U.S. Seeks Expanded Power to Seize Firms

U.S. Seeks Expanded Power to Seize Firms: "The Obama administration is considering asking Congress to give the Treasury secretary unprecedented powers to initiate the seizure of non-bank financial companies, such as large insurers, investment firms and hedge funds, whose collapse would damage the broader economy, according to an administration document.

The government at present has the authority to seize only banks.

Giving the Treasury secretary authority over a broader range of companies would mark a significant shift from the existing model of financial regulation, which relies on independent agencies that are shielded from the political process."
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The rationale is: if this had been the law last year the feds could have seized AIG and wrapped up its affairs like a federally-insured bank that failed, instead of buying a big ownership interest in AIG to keep it from failing, and then watching it continue to bleed away the government's bailout money and come around to Congress asking for more.

But the rationale for bank seizure is that the bank accepted federal depository insurance, and as a condition of that insurance, they agreed to be scrutinized at will by federal regulators, who also have the power to walk in at 4:00 on Friday afternoon and shut it down.