Date Posted: February 2009
This essay considers the implications of Treasury holding common equity in banks participating in the federal government's bailout under the TARP program. The federal government's position as the dominant shareholder in the financial services and automotive sectors requires careful consideration of its shareholder rights. Governments are a very unique brand of shareholder. Without careful consideration and advance planning for how those shareholder rights and responsibilities will be managed, the unintended consequences to capital markets could be dramatic.