Inside the Mind of a Financial Dictator

WASHINGTON–After summoning the heads of the nation’s largest financial institutions to the White House yesterday, President Obama said of the banks, “we expect an extraordinary commitment from them to help rebuild our economy.” Obama went on to outline a number of lending policies he wants to see the banks follow.
“A hallmark of dictatorship is the view that individuals, including market institutions, are incapable of making rational decisions for themselves, and thus must be compelled to act rationally by some higher authority,” writes Alex Epstein, fellow at the Ayn Rand Center. “Obama’s latest meeting illustrates that he holds this view of banks, and that he is more than happy to be the higher authority that tells them when to lend and whom to lend to.
“Do I exaggerate? Let’s study Obama’s terminology carefully. When Barack Obama says he ‘expects’ banks to do something, he is ordering them to do something. Everyone in the room knows that he has fired the CEO of GM, everyone remembers how Bank of America was railroaded into a deal with Merrill Lynch, everyone remembers how healthy banks were forced to join TARP–everyone knows that today, any President, and certainly President Obama, can pretty much destroy them if they are recalcitrant.”
Furthermore, “By ordering banks to, in effect, be productive, President Obama is asserting his authority to determine what constitutes productive behavior, ‘creditworthy’ loans, and ‘responsible’ risks for bankers to take. He is saying that without his compulsion, banks will act destructively, as parasitical ‘fat cats’–a term he brazenly used to describe all of Wall Street on Sunday.
“For the banks, Obama’s orders are an offer they can’t refuse. For Americans, the burgeoning financial dictatorship is an institution against which we must rebel.”

Alex Epstein is a fellow at the Ayn Rand Center for Individual Rights, focusing on business issues.
Alex Epstein’s op-eds and letters to the editor have appeared in such publications as the Wall Street Journal, San Francisco Chronicle, Philadelphia Inquirer, Canada’s National Post, the Washington Times, and Investor’s Business Daily. He is also a contributing writer for “The Objective Standard,” a quarterly journal of culture and politics. Epstein has been a guest on numerous nationally syndicated radio programs.