The Great 08 Bail Out has morphed into something horrific. Now the government plans to take large equity stakes in the largest banks in the country
as well as investing in a thousand smaller banks. The nationalization of the country's banking industry is now underway.
Equity stakes, for course, come with Board seats. Barney Frank and Nancy Pelosi love the idea. Why? Because they hope Obama will win the election and socialists will have unprecedented central planning authority over the economy. There is not better way to do this that through the banking system.
Think of it: Pet issues, such as gender pay equity (which is a phony issue), can be injected directly into companies at the highest levels. Does your company want a loan? Prove that your company has gender pay equity. And that's just one of thousands of potential strings that will likely become attached to getting credit. For example, what a way to push a "green agenda." Your interest rate may be tied to your "carbon footprint."
Paulson and Bernanke may mean well. But they are kidding themselves if they think the government will pull out of these positions any time soon. This is not the same as the loan provided by the federal government to Chrysler years ago. In fact, I predict that the government may never divest, at least not in our lifetimes. It is more likely that these equity positions will grow.
It was not so long ago that we were encouraging other countries to privatize their banking industries. Our country will never be the same.
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