Yesterday, Dick Morris posted an article at The Hill opposing the current financial reform bill in Congress. If passed into law, the financial reform bill that passed the House last year would give the power to the President and the Treasury Secretary to take over any financial institute that they deemed "too big to fail." There is no judicial review written into the process, and there is no level of evidence required to trigger a takeover.
After the government takes over a company, it has the right to fire the board of directors and the management, wipe out the stockholder equity, and sell off divisions of the company. It seems to me that this is more than a little unconstitutional.
Mr. Morris points out that the bill contains consumer protection provisions that he supports, but no one is paying attention to the federal power grab in the other parts of the bill.
The problems that caused the financial crisis that led to the housing bust had more to do with federal intrusion than bankers' failures. The pressure on banks to make sub-prime loans caused the banks to find a way to offload questionable assets. Eventually the whole house of cards collapsed. The way to avoid a repeat performance is to let the banks make wise business decisions rather than forcing them to make risky loans. One of the banks in the area of Massachusetts where I live came through the mortgage meltdown beautifully. They had very few foreclosures and were secure. They then got a letter from the government criticizing the bank for not lending enough, slapping it with a "needs to improve" rating under the Community Reinvestment Act (see rightwinggranny.com article of March 20, 2009). Business does better with less regulation--not more!
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