Treasury Secretary Timothy Geithner has more good news for America’s financial institutions today. He is reporting that as the bailout money comes in from the larger banks the administration will now be able to make it available ( i.e. force it upon) to smaller, community banks. Why any small bank which has managed to survive until now would need the funds at this point wasn’t explained. Nor was any mention made of why they are able to re-use these funds without needing new congressional approval. I would imagine that a noticeable chill passed through the room when Geithner made this announcement at an association of community bankers who, until this point, had believed they had escaped government control.
A report at Yahoo Finance had this quote,
“Several members of Congress, including Rep. Brad Sherman, a Democrat, contend that the law creating the TARP does not allow the money to be invested a second time. Instead, repayments should be used to reduce the national debt, they say.”
I’ve noticed that the rule of law appears to have been replaced by the rule of man under the Obama administration. Just look at the conduct of the Chrysler bankruptcy for example. Secured creditors who should have been given priority compensation under our bankruptcy law were extorted by the administration into accepting 30 cents on the dollar for their investments. Meanwhile, the United Auto Workers union, much further down the list of those waiting to get paid, got the priority compensation of 50 cents on the dollar and a seat on the board of the restructured company.
What everyone needs to understand is the effect this will have on businesses all over the country. By setting such an outrageous precedent, who will now be willing to invest in a corporation who does business with the government knowing they now run the very real risk of losing their investment through what amounts to government confiscation? Being an investor in our country is now like trying to run an oil business in Venezuela. Or as Hugo Chavez recently put it, ” To God what is God’s, and to Caesar what is Caesar’s”.
