The Power To Liquidate Any Company As Long As It's "At Risk"

hellblazer

hellblazer

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Sep 20, 2008
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I don't know if any of you have been paying attention, but apparently they're now considering a law which would give the Feds power to seize ANY company they wished, so long as they determined it was "too big to fail".

Aside from the fact that there is no such thing as "too big to fail", this benchmark seems like a totally arbitrary benchmark to me. And according to the proposed law, the decision to seize can't be appealed or overruled.

Once the company is seized, the Feds would have the power to replace the board of directors, fire the management, sell off divisions, basically liquidate the entire company.

This strikes me as an extremely draconian law and reminds me of a couple years back when Putin seized an oil company named Gazprom(I believe) and threw the owner in jail. In my opinion, the entire thing was political and the charges against Khodorkovsky were trumped up, but it brings up the main fear of this law: What's to stop the wrong type of politician from abusing this power in order to go after their opponents?

What do you guys think? Should the government have the power to seize any company they determine poses a 'risk' to the economy?
 


hellblazer said:
What do you guys think? Should the government have the power to seize any company they determine poses a 'risk' to the economy?
Click to expand...

yes
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Zoinks! Larry Kudlow, who worked under Reagan and has said that Obama is destroying capitalism, has a different interpretation.


RealClearMarkets - Is Dodd Ending Too Big to Fail?

"...the possibility of substantial progress on the road to ending "too big to fail" (TBTF) and bailout nation for banks and other financial institutions.

...large complex companies will have to submit plans for rapid and orderly shutdowns should they go under. These are called "funeral plans." Then, in terms of these orderly shutdowns, the bill would create an "orderly liquidation mechanism for the FDIC to unwind failing systemically significant financial companies. Shareholders and unsecured creditors will bear losses and management will be removed." Good.

...the possibility remains that a true bankruptcy process will replace government bailouts.

This is vital, since TBTF and government bailouts are among the root causes of the banking crisis, where large financial companies have a moral hazard to take too much risk at taxpayer expense.

...Chris Dodd conceivably may have opened the door to ending TBTF and bailout nation."
 
I gotta bump this thread because now I'm hearing that not only will the Treasury Secretary get these crazy powers, but the CFPA will get the power to decide who gets a loan. EVERY single loan application will have to be submitted to them for approval. If this is true, this is INSANE. This has gridlock and abuse of power written all over it.
 
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