PARP: TARP On Steroids

April 15, 2010

There seems to be no limit to the Obamacrats’ appetite for expanding federal power and for fabricating and exploiting crises, which must never be allowed “to go to waste.”

They always have a rationale for plausibly denying their federal power grabs. But like Obama’s other big agenda items, the financial overhaul bill currently in the Senate is exactly that..

Most Americans instinctively didn’t like TARP — the government’s Troubled Asset Relief Program. Even those who believed it was a necessary evil to avert financial catastrophe regarded the use of government funds to bail out companies as distasteful. They considered the government’s subsequent assumption of control over TARP companies as even more distasteful.

But at least they were told it would be “temporary.” Just as Obama said, “I don’t want to run auto companies,” he said he didn’t want to run banks. Right.

Apparently learning the wrong lesson from the public’s outrage at their shoving through Obamacare against the people’s will, Obamacrats have adopted the same model to push through their financial overhaul plan, which Treasury Secretary Timothy Geithner boastfully describes as “the strongest financial reforms since those that followed the Great Depression.” Have you noticed with these statists that everything has to be dramatic — the “greatest crisis,” the “most comprehensive health care plan,” the “strongest financial reforms”? Believe me; we believe you. We get it. You don’t like the America we like, and you want to radically change it.

Obama has fully embraced the bill, the essential blueprint for which he laid out last June with portentous language signaling that he was going to treat this problem, too, as a crisis that needs urgent and Draconian measures. Geithner said: “The damage of the crisis was just too acute. We are trying to move very, very quickly while the memory of the crisis is still in the forefront of people’s memory.”

True to form, Obamacrats pushed this 1,300-page bill through committee in a 21-minute partisan markup. The bill’s principal sponsor, Sen. Chris Dodd, warned Republicans that if they resist the bill, they’ll suffer the same fate they did on the health care bill, which the National Legal and Policy Center’s Carl Horowitz aptly paraphrased as, “Get in our way, and we’ll mow you down.” (If you watched the news this week, you might have seen how they’ve already savaged Senate Minority Leader Mitch McConnell for daring to oppose the bill.)

The White House is also adopting the same divisive strategy it used in promoting Obamacare. It has picked scapegoats to vilify, “big Wall Street banks” (you will recall Obama has called them “fat-cat bankers”), and pitted them against the American people, saying they want to preserve the “status quo.” Jen Psaki explicitly framed the debate in those terms on the increasingly partisan White House blog. Check it out:

Initially, even many Democrats were skeptical, such as Rep. Brad Sherman, who called the plan “TARP on steroids” and told Geithner, “You’ve got permanent, unlimited bailout authority.” “Permanent,” to be sure, which is why Horowitz dubbed the bill “PARP.”

Among the Republicans’ concerns about the plan is that it would create a Consumer Financial Protection Bureau with autonomous rule-making authority and the power to examine firms with $10 billion in assets. The bill would also create a new $50 billion fund to be used to “restructure” firms in emergency financial predicaments. According to Heritage Foundation expert David C. John, the bill would give the government “open-ended” power to “exercise discretion” based on “unspecified factors” to determine whether firms represent a “systemic risk.” Think about that. A vast new bureaucracy subject to political pressures, not the bankruptcy courts, would be making these vital decisions without clearly defined standards. We musn’t saddle the rule-makers with rules.

Imagine the temptation a statist-run administration would have under such broad authority to step in and break up firms on its whim or take control of them and inject them with funds subsidized by a punitive tax — with the Orwellian label “Financial Crisis Responsibility Fee” — on big banks. The banks will foot the bill simply because the Obamacrats believe that profitable concerns should be punished for their surplus values. Just more “spreading the wealth around.”

John argues the bill would incentivize banks to make unsound loans because it would remove the checks and balances creditors normally provide by, for example, demanding higher interest rates on loans from highly leveraged institutions. If the banks were not allowed to fail, the creditors would be more willing to lend to them. Wasn’t it “uncreditworthy” loans mandated by do-gooder Democratic policies that largely led to the financial meltdown in the first place?

Be on notice: Rapacious Obamacrats are hellbent on shoving this bill through. Even at the risk of being mowed down, we must vigorously oppose it.