The Government Becomes a Loan Shark.

When I first heard rumblings in the Wall Street Journal and elsewhere that the government would not allow big banks to repay their TARP loans, I thought it was either a genuine misunderstanding or an unfair partisan canard against the Obama administration. But the stories continue in the press and Tim Geithner has not done what he needs to do to kill this story: publicly announce that almost any bank that wants to pay back the TARP can bring a “check” to him personally.

It used to be that when you borrowed money from the mob, you could almost never get free. Once the mob got its hooks into you, you found that they owned you.

Now instead of the mob, it’s the federal government that won’t let you free, even if you want to pay off your loan with interest.

From my vantage point, this appears to be a naked power grab by the government, trying to get more and more of private enterprise within state control. This shift in government policy should be resisted vigorously. The TARP loans, after all, purported to be loans, not fraudulent credit scams. In Congressional hearings, the legislators certainly wanted the funds paid back as promptly as possible.

The latest press report is in the Financial Times, with analysis at Legal Insurrection (via Instapundit):

The Financial Times reports that banks and other financial institutions which received TARP funds may not be allowed to repay the loans. Yes, that is correct:

Strong banks will be allowed to repay bail-out funds they received from the US government but only if such a move passes a test to determine whether it is in the national economic interest, a senior administration official has told the Financial Times.

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