IMAO, long term we don't need the people that brought us the Post Office, BATFE and Amtrak owning our insurance and investment banking industry. What we need is a proper correction of bad decisions and risk taking.
The quote at the bottom of this post is from Tony Perkins (Family Research Council) today. Glad to see him report that "The government's aim is not to own AIG and the massive loan is to be repaid in two years, through the orderly sale of existing assets."
In yesterday's Update, I wrote about the new hard line from the federal government, which allowed Lehman Brothers to enter bankruptcy and suffer the consequences of its own faulty economics. That hard line dissolved swiftly yesterday, as the Federal Reserve stepped in with an $85 billion loan to the insurance giant AIG, buying up some 80 percent of that company's shares and essentially, if temporarily, putting the taxpayers in the insurance business. The nation's financial institutions are in some uncharted territory. Steady hands are needed now, and panic in any form, least of all politically stoked panic, is unwise in the extreme. The government's aim is not to own AIG and the massive loan is to be repaid in two years, through the orderly sale of existing assets. That must happen. Even more important, firm and consistent diagnoses of what got our nation here are needed.
Economist and columnist Robert Samuelson lays out such a diagnosis today. He cites three factors in the current financial crunch: the bipartisan repeal of the Glass-Steagall Act in 1999 that moved financial firms outside their traditional roles, the emphasis on employee bonuses that promoted short-term thinking, and the firms' over-reliance on borrowed money for investing. The current crisis is, in short, more about character than money, and partisan finger-pointing must not obscure this reality.