For all those that need to learn this lesson yet again

There are sound human behavior reasons to emphasize small government and segregation of government from economic activities. A couple of headlines really emphasize the point yet again.

Bailed-Out Banks Face Probe Over Fee Hikes
Banking institutions bolstered by capital infusions from the government face intensified scrutiny from TARP's oversight committee following a rash of complaints about higher interest rates and fees to consumers.

In this headline the issue is that banks are being limited on their ability to increase fees. There are plenty of smaller healthier banks that are not charging interest rates. Normal consumer behavior, will result in people moving to smaller healthier banks as a result of these transaction fees. We had a major bank to remain nameless acquire one of our local banks a number of years ago. Sure enough they hiked their account fees. We moved to the local credit union. Apparently enough other people took similar action that the big bank lowered their fees to be competitive.
The other issue with TARP is, healthy banks were strongly encouraged to take TARP funds under the guise of increasing the amount of money that could be lent. Now sure enough, any bank that has taken TARP is considered a "bad bank" and falls under government scrutiny.

Action on AIG Unit May Cost Taxpayers
AIG's financial-products unit is on track to wind down by year end and had 20 employees quit amid March's bonus controversy.

The point to be made in this story is that the bonus at financial firms was not simply a performance reward it was a fundamental part of the salary structure. When the furor over AIG bonuses came to light - the resulting consequences are that many people left AIG. Many of these people were the competent employees with the experience to help rebuild AIG. Likely AIG will now continue to be destroyed by further government involvement and sold off piece meal. The good news is there will be a number of other organizations that will snap up the pieces at government fire sale prices and at tax payers expense and make a windfall.

The bottom line on all of this is that in any complex system, intervention and command driven actions invariably are unable to take into account all of the interaction effects and interdependencies and lead to unintended consequences. On the other hand complex systems have a tendency to be self regulating and if given the chance will return to some sort of equilibrium, unless prevented from doing so.