Posted on 04/22/2010 5:05:16 AM PDT by Kaslin
Almost a year ago, in a Washington Examiner 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."
Fast forward to last Friday, when the Securities and Exchange Commission filed a complaint against Goldman Sachs, alleging that the firm violated the law when it sold a collateralized debt obligation based on mortgage-backed securities without disclosing that the CDO was assembled with the help of hedge fund investor John Paulson.
On its face, the complaint seems flimsy. Paulson has since become famous because his firm made billions by betting against mortgage-backed securities. But he wasn't a big name then, and the sophisticated firm buying the CDO must have assumed the seller believed its value would go down.
That's not the only fishy thing about the complaint. Yesterday came the news, undisclosed by the SEC Friday, that the commissioners approved the complaint by a 3-2 party-line vote. Ordinarily, the SEC issues such complaints only when the commissioners unanimously approve.
Fishy thing No. 3: Democrats immediately used the complaint to jam Sen. Christopher Dodd's financial regulation through the Senate.
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. The SEC complaint 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 Democratic Rep. Brad Sherman, "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 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 s---load of money."
The Obama Democrats portray the Dodd bill as a brave attempt to clamp tougher regulation on Wall Street. They know that polls show voters strongly reject just about all their programs to expand the size and scope of government, with the conspicuous exception of financial regulation.
Republicans have been accurately attacking the Dodd bill for authorizing bailouts of big Wall Street firms and giving them unfair advantages over small competitors. They might want to add that it authorizes Gangster Government -- the channeling of vast sums from the politically unprotected to the politically connected.
That can boomerang even against the latter. Goldman Sachs employees gave nearly $1 million to the Obama campaign and $4.5 million to Democrats in 2008. That didn't prevent Goldman from being shoved under the SEC bus.
Gangster Government may look good to those currently in favor, but as some of Al Capone's confederates found out, that status is not permanent, and there is always more room under the bus.
I challenge anyone to name one thing that the Mafia does that government does not also do.
Shoot people in the streets.
Yet.
Dick Morris has been talking up Rob (RINO) Simmons as the man to take Dodd's seat in CT. Simmons is a company man and will not lift a finger to change the corruption in DC.
We need to talk up Schiff as he lacks the requisite name recognition among the great unwashed.
“Shoot people in the streets.”
The government does that, although, I usually think those particular people SHOULD be shot.
Gangster Government. Public employee pension funds get ‘too big to fail’ status and are bailed out by US taxpayers.
“Gangster Government — the channeling of vast sums from the politically unprotected to the politically connected.”
Great sentence. Updating Monster Ping
http://www.freerepublic.com/focus/chat/2496737/posts
Filing this in ...
THUG-O-CRAT hit list [shocking links and headlines]
http://www.freerepublic.com/focus/chat/2464640/posts?page=4
[Now past 90 posts]
And Obama-nomics link-list
http://www.freerepublic.com/focus/chat/2464021/posts
These charlatans make Bernie Madoff look like a piker. Is this Chris Dodd's retriment gift to his nation? That S-O-B should be in an orange jumpsuit tending the lawn at Leavenworth....
The last sentence in the Michael Barone article is worth noting. Why? The “Obama” government is for certain either Facist or Communist. It will do anything, stop at nothing to control our lives and freedom. However as, Barone aptly states, mob rule is not forever. Hitler found that out, Mussolini found that out, Mao found that out and Stalin found that out. And....I can assure you Obama and we Americans will find that out. The PRC (China), The Russian Federation, the Iranians all have Obama’s number as a supreme “weak sister” and India cannot stand the guy. Beware America, these nations are on the move, as we the USA is has seen iots best times!!! Sad!!!
Gangster Government Becomes a Long-Running Series
Like The Sopranos? Sheeesh, I sure hope it has a more satisfying ending...
Passage of this bill is another why I will NEVER support a Republican again. All my life there has been a parade of these type of incremental damages to the country with timid (if any) resistance from the GOP. Meanwhile, the liberal infrastructure complete with new footsoldiers and a slush fund to pay other ones has been established, adding to the gigantic list of other makework positions.
The country is hell-bent for suicide, so the quicker the better.
The mafia pays it’s debts.
What we have now is a kakistocracy.
–noun,plural-cies.
government by the worst persons; a form of government in which the worst persons are in power.
My new favorite word.
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