Treasury Secretary Timothy Geithner is now saying he’s prepared to remove more executives and directors of banks that recieve “exceptional” aid from the government. Here’s what I think: Just as the government can define however it wants what subjective stress test it applies to whatever bank it wants, it can define “exceptional aid” however it wants. As we know from last week, the government is not above bullying any bank into selling a class of its stock to the government and then using that tiny toe hold as a mechanism for controlling management. This is classic fascism and mirrors a technique used by Hitler and Mussolini in their early years of power. Thus, unless the courts intervene, or unless the voters elect a Republican Congress in 2010, Geithner’s threats must be taken seriously. However, a courageous CEO of a bank that the government has bullied could probably persuade a federal judge and jury that the government’s extortion (sell us your stock or we will audit you for the next five years) is unlawful and unconscionable, can be undone, and the bank may then rid itself of the federal beast.

To comment on this blog entry visit go to