The essence of this article is to discuss the increased over lapping regulatory supervision of the various federal and state entities. The issue is whether the federal government should be allowed to encroach into a state territory of corporate regulation. Stricter government regulation of corporations simply means that instead of trying to create the incentives for private sector actors to do the right thing, the government has the power to simply demand that they do the right thing, or at least, they not do the wrong thing. We read in various media of the current administration’s plans to ask congress to expand powers that would let the treasury secretary to seize hedge funds and other non-bank financial companies whose failure would imperil the economy. The plans to expand treasury authority would represent a major shift from the current model of financial regulation in which independent agencies have oversight powers. In addition to seize non bank companies, the administration will ask for tools to prevent failures, guaranteeing losses, buying up assets, or taking a partial ownership stake in troubled companies. Those powers would let the government break contracts, such as those that promised $165 million in bonuses to AIG employees.
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