The financial crisis has been widely interpreted as proof of the need for extensive government regulation of banks, insurance companies and other capitalist institutions. The antics of politicians now that they have a greater role, however, are a vivid reminder of why they can't be trusted with such power.
These days, every politician assumes that because he has a driver's license and an ATM card, he must have all the necessary skills to run an automaker and operate a bank. House Speaker Nancy Pelosi and Senate Democratic Leader Harry Reid, for example, said Detroit should use its bailout money to become "a global, competitive leader in fuel efficiency."
Never mind that if we know anything from recent automotive history, it's that the Big Three's competitive advantage is in trucks and SUVs. If they had spurned that segment during the decades of cheap gas, things would have been very different: They would have reached the brink of bankruptcy long before now. But Congress' idea of a sound business plan is to build cars that suit its grand ambitions rather than, say, the tastes of consumers.
Banks getting federal money have likewise been subjected to a frenzy of finger-wagging. Politicians were shocked when Northern Trust hosted a client event featuring the band Earth, Wind and Fire. House Banking Committee Chairman Barney Frank and 17 other Democrats demanded that it "immediately return to the federal government the equivalent of what Northern Trust frittered away on these lavish events."
But Northern Trust didn't ask for federal help -- it was conscripted into the bailout. It happens to be managing its money well enough to be making a profit and repaying the taxpayers.
And did anyone notice that after Earth, Wind and Fire did the Northern Trust gig, it performed at a White House dinner? Why is it OK for President Obama to host "lavish events" that are financed by taxpayers but outrageous for a bank to use mostly private funds to entertain valued customers?
Then there is the insurance giant American International Group, which unleashed bubbling torrents of outrage when it paid large bonuses to hundreds of employees. Angry lawmakers have no idea what these workers should be paid, except that it should be a lot less.
Of course, some taxpayers feel that members of Congress should forfeit their salaries in years when they fail to balance the budget. But our leaders' contempt for failure applies only to the private sector.
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