Tyrannical Government Takeover Moves Forward

Buckle up, because the government takeover of the financial industry is moving forward full speed.  This is no exaggeration, so pay attention.

For starters, Legal Insurrection highlights the continuing resistance to the repayment of TARP funds, even from banks who are healthy (and remember, it has now been demonstrated that the $700 billion TARP expense didn't work, anyway):

The Financial Times reports that banks and other financial institutions which received TARP funds may not be allowed to repay the loans. Yes, that is correct:

Strong banks will be allowed to repay bail-out funds they received from the US government but only if such a move passes a test to determine whether it is in the national economic interest, a senior administration official has told the Financial Times.

"Our general objective is going to be what is good for the system," the senior official said. "We want the system to have enough capital."

I understand that there are systemic issues as to liquidity, but I don't recall any discussion when TARP passed that the government would not allow the loans to be repaid.

Remember, too, that many of those banks were forced to take TARP money in the first place.  Unfortunately, it gets worse - the latest stated purpose of the TARP program (to free up credit and lending) is yet another failure:

Lending at the biggest U.S. banks has fallen more sharply than realized, despite government efforts to pump billions of dollars into the financial sector.

According to a Wall Street Journal analysis of Treasury Department data, the biggest recipients of taxpayer aid made or refinanced 23% less in new loans in February, the latest available data, than in October, the month the Treasury kicked off the Troubled Asset Relief Program.

I say 'latest' stated purpose because there have been several:

The original purpose of TARP was to rescue failing financial institutions and stabilize the housing market by using federal funds to buy bad mortgages; and then TARP was changed to provide direct investment into financial institutions in order to stabilize balance sheets and provide liquidity.

According to the Financial Times article, the purpose has morphed yet again, this time into a recession management tool:

The official, meanwhile, said banks that had plenty of capital and had demonstrated an ability to raise fresh capital from the market should in principle be able to repay government funds. But the judgment would be made in the context of the wider economic interest. He said the government had three basic tests. It needed first to "make sure the system is stable". Second, to not create "incentives for more deleveraging which would deepen the recession". Third, to make sure the system had enough capital to "provide credit to support the recovery".

Something is wrong here.

Yes, very wrong.  It's called socialism.  This chronic redefinition should prove that they either don't have a clue what they're doing, they're changing the goalposts whenever it becomes necessary, or both.

Hot Air suggests that if this were a consumer loan, the charge of fraud would likely have been leveled by now.  On top of that, there is mounting evidence that the government interventions are actually making things worse.

In fact, this preliminary government intervention has set the stage for a total takeover of the financial industry.  The final steps have now been laid out (emphasis mine):

President Obama's top economic advisers have determined that they can shore up the nation's banking system without having to ask Congress for more money any time soon, according to administration officials.

In a significant shift, White House and Treasury Department officials now say they can stretch what is left of the $700 billion financial bailout fund further than they had expected a few months ago, simply by converting the government's existing loans to the nation's 19 biggest banks into common stock.

Converting those loans to common shares would turn the federal aid into available capital for a bank — and give the government a large ownership stake in return.

While the option appears to be a quick and easy way to avoid a confrontation with Congressional leaders wary of putting more money into the banks, some critics would consider it a back door to nationalization, since the government could become the largest shareholder in several banks.

When I say 'USof[soon-to-be-socialist]A' in my link roundup posts, I'm being deadly serious.  This is step one.  Steps two and three are health care and the energy industry.  Just watch...it won't be long now.

There's my two cents.