Barone on US Becoming a Gangster Government

Michael Barone is one of my favorite writers, and I always enjoy his stuff on the Detroit News. Recently he wrote an excellent analysis of what is really going on with these Democrat proposals to 'regulate' the banking industry. Read about it in 'Gangster Government' ready to expand:

Almost a year ago, in a column on the Chrysler bailout, I reflected on the Obama administration's decision to force bondholders to accept 33 cents on the dollar on secured debts while giving United Auto Worker retirees 50 cents on the dollar on unsecured debts.

This was a clear violation of the ordinary bankruptcy rule that secured creditors are fully paid off before unsecured creditors get anything. The politically connected UAW folk got preference over politically unconnected bondholders. "We have just seen an episode of Gangster Government," I wrote. "It is likely to be a continuing series."

You may want to believe the denials that the Democratic commissioners timed the action in coordination with the administration or congressional leaders. But then you may want to believe there was no political favoritism in the Chrysler deal, too. It looks a lot like Gangster Government to me.

The Dodd bill, however, has it trumped. Its provisions promise to give us one episode of Gangster Government after another.

At the top of the list is the $50 billion fund that the Federal Deposit Insurance Corp could use to pay off creditors of firms identified as systemically risky -- i.e., "too big to fail."

"The Dodd bill," writes Rep. Brad Sherman, D-Calif., "has unlimited executive bailout authority. That's something Wall Street desperately wants but doesn't dare ask for."

Politically connected creditors would have every reason to assume they'd get favorable treatment. The Dodd bill specifically authorizes the FDIC to treat "creditors similarly situated" differently.

Second, as former Bush administration economist Larry Lindsey points out, the Dodd bill gives the Treasury and the FDIC authority to grant an unlimited number of loan guarantees to "too big to fail" firms. CEOs might want to have receipts for their contributions to Sen. Charles Schumer, D-N.Y., and the Obama campaign in hand when they apply.

Lindsey ticks off other special favors. "Labor gets 'proxy access' to bring its agenda items before shareholders as well as annual 'say on pay' for executives. Consumer activists get a brand new agency funded directly out of the seniorage the Fed earns. No oversight by the Federal Reserve Board or by Congress on how the money is spent."

Then there are carve-out provisions provided for particular interests. "Obtaining a carve-out isn't rocket science," one Republican K Street lobbyist told the Huffington Post. "Just give Chairman Dodd and Chuck Schumer a ----load of money."

Barone has caught on to something important- that the type of government that Obama and the Democrats are running in Washington DC is a government that is not only corrupt, it is institutionalizing corruption and making DC a pay-to-play system. This might be par for the course in Chicago, but it shouldn't be allowed in our nations capital- vote against every Democrat on the entire ticket to show them that you don't want a gangster government.