Wednesday, October 15, 2008

Giving the foxes the keys to the henhouse

The government is now going into the business of bank ownership. The idea, I'm hearing, is that the government gets "nonvoting" equity shares, which, theoretically, is supposed to make everyone feel comfortable about government ownership of private businesses. But anyone who knows how businesses work knows that that is a distinction without much of a difference. Does anyone really believe that if someone has a significant ownership interest in a company they don't have a say in what goes on?

What is scary about this is that, although banks certainly share blame in all this by giving out 100 percent loans--and increasing their vulnerability by lending out, in some cases, over 100 percent of their assets in loans, the government itself is the entity that has pushed for the policies that brought the financial crisis about.

Now we're giving those very people even more control of the banking system. This kind of cure would very well kill the patient.

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