Anti-Lobbying v. Nationalization
posted by Lawrence Cunningham
Treasury Secretary Timothy Geithner swept into office announcing tough rules restricting lobbying by bank officials of public officials in connection with distribution of federal funds to the banking sector. At the same time, talk continues about how Treasury may yet determine that it is necessary to nationalize some banks. A conflict would appear.
The lobbying rules assume that public officials and bank officials are different categories of people. But if Treasury assumes control of a bank by nationalizing one, Treasury (or some other public official) will appoint bank officials. Then it will be difficult to distinguish between public officials and bank officials. Bank officials will be public officials.
Of course, this is just one of endless anxieties that would accompany any decision to nationalize US banks. Perhaps it is a sign that the Treasury Secretary means it when he says that nationalizing banks is not a desirable course.
February 25, 2009 at 8:14 am
Posted in: Current Events
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Responses (8)
A.W. - February 25, 2009 at 9:05 am
Mmm, gotta love this nationalization idea. here’s how it works.
1) government makes banks make bad loans.
2) banks make bad loans.
3) banks get in deep trouble.
4) the same government that put them in trouble takes over the banks. Now everything will be better! We swear we will be more practical this time!
Given that government is a large part of the problem here, i am understandably skeptical that they are part of the solution, especially given that Obama has demonstrated a remarkable lack of understanding of basic economics.
As for the lobbying issue, well, its a perfect example of the inequalities that are created under socialism.
Patrick S. O'Donnell - February 25, 2009 at 9:08 am
I thought the Administration made it clear that it is not out to “nationalize” banks: A “statement issued by the Treasury Department, the Federal Reserve and the U.S. government’s three banking regulatory agencies said the government’s new financial stability plan contains ‘the strong presumption…that banks should remain in private hands.’”
Patrick S. O'Donnell - February 25, 2009 at 9:08 am
I thought the Administration made it clear that it is not out to “nationalize” banks: A “statement issued by the Treasury Department, the Federal Reserve and the U.S. government’s three banking regulatory agencies said the government’s new financial stability plan contains ‘the strong presumption…that banks should remain in private hands.’”
A.W. - February 25, 2009 at 9:29 am
Patty,
Well, we are getting official denials, but Obama has a bad tendency to go back on everything, so I don’t put much stock in it.
Patrick S. O'Donnell - February 25, 2009 at 9:37 am
Premise 1) is not now nor has been the reason banks are in the financial mess they are in and, like it or not, government is in fact the only entity capable of steering us out of the recession and economic meltdown. It is the banks begging for capital infusion, and it is the goverment asking the banks to do what banks traditionally do so as to be socially and economically responsible. In doing so they will help the the general welfare. After all, James Madison and other Federalists well understood that the Constitution itself (and not just owing to its expression in the Preamble) is a means to desirable ends and one of the most prominent if not most important of those ends is the pursuit of the “people’s well-being,” welfare “embracing all that a state does to benefit its people,” as Sotirios A. Barber reminds us in Welfare and the Constitution (2003). It also helps to keep in mind, with James Fleming (and Rawls, Sunstein, Sager, et al), the important distinction between the judicially enforceable Constitution and the Constitution as a whole, which is in some sense binding outside the courts on nonjudicial institutions and citizens and hence the responsibilities and obligations that fall upon all of us.
Patrick S. O'Donnell - February 25, 2009 at 9:37 am
Premise 1) is not now nor has been the reason banks are in the financial mess they are in and, like it or not, government is in fact the only entity capable of steering us out of the recession and economic meltdown. It is the banks begging for capital infusion, and it is the goverment asking the banks to do what banks traditionally do so as to be socially and economically responsible. In doing so they will help the the general welfare. After all, James Madison and other Federalists well understood that the Constitution itself (and not just owing to its expression in the Preamble) is a means to desirable ends and one of the most prominent if not most important of those ends is the pursuit of the “people’s well-being,” welfare “embracing all that a state does to benefit its people,” as Sotirios A. Barber reminds us in Welfare and the Constitution (2003). It also helps to keep in mind, with James Fleming (and Rawls, Sunstein, Sager, et al), the important distinction between the judicially enforceable Constitution and the Constitution as a whole, which is in some sense binding outside the courts on nonjudicial institutions and citizens and hence the responsibilities and obligations that fall upon all of us.
Lawrence Cunningham - February 25, 2009 at 10:27 am
RE Patrick at 9:08 am: True. The post’s final link is to the official statement you quote, whose last sentence is:
“Because our economy functions better when financial institutions are well managed in the private sector, the strong presumption of the Capital Assistance Program is that banks should remain in private hands.”
RE A.W. at 9:29 am: I’m not sure it is a question of “going back” on “official denials,” as much as the uncertain and dynamic nature of the situation that may lead to the “strong presumption” giving way.
In any event, a whole new set of regulations and procedures would be necessary to deal with government ownership of banks. Treasury probably is working on related contingency plans.
A.W. - February 25, 2009 at 11:37 am
Patty,
If you don’t know government created this banking crisis, you have not been paying attention. And, by the way, a pox on both parties for this. These policies of making bad loans because it “helps” poor people has gone back to the Carter administration.
> government is in fact the only entity capable of steering us out of the recession and economic meltdown.
Right, if we left things alone, the entire financial system would fall down and not be able to get back up. *rolls eyes*
Its funny but Wall Street doesn’t seem to think that help is on its way. But I am sure you will cite an entire bibliography that knows better than those who actually deal with this stuff.
> It is the banks begging for capital infusion
After the government pushed them into bad loans.
Lawrence,
Dude, if you haven’t notice the flip-flops, you haven’t been paying attention. No one can honestly say what obama really believes or what he is about to do.
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