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A BLUEPRINT FOR COERCION
By DICK
MORRIS
TheHill.com
How odd that when the president's
largest corporate donor, Goldman Sachs, gets indicted it is seen in the
wonderful world of Washington as catalyzing his efforts to modify Wall
Street regulation. Goldman's employees, of course, gave Obama just shy of $1
million -- a total exceeded only by the faculty and staff at the University
of California -- making them the second largest bundle of donors to the
Obama campaign.
There are so many reasons to oppose Obama's financial
regulation bill.
Some Republicans have focused on the fact that it
sets up a TARP II fund that starts the bidding at $50 billion. In making
such an offer to back up firms that are too big to fail, the bill
guarantees:
a) that the big firms will feel free to make whatever
risky bets they can get away with since their downside (i.e., backside) is
covered;
b) that the bigger firms eclipse the smaller ones (as Fannie
Mae and Freddie Mac did to the mortgage industry) because of their implicit
federal guarantee; and
c) that more firms crowd to get under the $50
billion umbrella and that it expands into an even larger bailout.
Other Republicans complain, correctly, about the power the secretary of the
Treasury is given under the bill to seize any financial institution he deems
too big to fail and thinks is at risk of insolvency. They rightly worry
about the constraint this provision imposes on business growth and the
dictatorial powers it gives the administration to fire management, replace
directors, liquidate stock value and sell off parts of the companies they
seize.
But we also need to worry about how the power to seize on the
one hand and bail out on the other will be used by this administration.
Already, we have seen how Obama and Geithner did not hesitate to throw their
regulatory weight around to force bondholders to take a pittance in very
partial repayment of their loans to General Motors. We can imagine how much
political clout these new powers will give to Obama.
With political
action committees and bundling by financial firms playing an ever larger
part in campaign finance and issue advocacy advertising, will any large
financial institution feel free to let its executives work against Obama's
reelection? Will they not worry that he could take them over in a twinkling
of an eye? Or will they be so anxious to come in out of the rain of
competition to nestle under the bailout umbrella that they won't want to
risk antagonizing Obama?
Particularly after the Citizens United case,
anything that inhibits corporations from participating politically limits
political debate and slants it toward the administration. In the very debate
now under way, are financial corporations not already pulling their punches
so as not to alienate a president whose hand can feed them or seize them as
he wishes?
Yes, George W. Bush acquired vast new powers for the
executive branch of government in the Patriot Act and the war on terror. But
there is no record of his intentionally misusing them to intimidate
political opponents. But Obama has a more ruthless mind. His war on Fox News
shows how this thin-skinned president keeps track and takes names. We can
well imagine a Nixonian enemies list of financial institutions earmarked for
special regulation and intensive oversight, not for their economic
performance, but for their political views.
Let's remember the days
of JFK phoning steel-company executives to force a roll-back in their price
increases while Attorney General Bobby threatened increased antitrust
scrutiny. Equipped with the powers about to be conferred in the financial
regulation bill, such government tyranny could be even more dangerous.
Some seem willing to confer these powers if only a bankruptcy judge
signs off on the takeovers and seizures. But the administration, which
appoints the judges in the first place, can shop for a compliant one like a
prosecutor looking for a jurist to issue a search warrant.
Fidel
Castro and Hugo Chavez could only marvel at giving the government such
powers.