Responding to the outcry about growing control of GM and other firms receiving government bailout money, the Obama administration signaled that it will use its stock ownership only for approving board members and major transactions.
Board members set policy for corporations and approve major transactions such as mergers and acquisitions.
According to a Bloomberg News report, the Obama team is set to release a policy this month on how it will vote the government’s shares. On some resolutions offered by investors — such as pro-environmental policies, domestic partner benefits and executive bonuses — the Treasury plans to ask that its ballots be counted in the same proportion as the votes of other stockholders so it won’t unduly effect the tally.
The rules will be similar to those outlined in a pact with Citigroup and terms issued May 31 on ownership in the auto industry, Treasury spokesman Andrew Williams said. "Those are a good gauge of where we are going on this," he told Bloomberg.
The strategy is intended to ease Wall Street concern about greater federal intrusion into commercial enterprise decision-making.
President Barack Obama, Treasury Secretary Tim Geithner, and other policymakers have claimed that the government is a reluctant owner that wants to exit the private sector as soon as possible. But many critics don’t view this as credible.
"To say you are going to walk softly and carry a big stake is kind of ridiculous," said Patrick McGurn, special counsel at proxy advisory company RiskMetrics Group in Rockville, Md. "It does beg the question of an absentee landlord, and that usually is a prescription for disaster."
The voting move is a big expansion of government powers regarding corporate share control. The Securities and Exchange Commission tells investment advisers to vote their clients’ shares on issues that have an effect on a company’s bottom line. But it doesn’t control the shares that are voted.
Other observers expressed outrage at the Democratic Congress and Obama for interfering with American capitalism.
"The all-pervasive micro-regulatory state enervates, but nicely, gradually, so after a while you don't even notice," famed columnist and radio and TV pundit Mark Steyn wrote in an article entitled, "The State Despotic," in this month's issue of The New Criterion. exchange for liberty, it offers security. The right to health care; the right to housing; the right to a job, although who needs that once you've go t all the others!"
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