The Obama Nation Marches On

Last Tuesday, when I wrote about why Obama’s Chrysler intervention was worse for America than any of us have yet imagined, a wise market mentor told me I should also pay attention to the Hart Schaffner Marx saga unfolding right here in Chicago. In the heat of bank stress tests, auto bailout angst, and the S&P near my bear rally target of 940, I completely forgot the story. Until this afternoon when I saw Illinois State Treasurer Alexi Giannoulias vs. former Dallas FED president Robert McTeer on CNBC.

It seems that the Obama administration has been pressuring Wells Fargo for weeks to extend more credit to the struggling clothing manufacturer, restructure its debt, or even forgive some loans that Wells inherited from its acquisition of Wachovia. This is more government strong-arm tactics to make sure we don’t look like we just handed the candy store over to the banks via the TARP. To quote Giannoulias "unless the company remains open, Wells Fargo will not be doing business with the state of Illinois any longer."

McTeer, who we knew as a conservative, plain-spoken “dove” on the FOMC for over a decade through the 90’s bull and post-bubble crash, was typically skeptical today of Obama’s meddling where it didn’t belong. He, of course, has always been mindful of the slippery slope of government dictates for private enterprise. On CNBC today he compared Giannoulias’ plans to that of Chinese central planners.

Is Wells Fargo acting irresponsibly in the face of hero Obama’s job-saving program and all the TARP, etc. assistance the bank has received? Maybe a little ungrateful? Or are they trying to right their own banking ship according to how the business should be run? Let’s let them speak for themselves:

“Financial institutions must lend prudently, consistent with safety and soundness principles. Advancing more funds with no reasonable likelihood of being repaid is not consistent with sound banking.”

Isn’t this how we want banks to think now?

Here’s some good, recent reporting on the story by the Chicago Sun-Times:

Kevin Cook, ONN.tv

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