Banks Try to Pay Back Bailout Money....Government Says 'Wait a Minute!"

We wrote a few weeks ago, about the Government refusing the repayment of TARP money, or bailout money, by banks because they realized they would lose control over these banks. It now seems that they are back to their socialistic ways and have begun a process of developing rules for paying back the TARP money banks receive.

From the Financial Times:

Strong banks will be allowed to repay bail-out funds they received from the US government but only if such a move passes a test to determine whether it is in the national economic interest, a senior administration official has told the Financial Times.

“Our general objective is going to be what is good for the system,” the senior official said. “We want the system to have enough capital.”

So what this is saying, is that the government, who currently has control over certain aspects of these banks, decides whether or not the banks are suitable to pay back the money they borrowed from the tax payer.

Who is the administer of this test? The Treasury Secretary? The President of the United States? How about the banks themselves, who have a better idea of what is best for them?

A government official had this to say about the plan by the government:

The official, meanwhile, said banks that had plenty of capital and had demonstrated an ability to raise fresh capital from the market should in principle be able to repay government funds. But the judgment would be made in the context of the wider economic interest. He said the government had three basic tests. It needed first to “make sure the system is stable”. Second, to not create “incentives for more deleveraging which would deepen the recession”. Third, to make sure the system had enough capital to “provide credit to support the recovery”.

Again, this just proves that the government doesn't want to give up the power they have come across by allowing private banks to use tax paying dollars to come out of a financial hole. Banks, who probably have a better understanding about their financial stability, are subject to the government if they want to give back the money they borrowed.

If this isn't nationalization and socialism, than I have no idea what is...