The Obama administration may be trying to take over the banks for the long term. As Larry Kudlow writes:

White House and Treasury officials are now talking about turning government TARP loans into common stock for the 19 biggest banks. It’s clearly a backdoor path to nationalization, as Uncle Sam would be the largest shareholder in these institutions. What’s more, it’s not at all clear that the administration will even let certain banks pay down their TARP loans.

This is government intervention into the private sector on a grand scale. It is financial/industrial policy. Banks will be kept on a very short leash regarding compensation, loans, credit-card issuance, mergers, acquisitions, and all the rest.

Not surprisingly, stocks opened down 200 points today — with banks leading the freefall — and finished down about 300 points.

Government control of the banks is going to get worse. Team Obama won’t let go without a fight. And the hook may well be the so-called economic stress tests that will show certain big banks in need of more capital. The Treasury (a.k.a. the taxpayer) already owns 36 percent of Citigroup’s common stock, a position that comes with full voting rights. Now it looks like more of this is on the way.

Again. It’s not socialism. It’s corporatism.