There is much that has me concerned with Federal plan to help fix the credit mess that we find ourselves in. The $700,000,000,000 price tag for this made my eyes pop. Then, as George Will expressed, there is a concern about proper oversight – should one person have this much control over this much money – elected or not?
Lawrence Kudlow said in his op/ed on Real Clear Politics that a clean bill requested by Treasury Secretary Paulson along with the oversight board that Senator McCain has called for should help fix this credit problem we have.
Unfortunately it doesn’t look like Paulson is going to get that clean bill, Kudlow writes:
But after Tuesday’s Senate hearing I’m very concerned. The bells and whistles that would be attached to Paulson’s plan by our Democratic friends are anti-capitalist and anti-opportunity.
Capping compensation for both the selling and purchasing institutions? What? Salaries and bonuses are no business of the government. People go to work for profits. For opportunities. It’s at the heart of our free-market capitalist system.
Now, I can understand companies like AIG, Fannie, and Freddie, which effectively have been nationalized. That’s different. I don’t care if they all make $75,000 a year, just like the regulators. But to stretch this to the banks that are selling or buying the assets goes beyond the pale. It’s France. But it’s France heading toward the old Soviet Union, or at least Tsar Putin’s Russia.
And then there’s the ownership question. Some Democrats want Uncle Sam to take an ownership position in all the selling and purchasing banks. This is nuts. In America, this is nothing but property confiscation. It also will sharply curb buyers of the distressed assets.
You think Henry Kravis or Steve Schwarzman are gonna take a salary cap and lose an ownership share of the private-equity funds they themselves created and built? They shouldn’t and they won’t. And these funds are crucial to the new process. The only banks that will sell in this over-regulatory environment are the absolute, near-bankruptcy turkeys.
Meanwhile, Sen. McCain apparently has proposed that the buying and selling banks have comp-levels no higher than the top paycheck in the U.S. government, which I guess is the president’s at around $400,000 a year. Hey, I’ve got an idea. Let’s raise the chief executive’s pay to $50 million. He probably earns it anyway.
There is a word for what they are suggesting. It is socialism. What business does the government have in establishing what compensation levels should be for anybody but government employees? None. Does the government have any business in having an ownership position in selling and purchasing banks? Now way!
Not only does Kudlow not like it, neither does the stock market as it took a dive when the details of the behemoth bailout were shared. Not a good move. Some regulation is needed in this time these proposals are an overreaction and will make this proposal ineffective essentially wasting taxpayer money. Let’s keep the marketplace free and not allow socialism to creep in.