Hi, we're from the government and we know better than you

I was listening to Larry Summers on Meet the Press when David Gregory asked him about whether the government would refuse to allow banks to pay back the TARP money.

MR. GREGORY: That's become a controversial point. You have some banks who are saying, "Look, we're in pretty healthy shape here. We want to give back this bailout money. We don't want the taxpayers' money." And the administration has appeared to say, "Hey, not so fast." Wouldn't that be a good thing?

DR. SUMMERS: Well, the administration's been, I think, consistent and clear in taking what I would guess almost everybody would agree is the right position. We want, we want to be out of the financial system. We want people to be paying back the government. But we don't want people to be paying back the government in ways that will put themselves right back in trouble and leaving themselves with inadequate capital. And we certainly don't want people starving automobile loans or starving the mortgage market or starving the small business market in order to pay back the government. So what Secretary Geithner has made clear is that he's very open, and regulatory authorities are very open to being paid back, but it has to be done in a way that's consistent with the stability of the financial institution and has to be consistent with maintaining the, maintaining the flow of credit.

In other words, Secretary Geithner knows better than the banks themselves what is in their best interest. Now you might argue that these banks got themselves into this mess and the government had to bail them out so now the government, in a domestic version of Colin Powell's Pottery Barn rule owns the mess. But have we seen any indication of such brilliance on Geithner or anyone in the Department of the Treasury's part to indicate that they have any better sense of how to run these banks than the people whose livelihood depends on their making the right decisions? And remember that some of these banks that want to pay back the TARP funds didn't want to take the money in the first place, but were forced to.

Originally designed to unload banks’ toxic assets, something that isn’t an issue for many regional banks, the government instead used TARP to shore up banks’ balance sheets. In some cases banks were forced to accept the funds whether they said they needed them or not.

Imagine the frustration of being forced to take the government's money in the first place and then to have the President's chief economic adviser go on TV and intimate that such banks don't know how to run their own business and need Nanny Geithner to determine when they're ready to pay back the unwanted money. The Obama administration has made it clear that they want to maintain control over which banks get to pay back their funds based on the national interest rather than what is in the banks' interest.

The official, meanwhile, said banks that had plenty of capital and had demonstrated an ability to raise fresh capital from the market should in principle be able to repay government funds. But the judgment would be made in the context of the wider economic interest. He said the government had three basic tests. It needed first to “make sure the system is stable”. Second, to not create “incentives for more deleveraging which would deepen the recession”. Third, to make sure the system had enough capital to “provide credit to support the recovery”.

While Obama's administration should act in the national interest, that is not how private enterprise works. Every day we're witnessing a departure from the foundation of our capitalist system. Maybe that is why President Obama is trumpeting his "New Foundation."

Perhaps that is why the CEO and BB&T, Kelly King, sounds so eager to pay the money back.

I will say categorically to you that our plan is to repay the CPP as soon as it is humanly possible. I frankly consider the CPP investment in our company to be destructive. It creates excessive controls. It is having negative impacts on our people and strategies. And I think from a systemic point of view and certainly for us it runs a great risk of politicizing the lending process, which is very, very unhealthy. So we consider that investment in our company to be not good and one that we should extricate ourselves from as quickly as possible.

I'm sure that there are many CEO's around the country who would say "Amen" to those sentiments. Maybe they don't have as much confidence in Geithner's judgment as Larry Summers does.