Monday, April 20, 2009

Confirmation of an expectation

I asked a couple of financial types the other day, "Do you think the banks will ever become private again?" They said something along the lines of, "Sure, the banks will pay back the loans and everything will be normal." I asked that question because I had heard that the government was refusing offers of repayment. I couldn't think of specifics at the moment, though, so let it pass without following up.

Now Glenn Reynolds points to Le·gal In·sur·rec·tion, where William Jacobson cites the Financial Times and Forbes to say that some of those bailed-out banks will not be allowed to repay those loans.

I'm tempted to quote the whole thing, but the comments are good, too, so I'll leave it there. Well, maybe just a little:

It is one thing for the government to lend money to banks to help the banks survive. It is someting quite different to use the lending to maintain control of the private sector when the specific borrower-bank no longer needs the money. And the greatest irony is that many banks which didn't want or need TARP money took it at the insistence of the feds, and now they can't pay it back.
This is the sort of "fascism" that Cody Willard was talking about, that led Jon Stewart maliciously to misquote him following the Tax Day Tea Parties: the penetration of private enterprise by the tendrils of government.

Alternate title: Here it comes.

Update: And from Megan McArdle, No Parting from TARP: "Once you take the King's Shilling, apparently you've enlisted for life--and your Congressional drill sergeants reserve the right to change the rules of your employment at will."

More at Reason: Is the Government Acting Like a Payday Lender?

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