A Government Bank? Please, No!

Nearly a century after the creators of the Federal Reserve System believed they had given the banking system its “magic bullet,” today’s government geniuses are proposing the next logical step: a government bank. No, I am not kidding:

WASHINGTON (Reuters) – The incoming Obama administration is considering setting up a government-run bank to acquire bad assets clogging the financial system, a person familiar with the Obama team’s thinking said on Saturday.

The U.S. Federal Reserve, Treasury and Federal Deposit Insurance Corp have been in talks about ways to ease a banking crisis that is once again deepening — and a government-run “aggregator bank” is among the options.

Outgoing Treasury Secretary Henry Paulson and FDIC Chairman Sheila Bair both said on Friday a government bank was one of a number of ideas U.S. regulators had been discussing.

The source said advisers to President-elect Barack Obama, who takes office on Tuesday, were also considering the idea of an aggregator bank among a range of options that could be pursued.

David Axelrod, a top adviser to Obama, told Reuters the new administration would have something to say about a fresh approach to the financial crisis in “the next few days.”

Oh, yes, socialism is a “fresh approach.” Yeah, it is “fresh” the same way that a newly-created cowpie is “fresh.” I hate to tell these geniuses that a government bank is going to be enmeshed in all sorts of corruption and political pressures before long. However, like the Tennessee Valley Authority, it never will go out of business, just as long as there is a living, breathing taxpayer to squeeze.

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7:54 pm on January 17, 2009