Pirate's Cove

But, don’t say Democrats are socialist or anything

Congress and the Obama administration are about to take up one of the most fundamental issues stemming from the near collapse of the financial system last year — how to deal with institutions that are so big that the government has no choice but to rescue them when they get in trouble.

Sounds reasonable, right? When these huge private institutions fail, it harms lots and lots of Americans. So, what’s the answer?

A senior administration official said on Sunday that after extensive consultations with Treasury Department officials, Representative Barney Frank, the chairman of the House Financial Services Committee, would introduce legislation as early as this week. The measure would make it easier for the government to seize control of troubled financial institutions, throw out management, wipe out the shareholders and change the terms of existing loans held by the institution.

That, by definition, would be Socialism, where the Government is seizing the means of production.

The official said the Treasury secretary, Timothy F. Geithner, was planning to endorse the changes in testimony before the House Financial Services Committee on Thursday.

Shocking, I know!

The White House plan as outlined so far would already make it much more costly to be a large financial company whose failure would put the financial system and the economy at risk. It would force such institutions to hold more money in reserve and make it harder for them to borrow too heavily against their assets.

Setting up the equivalent of living wills for corporations, that plan would require that they come up with their own procedure to be disentangled in the event of a crisis, a plan that administration officials say ought to be made public in advance.

So, what you have is the “don’t call him a Socialist” president creating plans and legislation for the Federal government to actually become involved in the running of private companies before they get into any trouble.

Feel better about which way your Freedoms are heading?

Crossed at Right Wing News and Stop The ACLU