Promoting Strong, Viable Companies That Contribute to Our Economy Without Government Involvement

The Obama Administration inherited the worst economic crisis in a generation. The severity of the crisis has required the government to take unprecedented steps – in some cases, taking on substantial equity in private companies to shore up our economic system. Today, President Obama announced that the U.S. government would reluctantly take a 60 percent equity stake of the new GM. In this case, President Obama had no other responsible choice that would allow GM to restructure and protect the taxpayers and the economy at the same time.

The Obama Administration announced four core principles that will guide the government’s management of ownership interest in any private firm (including GM):

• Principle 1: The government has no desire to own equity stakes in companies any longer than necessary and will seek to dispose of it ownership interests as soon as practicable.

• Principle 2: In exceptional cases where it is necessary to respond to a company’s request for assistance, the government will reserve the right to set conditions, upfront, to protect taxpayers, promote financial stability and encourage growth.

• Principle 3: The government will not interfere with or exert control over day-to-day company operations.

• Principle 4: 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.

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