Transparency and Accountability in Government Ownership: A Critical Concern

Strategic Insights -

Congressional hearings on government ownership and dominant shareholder influence highlighted significant concerns regarding transparency, accountability, and the lack of meaningful say on pay for shareholders. The December 2009 hearing, chaired by Representative Dennis Kucinich, brought forth expert opinions from various fields, shedding light on the complexities of government intervention in the economy.

Key Takeaways:

  • The US government's role as a dominant shareholder in certain companies lacks transparency, with Treasury officials enjoying "get out of jail free cards" from securities and corporate liabilities, allowing for potential insider trading and abuse of power.
  • The lack of accountability and transparency is particularly concerning, as witnessed by the opaque decision-making process in the auto task force's handling of General Motors' restructuring.
  • The influence of union investors and the absence of clear definitions for "major" decisions in government intervention can create conflicts of interest and undermine shareholder rights.
  • The designated witnesses, including Orice Williams Brown, A. Nicole Clowers, B. Espen Eckbo, J.W. Verret, Anne Simpson, Alan Tonelson, Ralph Nader, and Robert Weissman, provided insightful perspectives on the complex issues at hand.
  • The hearing underscored the need for shareholder democracy, where investors have a meaningful say on pay and can exercise their ownership rights effectively.

Statistics:

  • The US government's control over certain companies has been likened to that of the UK's insurance companies and private company pensions, where institutional investors have a significant say in decision-making.
  • The auto task force's restructuring plan for General Motors was denied, highlighting the opaque decision-making process and lack of transparency in government intervention.
  • The cost and complexity of removing a board of directors or putting forward a new director in an American company can be "expensive and fiendishly complicated," as pointed out by Ms. Simpson.
  • The lack of transparency in government decision-making has created uncertainty among taxpayers about exit strategies and the impact on the economy.

Sources:

  • Federal News Service, Inc.
  • Representative Dennis Kucinich (D-OH)
  • Orice Williams Brown, Director, Financial Markets and Community Investment, GAO
  • A. Nicole Clowers, Acting Director, Physical Infrastructure, GAO
  • B. Espen Eckbo, Tuck School of Business, Dartmouth University
  • J.W. Verret, Assistant Professor of Law, George Mason University School of Law
  • Anne Simpson, Senior Portfolio Manager, Global Equity, California Public Employees' Retirement System
  • Alan Tonelson, Research Fellow, U.S. Business and Industry Council Educational Foundation
  • Ralph Nader, Public Advocate
  • Robert Weissman, President, Public Citizen