In a typical political move, Geithner and Bernanke are using the public outrage over Wall Street bonuses to seek powers that they couldn’t get before — for a good reason — and implement even more bad ideas.

The Wall Street Journal explained this morning: “The government’s top financial regulators are channeling widespread outrage over retention bonuses at American International Group Inc. to quickly win authority they have sought for much of the past year to seize nonbank companies and freeze their contracts.”

Supposedly, if the government had had this authority to takeover AIG last September we wouldn’t be in this situation today. “If a federal agency had had such tools on Sept. 16, they could have been used to put AIG into conservatorship or receivership, unwind it slowly, protect policyholders, and impose haircuts on creditors and counterparties as appropriate,” Mr. Bernanke said.

Really? I thought the $700 billion TARP and the different AIG bailouts were sold to lawmakers back then by Bernanke and former Treasury secretary Paulson as the solution to our financial problems. Yet Geithner and Bernanke is now saying that the bailouts didn’t work because they didn’t have enough powers. Seriously, I wouldn’t be surprised if they came out next week asking Congress to give them powers over private bank accounts.

More importantly, don’t we have bankruptcy laws to do what these guys want to do? Instead, of having the Fed and Treasury step outside their purposes by attempting to save AIG in the first place, the company could have broken into smaller pieces, salvaging what clients it could while competitors picked up the rest.

Finally, am I the only one horrified at the prospect of having Barney Frank and his committee determine whether the government should have the authority to nationalize private industry? Frank is one of the authors of the great Fannie Mae disaster. This is like asking the fox to watch the henhouse.