The Obama administration now wants unfettered power to seize assets, abrogate contracts, and take over management of private corporations if it believes their failure would cause systemic damage to the economy. This is how Robert Gibbs justified it this morning:
“We need resolution authority to go in and be able to change contracts, be able to change the business model, unwind what doesn’t work,” Gibbs said on CNN in one of several morning television interviews aimed at promoting the administration proposal. ” . . . This is the exact type of authority that will allow us to deal with the problems in AIG . . . that will address the systemic risk without having to put [a failing firm] in bankruptcy.”
On its face, this is an assault on free enterprise. We’re no longer talking about companies coming hat-in-hand to the government begging for a bailout and agreeing to let the government tell them what to do. The Obama administration is now seeking the go-ahead to make these decisions on its own. This is truly scary — worse than anything we’ve seen out of this crew so far.
These are the same people who believe that no threat to national security justifies warrant-less searches or electronic eavesdropping, not even on non-citizens who are outside the U.S. But they are quite willing to bypass the courts in order to seize companies and rewrite contracts. We already have an effective system through our bankruptcy laws to re-negotiate contracts (a system many Democrats seem to believe is too onerous to subject union autoworkers to). Beware the future if we give up on the notion that contracts are sacrosanct, subject to change only by the agreement of the parties, or through a carefully conducted bankruptcy procedure in which all parties who have a stake in the outcome have the chance to be heard. This is the path to economic ruin and tyranny.