Monday, November 23, 2009
Trust and verify
Kansas City Star: Historically, government has a lousy record of running businesses. The interests of politicians don’t usually coincide with those of stockholders.
That’s why Washington’s investment in General Motors, as well as other big enterprises saved during the credit panic, should be placed in an independent trust under rules that assure taxpayers that the bailout is temporary.
Democratic Sen. Mark Warner of Virginia and Republican Sen. Bob Corker of Tennessee are backing a bill that would do just that. Independent, non-political trustees would manage any federal stake in a private business greater than 10 percent. That would include GM, Citigroup, AIG and Chrysler.
Block political meddling
The trustees would have the fiduciary responsibility of maximizing return for the taxpayer — not the politicians. For example, to save costs and realign its sales network with demand, GM planned to close 1,300 dealerships. But after lawmakers intervened, several dozen of those closings have been reversed.
Some of those reversals may have made sense, but the trend is worrisome. As long as the taxpayers have a stake in GM, politicians will be inclined to meddle to keep important constituents happy.
Moving the Treasury’s shares into a trust would provide at least a measure of insulation from political influence.
Indeed, the best feature of the Corker-Warner bill is a deadline. The taxpayers’ investment in these companies would have to end in two years, unless it could be shown that continuing is in the taxpayers’ interest.