Obama embraces House financial overhaul bill

According to Obama, if banks and financial companies think they'll be bailed out, it will encourage risky behavior. So obviously that means we need to give the government the power to "dismantle" them. So they don't become too successful.

"WASHINGTON - President Barack Obama on Tuesday embraced a House bill that would give the government unprecedented power to seize bank holding companies and other large financial firms teetering on the brink of collapse and stick their competitors with the cost.

In a letter to House Financial Services Committee Chairman Barney Frank, Obama said the belief among financial executives that the government would ultimately protect them creates a 'perverse incentive' for large firms to take reckless risks.

'Taxpayers simply must not be put in the position of paying for losses incurred by private institutions,' Obama wrote in the letter, obtained by The Associated Press.

Under Frank's proposal, a council of regulators would be established to monitor financial firms regarded as so big and influential that their collapse could bring down the entire economy.

If the council determines that a firm has grown too big and dangerous, the Federal Reserve could step in to dismantle it. Firms with more than $10 billion of assets would be responsible for covering any outstanding costs of that action," the Associated Press article stated.

This is dangerous territory we're entering. The government can essentially take over, break up and sell off any company it deems to be too big?

If these liberals are oh-so-worried about the expectation of bailouts inspiring risky behavior among financial institutions, then why don't they stop the bailouts? No more "too big to fail." If they fail, so be it.

Nothing encourages good behavior like consequences. Consequences in the market are what we need. Not more government interference.

Government is the ultimate monopoly and thanks to a somnambulant public and a piece of paper which the political class wipes its ass with whenever convenient, they can enforce that monopoly by expropriation, imprisonment and execution.

Name one big company that can write rules on you that are binding and have absolutely no recourse to a higher authority which can detain you, arrest you and ultimately kill you. Name one that maintains a standing army, a similar army of paramilitary forces controlling the civilian population, and extorts from its customers as much money as it can squeeze out of them under threat of use of those powers.

You can't.

Given the choice between the two, I'll take a business I can buy into, compete with and which cannot simply do away with me when I become inconvenient.

Katelyn Johnson, a member of the Delta Zeta sorority and soon to be a graduate with her Bachelors in Business Management, says that in her opinion, she respectfully disagrees with me.

"The bailouts were a lesser of two evils because there really wasn't any other option. If those companies were to fail, we would be in a deeper economic hole than we currently are in. This bill would try and prevent this from happening again. These companies are too big for their own good. They are taking risks where the negative impact outweighs the positive impact. This bill is preventing future bailouts from happening because there will now be regulation that would warrant a bailout from ever occurring."

In my opinion, the idea behind this bill may seem ideal for the time being, but the recession is coming to a closure.

Giving the federal government this kind of a power in a time that it is not necessary is very dangerous, especially with the current administration.

I have heard an interesting comment before: "Any company that can form a monopoly for more than six months is to be commended," but the speaker is right. It is next to impossible to form a monopoly period, much less give it lasting power. The only way any company could accomplish this, without government help, is by providing far better services than everyone else combined at better prices.

In the short term, this is a miraculous accomplishment. In the long term, it is indeed a tremendous accomplishment that should be celebrated, not booed.

This writer can be contacted at opinion@theeastcarolinian.com.