The AP has come out with a story that provides details showing that Treasury Secretary Paulson “forced” at least nine banks to accept TARP funds. The most damning pieces of evidence are meeting documents “obtained and released by Judicial Watch, a nonpartisan educational foundation, the documents revealed “talking points” used by former Treasury Secretary Henry Paulson during the October 13 meeting between federal officials and the executives that stressed the investments would be required ‘in any circumstance,’ whether the banks found them appealing or not.”
Two thoughts immediately spring to mind after reading the article.
First, this kind of strong-arm power grab should make people think twice when they start talking about wanting more regulation in the private sector. I’ve been accused by a friend of acting as if we can have a world where the free market works perfectly and unfettered without consequences. I don’t believe that, but I do believe that the free market is the best system we have and that although some regulation is necessary, in general, the less regulation the better. If the TARP and housing bust situations have nothing else to teach us, they at least show us that government is just as corrupt and greedy, if not more so, than private actors in the free market.
My second thought could best be described as disappointment. It it no secret that I have admired George W Bush. I have always thought that history would be kind to him for exactly the reason the present hasn’t been. He dealt with a situation that was entirely new and foreign to our nation. He had to decide how to prosecute a unconventional war against not another nation, but rather, several groups that arguably don’t even believe that nation-states should exist and are bent on nothing less than the destruction of the Western way of life. But now, even if history does vindicate his positions on the war on terror, I don’t see how it can vindicate the fact that it appears that GWB, a Republican, began the largest expansion of the Federal Government into the private sector that our country has ever seen. I remember at the time of the Auto Bailouts and when TARP was being debated, GWB came out and said something like, I had to set aside my free market principles for the good of the country because we couldn’t let these businesses fail. Well first off I call BS on that. There are no businesses too important to fail. And really if we had just refused to help these companies and let them hash things out in bankruptcy court their road to recovery would be all the more speedy. Secondly, principles aren’t very principled if you can set them aside. And if you have to set them aside for the “good of the country” maybe they aren’t the principles you should be subscribing to in the first place. I don’t know to what extent Bush knew what Paulson was doing. But it seems he allowed himself to be flim-flammed by Paulson and Bernanke into agreeing to all this. For me that will forever taint my otherwise high opinion of him.