A Buyer of Last Resort

The restructuring of GM obviously puts the Obama Administration in a position it never dreamed of: majority ownership of the once most powerful corporation in the world. It has the potential to blur and create potential conflicts between government's role in ownership versus regulation and legislation.

What minimizes the conflict is this government is not trying an offensive takeover of GM in a Venezuela-type initiative, but is the buyer of last resort at a moment where the consequences of bankruptcy far outweigh a big government stake.

The Obama administration seems to expect independence on the part of the new GM board and management. The Obama administration is well aware that the government's ability to get their money back requires a successful private-sector company.

The Obama administration is playing defense not offense here, and although there will be practically and in appearance some conflicts, I think they will prove to be better sound bites for the "drift towards socialism" crowd then a significant problem.

The government should continue to minimize its operational involvement in GM and maximize its focus on the overall health of the economy.

By Andy Stern

 |  June 1, 2009; 11:02 AM ET
Category:  Economic crisis
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