Terry Jeffrey

There was instructive value even in the language that The Washington Post and The New York Times used to describe the Monday meeting at which nine large banks agreed to surrender part ownership to the government.

In describing how it came about, the Post said, "The government ordered the chief executives of nine prominent banks to attend a meeting yesterday at the imposing offices of the Treasury Department."

In describing the outcome, the Times said, "Bringing together all nine executives and directing them to participate was a way to avoid stigmatizing any one bank that chose to accept the government investment."

The bankers were "ordered" to come to Washington and "directed" to surrender an ownership interest to the state.

Treasury Secretary Henry Paulson emerged from the meeting looking and talking like Shakespeare's Macbeth when that woeful character emerged from the room where he had just slain the king of Scotland.

"We regret having to take these actions," said the remorseful former Wall Street banker. "Today's actions are not what we ever wanted to do, but today's actions are what we must do to restore confidence to our financial system."

"Government owning a stake in any private U.S. company is objectionable to most Americans -- me included," said Paulson.

He then went on to explain that the government intended to buy an interest not only in nine big banks but also in hundreds of smaller -- financially healthy -- banks all across the country.

"Today I am announcing that the Treasury will purchase equity stakes in a wide array of banks and thrifts," Paulson said. "While many banks have suffered significant losses during this period of market turmoil, many others have plenty of capital to get through this period. … Our goal is to see a wide array of healthy institutions sell preferred shares to the Treasury and raise additional private capital so that they can make more loans to businesses and consumers across the nation."

The New York Times reported that there are about 8,500 smaller banks in the United States and that, according to the American Bankers Association, 95 percent of U.S. banks are well-capitalized.

In other words: The government is seeking to buy up shares in healthy, well-run small businesses all across America so it can get those businesses to behave as the government wants them to behave -- which, as Paulson put it, is to "make more loans to businesses and consumers."

But isn't that how we go into this mess -- with the government trying to get banks to make more loans?


Terry Jeffrey

Terence P. Jeffrey is the editor-in-chief of CNSNews

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