Uncomfortable Embrace: Federal Corporate Ownership in the Midst of the Financial Crisis

By Steven M. Davidoff. Full text here.

The Article traces the terms of the government’s private ownership during the financial crisis, and provides a near-term critique of the government’s corporate ownership experience. It concludes that the government largely achieved its economic and social goals. The government ultimately saved the financial system, stalled a financial panic, and averted a much more significant economic downturn. The potential losses on the government’s corporate investments in the aggregate and individually pale in comparison to these avoided costs. Yet, the government often failed to negotiate financial and governance structures which were in its best interests, even allowing for legal, economic and time limitations. While U.S. government corporate ownership is likely to remain quite rare, we are unlikely to have seen the last of it. The Article draws on the recent experience to set forth principles to guide the future structure, monitoring, and retention of government investment in private enterprise.