April 02, 2009

Federal Government Extorting Our Banks

Judge Andrew Napolitano recalls a discussion he recently had with the CEO of one of the country's top 10 bank holding companies.
His bank is worth in excess of $250 billion, has no bad debt, no credit default swaps, no liquidity problems, and no subprime loans. He told me that he and others were forced by Treasury and FDIC threats to take TARP funds, even though he did not want or need them.

The FDIC — with Treasury backing — threatened to conduct public audits of his bank unless his board created and issued a class of stock for the Feds to buy. The audit, which he is confident his bank would survive, would cost it millions in employee time, bad press, and consequent lost business.

He pleaded with the Feds to leave his successful bank alone. He begged his board to let him tell the Feds to take a hike. But they gave in. The Feds are now just a tiny shareholder, but want to begin asserting more and more control. This is a classic extortion: Controlling someone’s free will by threatening to perform a lawful act. 

The message: you will take government money all strings attached whether you want it or not.  The government simply will not allow dissent.  How can they keep up the charade that they "had to do" what they did if they allow groups to refrain from joining the bailout party.  The government needs everyone in the same boat to eliminate the option of being proven wrong.

Napoliano also says there is no authority in the U.S. Constitution for this type of intervention in the private sector.  Much like the AIG "super tax," I am not sure that it matters, for practical purposes, whether it is legal or not.  Everything is being done through fear-mongering and out of "our way or the highway" necessity.  I have seen little thought, or care for that matter, to the legality of these measures expressed by the decision makers.

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