Beware the Encroaching D.C. Leviathan
Congress: The spectacle of the very same people responsible for one of the nation's great financial calamities angling to be given even more control to fix the problem would be funny if it weren't so tragic.
Rep. Barney Frank, the Democrat who sits atop Congress' efforts to deal with the financial crisis, has enough chutzpah for 100 politicians — which is saying a lot.
In comments before testimony from both Treasury Secretary Tim Geithner and Fed chief Ben Bernanke Tuesday, Frank said he wants to regulate pay on Wall Street — even for companies that aren't getting bailouts.
And he called retention bonuses — a time-honored practice on Wall Street and elsewhere in America in which key employees are compensated for their enormous value — "extortion" and "bribes."
Frank, one of the chief architects of the housing mess that's brought us so low, isn't satisfied merely with pretending he and his Democratic pals aren't to blame for all this. No, exploiting voter anger over the now-infamous AIG bonuses, he also wants to dictate to American capitalism what it can earn and what it can't.
This is the kind of thing that normally happens in Third World countries ruled by tinhorn dictators, or in fascist states, where the democratic rule of law has collapsed. Not the U.S.
Yet, that's where we find ourselves today, isn't it? Democrats in Congress, who steadfastly rejected virtually all efforts to reform Fannie Mae and Freddie Mac as they went on the wildest, most irresponsible lending binge in the history of finance, now pose themselves as the saviors of fallen capitalism.
The hypocrisy is nothing short of stunning.
Take Frank. As we've written before, he spearheaded congressional Democrats' efforts in 1992, 2000, 2002, 2003 and 2005 to block reform of Fannie and Freddie.
Those two "government-sponsored enterprises" were the nexus of this crisis, holding $5.4 trillion of the $12 trillion in U.S. mortgages, while originating or funding 90% of the subprime market.
Their failures presaged the subsequent financial meltdown from which we're still trying to regain our economic footing.
Then there's Sen. Chris Dodd of Connecticut, another posturing moralist in the flap over AIG bonuses. He turns out to have inserted the bonuses into the bailout legislation in the first place.
An innocent move? Please note Dodd was No. 1 on the list of recipients of AIG's political contributions. Also that his wife was a former director of IPC Holdings, a company controlled by AIG.
We wish all this tinkering with the private sector was limited to Congress. But it isn't. The Treasury wants what the Washington Post called Tuesday "unprecedented powers to initiate the seizure of non-bank financial companies, such as large insurers, investment firms and hedge funds, whose collapse would damage the broader economy."
Citing the AIG precedent, White House spokesman Robert Gibbs defended this radical move, saying on CNN, "We need resolution authority to go in and be able to change contracts, be able to change the business model, unwind what doesn't work."
Breathtaking. Coupled with the vast expansion of government spending over the next 10 years, this is socialism, pure and simple.
Yes, we know it's unfashionable to use the "S" word. But we're willing to be unhip in the service of the truth.
It's a frightening thing to see a once mighty, and free, capitalist economy placed under the heel of an incompetent government. But that's precisely what's happening now.
Executive pay, the focus of much public fury right now, is only the start. Your pay will be next, rest assured. So hold on to your wallets, sure, but also hold on even tighter to something even more precious that now seems at risk: your freedom.