U.S. Socialism Expands to MetLife: Today's Outrage
NEW YORK (
) -- The U.S. government keeps adding to -- rather than exiting -- its huge ownership stakes in private enterprise.
The latest victim is
MetLife
(MET) - Get Report
. The largest U.S. life insurance company will end up being 20% owned by government-controlled AIG after the planned purchase of
AIG's (AIG) - Get Report Alico
foreign life insurance business in a $15.5 billion stock and cash deal.
Earlier this month,
AIG agreed to sell its Asian unit
in a $35.5 billion stock and cash deal with
Prudential
(PRU) - Get Report
. That will give the U.S. government a roughly 10% stake in the U.K. insurer. At least the U.S. government won't be both an owner and regulator in that relationship.
The Treasury Department also holds 27% of
Citigroup
(C) - Get Report
and about 60% of
General Motors
after using taxpayer funds to provide bailouts during the financial crisis. Those are just the direct stakes in common shares. The government continues to hold billions of dollars in preferred shares issued by hundreds of other U.S. banks in exchange for federal aid.
This political encroachment on private enterprise and private property is looking a little more socialist than capitalist. At a minimum, we may have to admit that we've partially socialized the financial system.
Whatever we call it, partial government ownership of private enterprise seems like the worst of both political systems. The U.S. government is in the untenable position of being both the regulator and the regulated.
For most of these quasi-governmental entities, the Treasury doesn't own big enough stakes to just call the shots internally. But as a regulator, the government's independence is compromised.
One of the ironies of this new regulatory relationship is that new rules being proposed for the financial industry are a reaction to the perceived failure of self regulation. How is that any different than the government regulating companies it owns?
--Written by Glenn Hall in New York.
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