The U.S. government is expected to take stakes in nine of the nation's top financial institutions as part of a new plan to restore confidence to the battered U.S. banking system, a far-reaching effort that puts the government's guarantee behind the basic plumbing of financial markets...Emphasis mine. Those rotten assets exist, for the most part, due to a previous wave of government interference. In that episode, the government, through regulations and coercion, encouraged mortgage brokers to make home loans to people with bad credit and no money to contribute to the purchase of the home. To make up for the incompetence and meddling that got us into this mess in the first place, the government is now buying stakes in the private banks it helped ruin.
Other elements of the plan, which will be announced Tuesday morning, include: equity investments in possibly thousands of other banks; lifting the cap on deposit insurance for certain bank accounts, such as those used by small businesses; and guaranteeing certain types of bank lending. It builds on an earlier plan to buy up rotten assets dragging down banks, which failed to calm investor fears, and follows similar moves by major European countries.
Totalitarianism doesn't always come with thugs or rogue armies or massive demonstrations. Sometimes it just blunders its way into being.