Official Obama Derangement Syndrome Blog

Obama Exposure

April 21, 2009 at 5:36 pm

Obama Backdoor Nationalization of Banks?

» by ODS Expositor in: -Bailout, -Economic Policies, -Nationalization, Obama Admin., Obama Policies

(Sec. Timothy Geithner)

Recently the Obama treasury Department has refused to receive repayment of TARP funds from banks trying to give the money back. Instead, Geithner is asking for the debt to be converted into common equity which would give the Obama administration greater actual control over the largest US banks.

There doesn’t seem to be an end in sight for the banking crisis and the Obama administration has seemingly made it a priority to control the whole industry for better or worse.

The banking industry looks upon this attempt as a ‘backdoor nationalization’ of the banking industry. The stock market declined rapidly on Monday in response to the possibility of greater government control.

According to a Wall Street Journal Opinion piece:

A backdoor nationalization also creates more uncertainty, not less, by offering the specter of an even lengthier period of federal control over the banking system. And it creates the fear of even more intrusive government influence over bank lending and the allocation of capital. These fears have only been enhanced by the refusal of Treasury to let more banks repay their Troubled Asset Relief Program (TARP) money.

As it stands, banks and their owners at least know how much they owe Uncle Sam, and those preferred shares represent a distinct and separate tier of bank capital. Once the government is mixed in with the rest of the equity holders, the value of its investments — and the cost to the banks of buying out the Treasury — will fluctuate by the day.

ODS Expositor: Hugo Chavez would be proud–Danny Ortega also! Those Marxists haven’t dared to touch their banks yet!