A Trillion Here, a Trillion There…

us-economy-771581The Associated Press reported today that the Treasury’s toxic asset plan (details to be unveiled tomorrow) could cost $1 trillion.

The Obama administration’s latest attempt to tackle the banking crisis and get loans flowing to families and businesses will create a new government entity, the Public-Private Investment Program, to help purchase as much as $1 trillion in toxic assets on banks’ books.

The new effort, to be unveiled Monday, will be followed the next day with release of the administration’s broad framework for overhauling the financial system to ensure that the current crisis — the worst in seven decades — is not repeated.

A key part of that regulatory framework will give the government new resolution authority to take over troubled institutions that would pose a threat to the entire financial system if they failed.

Administration officials believe this new power will save taxpayers money and avoid the type of controversy that erupted last week when insurance giant American International Group paid employees of its troubled financial products unit $165 million in bonuses even though the company had received more than $170 billion in support from the federal government.

Under the new powers being sought by the administration, the treasury secretary could only seize a firm with the agreement of the president and the Federal Reserve.

Continue reading…

Forget the trillion dollars for a minute, what about that huge power grab? If Barack, Ben and Timmy decide a firm’s possible failure might threaten the entire financial system, they can seize control of it- and so far there is no detail about whether this means only financial firms or any firm.

Isn’t this the kind of thing the Soviets did when the USSR’s economy and government began to collapse?

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