Power tends to corrupt, and absolute power corrupts absolutely

One of the unheralded accomplishments of the Bush administration has been a centralization of power. It is almost as though there is now a fourth branch of government, the White House, to which power has been ceded by the other three branches.

Examples of the power grab might include specific exemptions of the White House from public scrutiny (think secrecy of Vice President’s office, protection of Attorney-General privilege, etc.), politicization of the public agencies (such as political appointments going far deeper than ever before in organizations such as the Forest Service), an either-you’re-with-us-or-your-against-us attitude, and the recent exclusion of Congress from decisions on bailing out Fannie Mae/Freddie Mac.

And now they’re at it again. President Bush has asked the nation to pony up $700 billion so that the Fed can go to the rescue of their friends, the banks. (Member banks must pony up federal funds to meet their reserve requirement. As a result all nationally chartered banks hold stock in one of the Federal Reserve banks.)

That’s right, Bush is asking for carte blanch. A clean check, with no strings attached. To be handed over to Ben Bernanke, Chairman of the Federal Reserve System, to spend how he wishes. Unelected, and supposedly independent, Bernanke is helping engineer the $700 billion mortgage-bailout plan which would significantly increase the responsibilities and vastly expand the lending by the Fed. Sounds like good job security to me!

It gets worse. Now we discover that ‘asset managers’ would be hired. Their job would be to manage the distressed assets, including buying and selling loans and securities. No, we don’t know who they will be. The Bush administration is said to be wanting “ a competitive bidding process to hire the managers.” Somehow I doubt it will be the hard working, underpaid employees of the Treasury Department. But, it could be the very same investment bankers who got us into this mess!

The question of who will get the $700 billion is a big question. Already, the Bush administration has changed their plans. On Saturday, it was only domestically-owned banks. By Sunday, after intense lobbying, it had expanded to any bank “having significant operations” in the United States, foreign-owned or otherwise.

Deciding who gets bailed out is a definitively political decision. And political decisions are best left to our elected officials. Unless you are trying to amass more power. Then the person left holding the purse-strings holds all the power!


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