Frigtening News from Dick Morris: Democratic Bill Allows Takeover of Businesses - read that last sentence!

 Democratic Bill Allows Takeover of Businesses
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> Wednesday, 14 Apr 2010 10:02 AM
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> *By: Dick Morris*
>
> **
>
> If the financial regulation bill that passed the House last year becomes
> law, President Obama and his Treasury secretary will acquire the right
> to take over any financial institution they wish to, provided that, in
> their sole opinion, it is both "too big to fail" and on the brink of
> insolvency. The House bill provides for no judicial review and does not
> require any objective evidence of imminent failure to trigger the
> takeover provisions.
>
> Once the government takes over such a company, it will acquire the right
> to replace the entire board of directors, fire the management of the
> company, wipe out stockholder equity, and even sell off divisions of the
> company.
>
> Essentially, this bill permits the government to launch an unfriendly
> takeover of any financial institution it wishes without risk and with no
> poison pill or other counter-measures possible.
>
> This legislation, essentially, confers on the federal government police
> powers that, under our system, are the exclusive preserve of state and
> local government. The blank check the bill gives the feds to take over
> any financial institution is really more of an exercise of eminent
> domain than it is an extension of traditional federal regulatory power.
>
> This grant of power to the executive branch is unprecedented and
> potentially totalitarian. Consider:
>
>     * Will Obama, or any future president, target companies that are
>       particularly vocal in their opposition to his policies or generous
>       in funding his political opponents? Will the fact that Obama would
>       have this power force companies, investors, CEOs and managers to
>       self-censor their opinions and political involvement because they
>       fear the wrath of a vengeful president?
>     * Will this grant of authority force companies to hesitate before
>       they grow and expand? Will it function the same way the antitrust
>       powers of the Justice Department do in making companies re-examine
>       mergers and acquisitions with a view toward what Justice will
>       think of their resulting market share? In antitrust situations,
>       where a specific action brings companies under scrutiny — like a
>       merger — such concern is not unreasonable. But when the simple act
>       of making money, showing a profit and expanding in size puts a
>       company in federal crosshairs, does this not have the potential to
>       attenuate the capitalist focus on growth?
>     * In an environment where the feds are looking over the shoulder of
>       every financial institution to see if they should take it over and
>       shut it down, will this not force financial companies to follow
>       the most risk-averse lending policies possible? Doesn't this mean
>       that it only makes sense to buy government paper, since consumer
>       loans, mortgages and business lending could be considered risky
>       and lead to a federal takeover? Isn't this policy precisely the
>       opposite of what we need to catalyze economic growth?
>     * In a political world where contributions from financial
>       institutions are sought and widely given, doesn't this power give
>       the president and his party unlimited fundraising ability, simply
>       by baring its teeth and showing the power it has to take anybody
>       over and fire anybody?
>
> Given the fact that Goldman-Sachs was the second-largest donor to
> Obama's campaign, giving $954,795, doesn't this new power raise the
> specter that the federal government could take over financial
> institutions so as to make the competition lighter for its donors?
>
> Already, there is considerable evidence (cited in our new book, 2010:
> Take Back America — a Battle Plan) that Goldman profited handsomely from
> the decision of its former CEO — Bush's Treasury Secretary Henry Paulson
> — to allow Lehman Brothers to fail. Now that the Treasury secretary will
> have the takeover power, might it not be used as irresponsibly and with
> as many bad consequences as Paulson used his power in the Lehman crisis?
>
> While the focus on the regulatory bill has been on the consumer
> protection provisions, which I tend to support, there has been far less
> scrutiny on these horrific expansions of federal power.
>
> Fidel Castro and Hugo Chavez could only dream of this power.
>
>
> © Dick Morris & Eileen McGann
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