This Is Capitalism?
I read the following in a New York Times article this morning about an apparent bidding “war” taking place between Citigroup and Wells Fargo for Wachovia:
Citigroup and Wells pressed regulators to seize Wachovia and let them buy its assets and deposits, as JPMorgan did with WaMu, or provide some sort of financial guarantee, as regulators did with JP Morgan’s acquisition of Bear Stearns, according to people briefed on and involved with the process.[1]
So is this how businesses grow in the brave new world of American finance?
By begging federal regulators to violate property rights, seize privately owned companies, and then “sell” their assets to those deemed by regulators, not the market, to be “strong enough” to handle the financial crisis?
Wasn’t Wachovia strong enough just two weeks ago to “save” Morgan Stanley?
If institutions fail because they made business decisions without taking all relevant factors into consideration that is fine.
But one thing no American businessman should have to worry about is having their property “seized” to make “the market” feel good about the economy (or anything else for that matter).
Recent government seizures of financial institutions with the ostensible goal of “calming markets” threaten more than just the owners of those companies; they threaten the integrity of American capitalism, and the principles upon which it stands (property rights, contract law), itself.
Some may welcome recent events.
But I like living in a free country.
This must stop.
(Disclaimer: the author of this article holds positions in Citigroup and Wachovia).
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