It's funny because it's true

Welcome to the Age of Nationalized Banks

We knew it was coming, but now the White House has announced plans to buy equity stakes in the countries top 9 banks. This will make the Federal Government a shareholder in all of these companies, and is interpreted as an implicit guarantee that they will not fail. The UK did this over the weekend and some place the Monday rebound of the stock market on the shoulders of this action.

To kick off Tuesday's expected announcement, the government is set to buy preferred equity stakes in Goldman Sachs Group Inc., Morgan Stanley, J.P. Morgan Chase & Co., Bank of America Corp. -- including the soon-to-be acquired Merrill Lynch -- Citigroup Inc., Wells Fargo & Co., Bank of New York Mellon and State Street Corp., according to people familiar with the matter.

I am of many minds about this. First, I am against the socialization/nationalization of banking. It places significantly more power in the hands of the Federal Government over our lives, and may actually one day require you get permission to own a home (i.e. get a mortgage or write a large check). Second, I am concerned that only large banks are being backed. This means smaller institutions (like the bank I work for) might see depositors fleeing in favor of Federally-owned banks, figuring they will be more secure for the future. Is this the end of the local bank branch? Third, where does this end? We all know the automakers are likewise on the edge of bankruptcy. Should we expect equity stakes there, in order to protect jobs? What about power utilities or internet providers, to protect our infrastructure against collapse? You see where I am going with this - where does it all end?

The inevitable Supreme Court challenge here will be fascinating to watch. Bank ownership is definite NOT among the enumerated powers for the Federal Government, but this policy probably fits under "interstate commerce" in the implied powers section. Will the Supremes endorse the full action, and pave the way for massive nationalization of industries? Will they strike it down, and possibly destabilize the economy? Will they selectively strike down aspects to walk a middle road? Whatever happens, it will transform our American notions of government for generations to come.