Partial Bank Nationalizations to Begin

As the 700 billion dollar economic bailout begins to take effect, it’s worth looking at what the government actually intends to do with that money. The first 250 billion dollars is about to enter the economic system, and the government—under the leadership of President George W. Bush’s (R) Treasury Secretary, Henry Paulson—is going to use much of it for a forced partial nationalization of our banking system.

The government can use the money for a number of things, including buying ‘bad debt’ from private banks (which was much of the initial intent). That’s socialist enough in nature for my tastes, but the government’s revised bailout allows it to make ‘equity investments’ in many private banks—perhaps hundreds of them. That will begin soon with 9 ‘top’ banks. We still don’t know how big each of these ‘equity investments’ will be, but let’s not speak in euphemisms. An ‘equity investment’ means you are buying part of the bank. Yes, the government of the United States will soon own parts—possibly large parts—of the U.S. banking system, and will offer those banks increased benefits and/or responsibilities in return (as compared to wholly-private banks).

The U.S. government has very limited authority under the Constitution for owning or managing banks. By ‘limited authority’ I mean it has absolutely no such authority whatsoever. The existence of the Federal Reserve is debatably Constitutional since the federal government does indeed have a right to produce money, though the Reserve arguably grossly oversteps that limited purpose, and that’s pretty much it. We are on the verge of one of the most blatantly unconstitutional acts of economic interventionism in U.S. history, and we as citizens must be mindful of this dangerous slide toward socialism.

Scott Bradford is a writer and technologist who has been putting his opinions online since 1995. He believes in three inviolable human rights: life, liberty, and property. He is a Catholic Christian who worships the trinitarian God described in the Nicene Creed. Scott is a husband, nerd, pet lover, and AMC/Jeep enthusiast with a B.S. degree in public administration from George Mason University.