By Bill Wilson
The American people cannot say they weren’t warned. When he was standing for election, Barack Obama said, “I think when you spread the wealth around, it’s good for everybody.” And, a $787 billion “stimulus”, a $2.5 trillion health care takeover, and a proposed budget that will add at least $10.6 trillion to the national debt by 2020 later, there should be little uncertainty of this White House’s insistence to redistribute wealth.
But in case there was any lingering doubt, last week Obama left none when he endorsed a Senate plan to take over the nation’s financial system. The Dodd bill, which the Senate will vote to proceed to today, gives the government the ultimate power to take over and “liquidate” any company in the country and “spread the wealth around.”
As noted in an Americans for Limited Government summary published last week, all that is necessary under the bill for a company to be taken over, is that:
1) government deems the company to be “substantially engaged in activities… that are financial in nature,”
2) alleges it is in default or in danger of default,
3) which would have what it says are “serious adverse effects on financial stability in the United States”
4) where it claims “no viable private sector alternative is available to prevent the default of the financial company.”
You know, companies like GM and Chrysler, which were nationalized under the similar Troubled Asset Relief Program (TARP). Only, those companies were automakers, not financial companies, and there were private sector alternatives to nationalization. It’s called bankruptcy.
The costs of the failures of the automakers were overstated, too. It would have meant that the brands were bought by other companies, not that the end of the U.S. economy was imminent. But, because of unlimited discretion vested in the executive, the bailout fund was abused to take exception to its intentions.
Importantly, the ownership of the companies was redistributed from their bondholders that kept the companies afloat to the labor unions that put it into red in the first place. Obama did say he wanted to “spread the wealth around,” and the Dodd bill will make that authority permanent.
Under this unending program, any company may be seized under a $50 billion, revolving “orderly liquidation fund,” which is funded by the Federal Deposit Insurance Corporation (FDIC) levying assessments on about 60 financial and insurance companies holding $50 billion or more in assets. There would be no limit on how much money could flow through that fund, nor require any Congressional approval for firms to be seized, funds to be spent, or new assessments to be levied by the FDIC to replenish the fund.
As reported by the Wall Street Journal’s editorial board, all “crucial questions will be settled not by statute, but by regulatory discretion after the law passes.” The Journal warns that “the President had better be very, very smart because the reform bill he is stumping for would give him and his regulators vast new sway over financial markets and risk-taking.”
In short, it is the ultimate expression of Edward Mandell House’s Philip Dru: Administator’s “supremacy of mind.” In House’s utopian vision, a socialist takes over the nation, dissolves the Constitution, eliminates judicial review, and well, spreads the wealth around. He guarantees labor and government representation on the board of every corporation, places corporations under the control of national and state “commissions” appointed by the Administrator, and prohibits selling short or long stocks, bonds, commodities or “anything of value.”
In Dru’s America, profits are capped, wages are maximized, full employment secured, prices fixed, and loans guaranteed for the poor. Any “surplus” of profits was to “be distributed between labor and capital on some principle of equity.”
Administrator Dru even pretends that the people prefer his role as dictator because of the “inefficiency” of Congress and the ability of the Supreme Court to strike down laws as unconstitutional. Thus, “the function of law making was confined to one individual, the Administrator himself.” Speaking to the American people, Dru flatly states, “I am sure I shall be able to meet your wishes in a much simpler way” without the constraints of the Constitution, Congress, or the courts.
And that’s exactly what the Dodd bill does.
Besides giving the executive branch unlimited authority to seize companies, levy taxes, and spend the fund, any company seized would be barred any recourse to federal courts on “any action seeking a determination of rights with respect to, the assets of any covered financial company for which the [FDIC] has been appointed receiver.” The Supreme Court’s “jurisdiction” would be utterly limited to no longer hear due process property rights claims.
In short, the seizure of any company by the government would be beyond dispute. Instead, any company seized by the FDIC will be bundled into securities to be sold to the Treasury. Then, the Treasury Secretary can keep (i.e. nationalize) the company, or redistribute it to customers of his choosing. You know, like union bosses.
Sadly, Obama will have a much “simpler” time at “spreading the wealth around” if the Dodd bill passes. Indeed, it may be what he had in mind all along.
Bill Wilson is the President of Americans for Limited Government.
