The administration is seeking additional power to seize firms involved in the financial problems. Which is fine -- so long as their plan for dealing with these firms doesn't encourage more mergers and buyouts like JP Morgan / Bear Stearns or Whoever / Wachovia. Because, despite the Bush administration defending these mergers as "necessary to preserve the free market," they're neither necessary nor "free."

In fact, the last round of buyouts came with with special breaks instituted by then Treasury Secretary Hank Paulson, who rescinded a 1986 rule and provided an estimated $140 billion in tax breaks to grease the skids for mergers. In some cases, the government did more than make it easier for financial institutions to merge. In some cases it played Shadchan for reluctant partners, in others (as with Wachovia) it drove institutions to marry at the point of a fiscal shotgun. So banks that were too big to fail became bigger financial institutions that (like Citigroup) required billions more to keep afloat.

Let's wind back the clock a bit. Remember Smith-Barney, the brokerage that used the slogan "we make money the old fashioned way -- we earn it?" (you can bet no one on Wall Street is using that motto today) In the 1980s, Smith-Barney was already part of an insurance/brokerage mash-up called Primerica. Then Primerica was bought by Commercial Credit, which merged with Travelers Insurance, which bought the brokerage firm Solomon Brothers, which merged with Citicorp to form Citigroup. Fun fact: this was all pre-1999, when the Glass-Stegall Act was still in full effect, meaning that several of these mergers were probably illegal. But instead of enforcing the existing law, Congress chose to pass Gramm-Leach-Bliley, pasting a retroactive smiley face over these mergers and clearing the way for more in the future.

So instead of several smaller companies, we ended up with one behemoth which has collected $45 billion in bailout bucks, in addition to billions more in tax breaks -- $10 million of which is going to spruce up executive's offices. But why should we be surprised by that, or by the bonuses handed out in AIG? When we gripe about these companies that have become "too big to fail," what we really mean is that they have become too big to be dictated to. They have been provided with such fiscal leverage, such control of the system, that they are too big for the United States government to control.

This is a problem whose coming was welcomed by many conservatives, who have long lived in a Rand-ian dream world where business size is equated to moral worth -- and feared by everyone else at least as far back as Teddy Roosevelt.

Theodore Roosevelt actually liked big business. He thought that the growth of big business was very healthy, that most of the businesses got there because they were efficient and the businessmen were doing their jobs right. But two things bothered him. ... One was just that idea that they were overshadowing the government, that some of these tycoons, such as J. P. Morgan, could presume that they were sovereign equals of the U.S. government. For example, when the first big anti-trust suit under Roosevelt was brought, which was against Morgan's railroad combine, Morgan said, "Send your man to see my man and tell him to fix it up." Roosevelt's answer to that was, "That can not be done. Nobody treats as a sovereign equal to -- of the President. No company can presume to be -- no private interest can presume to be equal to the government. The government must be superior to all of these."

Market fundamentalists may cheer at the idea of government being bossed about by business forces, since they've long held disdain for government and awe of the most ruthless business mogols. They'll defend elevating business above government as "freedom" while ignoring the fact that it's enormously undemocratic. If we get anything out of living through the Great Bushwhack, let's hope it's a new understanding that the market fundamentalists are simply anti-American nuts.

From its beginning, the "American compromise" has represented an understanding that business be regulated by government for the betterment of both the market and the people. Teddy didn't mince words when it came to restating this as a central, and often neglected, role of the government.

Of course there are many sincere men who now believe in unrestricted individualism in business, just as there were formerly many sincere men who believed in slavery -- that is, in the unrestricted right of an individual to own another individual. ... The proposal to make the National Government supreme over, and therefore to give it complete control over, the railroads and other instruments of interstate commerce is merely a proposal to carry out to the letter one of the prime purposes, if not the prime purpose, for which the Constitution was founded.

When it comes to "too big to fail," the solution now as the same as it was a century ago: chop them up. That means not waiting until a company has an effective monopoly on the market before applying anti-trust laws. It means applying those laws when a company reaches the size where it deforms the market, bullies its competitors, and when the prospect of its failure is so frightening that we cushion its fall with billions in taxpayer assistance. It means applying those rules to AIG and Citigroup and others like them long before now.

So give the administration the authority to seize the companies at the heart of the financial meltdown. Not to let them "fail gracefully." Not to force them into more corporate marriages. Not to prop them up with more billions in government investment.

Seize them, then slice them, dice them... heck, use them to make julienne fries (whatever those are). The truth is that many of these corporate monsters are much less efficient as giants stitched together by the egos of their officers, than they were as separate entities. Chop 'em up. Then put back reasonable restrictions on the merger of financial institutions so that this doesn't happen again.