No Strings Attached?

Treasury Secretary Timothy Geithner surprised everyone yesterday when he announced that the banks receiving government bailout money would not be allowed to pay off the loans early. For firms like J.P. Morgan Chase and Goldman Sachs, the administration's "gotcha" moment came in the form of Tuesday's press conference, when Geithner said it was up to the government to decide when and how the banks repaid their TARP debts.

Anxious to get out from under Washington's thumb, some had asked to be released from their bailouts. Not so fast, said Geithner, who indicated that the banks were at the mercy of the "system as a whole" and its ability to rebound collectively. For the firms frustrated by the President's constant meddling, the news is a crushing blow. But for Uncle Sam, who delights in this new role as the federal loan shark, the ability to dictate everything from executive salaries to internal purchases is simply too much power to walk away from.

As Larry Kudlow points out on NRO, "If a bank has the money to pay the taxpayers back, they should be allowed to do so. Is ... Obama... simply trying to maintain control over the banks?" Or worse, nationalize them for good? This example of payday loan politics should serve as a warning to any companies seeking government handouts that Washington will hold their autonomy as collateral. After Geithner informed the banks of this small print, the markets took a predictable dive. (frc.com)