It seems that our esteemed leadership in the White House cannot stop meddling in the markets or overcome their socialist predilections.  From education, to healthcare and home loans our government has screwed up so many facets of American life by interfering in the market.  The latest whiz bang idea from the economic minds that have given us a jobless recovery is Small Business Jobs Act.  Today's Wall Street Journal has an excellent editorial where they label this boondoggle "Son of Tarp".  The act should be called "Fannie & Freddie Deux" or maybe "The Bank Nationalization Act".

The folks in Washington just can't let a bad idea die, so it gets life in another venue.  The Small Business Jobs Act authorizes the Treasury to purchase 30 billion of stock in small community owned banks.  The banks are then supposed to lend out 300 billion in loans that probably wouldn't have been made in the first place.  The icing on the cake is that the geniuses that came up with this plan think that it will raise 1.1 billion dollars for the federal government.  This is the typical logic employed by folks that think that printing money creates wealth. 

The official line is that the program assumes that small banks aren't making loans because they don't have enough money.  For banks keeping their heads above water, that isn't the case at all.  In today's market, demand for loans is down.  One doesn't get a loan to expand a business with this much economic uncertainty in the air, unless you're guaranteed a return.  The undercurrent of the legislation is that the government is going to force small banks to make loans to the "right" types of businesses.  This is exactly how Fannie Mae & Freddie Mac were supposed to work.  The two entities were supposed to make money off from the "right types" of loans, and we see how well that worked out. 

Having an ownership stake in two car companies, controlling more than 40% of every health care dollar spent in the US, and being the sole provider of student loans isn't enough for our government, now they want to "help" run the small community banks.  Considering that there is a great deal of resistance to Obama's programs in small business and in rural areas, any plan that regulates those people's financial futures should be viewed with suspicion. In very recent memory we have seen federal dollars spent that provided political pay back via a community bank making the "right" types of loans.  Considering the Obama administration's track record small businesses can be forgiven for thinking that this program is less about helping them and more about controlling their future.