More market interventions?

Many highly paid employees in the financial industry showed failures of judgment that contributed to the country's current economic debacle.

We're advised there was simply no organized system in place to deal with those failures, which would explain why the federal government had plow hundreds of billions of dollars into firms that were "too big to fail."

In fact, the American system of bankruptcy law has been called among the best in the world. Only time will tell whether the correction -- however shocking -- might not have been quicker had the failing firms been advised to seek routine bankruptcy protection, allowing their surviving good assets to pass to new, better managers.

Instead, the intervention has now led, with breathtaking speed, to federal bureaucrats micromanaging private industry to an extent not seen since the World War II era of rationing, price controls and mass industrial mobilization.

White House "pay czar" Kenneth Feinberg last month ordered steep pay cuts for executives at the seven financial companies that received the most money in the Wall Street bailout. Assuming such interventions prove to be constitutional, at all, how deep and how widely can such a populist drive to punish "greedy executives" now reach?

The U.S. Supreme Court on Monday heard arguments in a case that might allow it to weigh in on that question, but several justices seemed to resist calls for the courts to get involved in reining in what investors are calling "excessive" fees on mutual funds.

"It makes a lot more sense to have the SEC (Securities and Exchange Commission) regulate rates than to have courts do it, doesn't it?" Chief Justice John Roberts asked during arguments.

In the case before the court, three investors sued Harris Associates L.P., which advises on the Oakmark complex of mutual funds. The plaintiffs, who own shares in several Oakmark funds, complain that Harris' fees are so high they violate the federal Investment Company Act, which is supposed to combat excessive investment adviser fees.

But both Chief Justice Roberts and Justice Antonin Scalia suggested people can move their money somewhere else if they don't like what they're being charged.

"When investors leave the company that is charging excessive fees to go to other companies, the company that they are leaving sees that something's wrong and has to lower its compensation to its adviser," said Justice Scalia, explaining a basic tenet of the free market.

Both of the other branches of government seem as anxious to jump into micromanagement of our once-free economy as kids arriving at the swimming hole on a hot summer day. The reluctance of the court to join the skinny-dippers is somewhat reassuring.