This is a rush transcript from "The Journal Editorial Report," April 18, 2009. This copy may not be in its final form and may be updated.
STUART VARNEY, FOX GUEST HOST: Up next on "The Journal Editorial Report," take it back, please. Banks are lining up to repay the government's bail-out money and escape federal bondage. But will Treasury let them?
And anarchy on the high seas. What can be done to stop Somali pirates? And what should be done with the ones we capture?
And a closer look at President Obama's change of course on Cuba.
"The Journal Editorial Report" begins right now.
Welcome to "The Journal Editorial Report." I'm Stuart Varney, in for Paul Gigot.
First up this week, top recipients for Treasury, take back the money, please, calling the funds received through the Trouble Asset Relieved Program a scarlet letter, JPMorgan Chief Jamie Dimon said this week that his firm could repay the rescue funds tomorrow, and he's awaiting guidance from the Treasury. Such a move, of course, would free the bank from compensation restrictions and other regulatory strings attached to the bail-out money. Goldman Sachs said earlier in week that it's eager to repay the $10 billion it took from the government as well.
Joining the panel this week, Wall Street Journal columnist and deputy editor, Dan Henninger; columnist, Mary Anastasia O'Grady; editorial features editor, Robert Pollock. And we're joined by Jonathan Macy, law professor at Yale University and author of "Corporate Governances, Promises Kept, Promises Broken."
Professor, to you, first. You have written forcefully that the administration wants to socialize American finance, really get a grip on and control the banks. What would be the motivation to do that?
JONATHAN MACY, LAW PROFESSOR & AUTHOR, YALE UNIVERSITY: Well, there are two things. Number one, the government is not really a hero here. They are coming to the rescue of the banks. But they want political currency. They want to be able to control the banks and they want to be able to use the banks to implement policies that will further the political interest of the politicians associated with the bail-out. Basically, they are using it as a political ploy.
VARNEY: How are they going to exercise this control?
MACY: It's simple. There are several ways that the government has given money to the banks. Some of the money the banks want to pay back some of it. They say they want to pay it back, but they don't want to pay it all back by any stretch or even half of it back in the case of Goldman or Citi. The government says before you pay us back, we want to have a few strings and make sure certain loans are made to maybe some of our buddies, that certain accounts are kept in a particular way. So it's a fairly, you know — it's your basic dance of the scorpions where each side is making moves and faking the other side out, saying things that may be true, like we'd like to pay you back, but under many, many conditions. And saying things like maybe we'd like to be paid back, but only if many, many other conditions are met. So...
VARNEY: But you think this is a — you think this is politically motivated? The administration wants to direct the economy via the banks and control the banks?
MACY: Yes. Right. The easiest way to see this is to think about the contrast between this dance and the interactions that would take place in the purely private sector between somebody who loaned money to a creditor, and the creditor would never want to or be allowed to in the ordinary course of business start throwing in additional conditions to a loan. They'd be really happy if the debtor came back, particularly in this economy, and said here, here, here is your $10 billion back. We'd like to pay you back. They'd say great.
The fact that we don't see any interaction resembling what would have occurred in the private sector should lead any reasonable. thoughtful person to say wow, what is going on here? This is not a typical borrower- lender relationship.
VARNEY: Jonathan, stay right there. I want to broaden the discussion out and see what the panel makes of this.
Rob Pollock, what do you think of this?
ROB POLLOCK, EDITORIAL FEATURES EDITOR: To me, it seems less important what the current administration is than the fact that the longer these banks stay in the situation they're in, you're going to have increasing politicization of the financial industry of the allocation of credit in the country. That's not a rescue for a strong recovery.
VARNEY: OK. The banks want to give it back. They are saying to the Treasury, please, take this money back, please. They want to give it back. Will the treasury let them take it back?
POLLOCK: I don't know.