simply letting the market take its course?
If these massive companies know that the government will step in any time they get in over their heads, then what incentive do these companies have to behave responsibly? Does this government safety net not promote irresponsible lending (among other activities) simply because there’s plenty of incentive to lend and otherwise act indiscriminately for short-term profit with the full knowledge that long-term solvency will be propped up by the government?
Of course.
And then there’s the question of how long it will take before the government begins to abuse this. Does anyone really think we can trust the angels in government to only use this broad, sweeping power for the good of the economy in general? The potential for graft, corruption and outright theft here is amazing.
We’d be fools to allow the government to take this power. It’s only going to promote more bad behavior in the markets, at best, and create corrupt nationalized version of our financial systems at worst.