Obama’s Principles For Government Ownership

I overlooked this today and I saw very little about it on other blogs today. It’s the standards for the government to follow in managing its ownership interests in companies such as GM. It was evidently part and parcel of the announcements surrounding the bankruptcy and didn’t get the attention it deserves.

From Politico.com here are the four principles for owning firms:

“Consistent with the goal of clearly limiting the government’s role as a reluctant equity owner but careful steward of taxpayer resources, the Obama Administration has established four core principles that will guide the government’s management of ownership interests in private firms. These principles will apply to the U.S. government’s equity stake in GM:

“—The government has no desire to own equity stakes in companies any longer than necessary, and will seek to dispose of its ownership interests as soon as practicable. Our goal is to promote strong and viable companies that can quickly be profitable and contribute to economic growth and jobs without government involvement.

“—In exceptional cases where the U.S. government feels it is necessary to respond to a company’s request for substantial assistance, the government will reserve the right to set upfront conditions to protect taxpayers, promote financialstability and encourage growth. When necessary, these conditions may include restructurings similar to that now underway at GM as well as changes to ensure a strong board of directors that selects management with a sound long-term vision to restore their companies to profitability and to end the need for government support as quickly as is practically feasible.

“—After any up-front conditions are in place, the government will protect the taxpayers’ investment by managing its ownership stake in a hands-off, commercial manner. The government will not interfere with or exert control over day-to-day company operations. No government employees will serve on the boards or be employed by these companies.

“—As a common shareholder, the government will only vote on core governance issues, including the selection of a company’s board of directors and major corporate events or transactions. While protecting taxpayer resources, the government intends to be extremely disciplined as to how it intends to use even these limited rights.”

These principles raise two questions in my mind.

One, has everyone on Capitol Hill received the memo? If they have to they have any intention of adhering to the rules?

Two, did you ever think that you would live to see the day that something like this was enunciated by the government of the United States?

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