John Thune

Posted: June 12th 2009

The Argus Leader reports:

The federal government, which has amassed large ownership interests in private companies, would be forced to sell those interests by July 1, 2010, under a bill introduced Thursday by Sen. John Thune.

The federal government has taken equity stakes in financial companies and the auto industry using money from the Troubled Asset Relief Program. Thune said Thursday that the government's equity stakes have made President Obama a "de facto CEO" and Congress a "board of directors." The relationship between government and private industry, he said, has "created a dangerous conflict of interest."

"Americans expect government to be the referee of markets - making sure that laws are followed and that contracts are enforced," Thune said during a press call to introduce the bill. "But the government can't be the referee if it's also a player. Players take sides. They want to see one side win."

The issue has become a lightning rod of controversy, as the government has taken on a larger ownership stake in auto companies and other private corporations in recent weeks.

Members of Obama's auto task force Wednesday defended their work to rescue General Motors and Chrysler, telling lawmakers the nation would have faced "substantial job loss" if the administration had not restructured the struggling companies.

Ron Bloom, a senior adviser to the task force, told the Senate Banking Committee in prepared remarks that both GM and Chrysler faced "uncontrolled bankruptcies and almost certain liquidation, which would have caused substantial job loss with a ripple effect throughout our entire economy."

A provision in Thune's bill would allow the government to hold assets in private companies for an additional year if the Treasury Department deemed them to be undervalued.

The bill also would prohibit the government from using TARP funds for any other equity stakes in private companies, and it would mandate that any money repaid by private companies be applied to the national debt.
Thune voted for the $700 billion TARP program last fall, but he said the purpose of that program was to remove troubled assets from bank balance sheets, not to buy equity stakes in private companies.

Republicans have been critical of the government's involvement in private industry, fearing the United States is sliding toward European-style socialism.
Thune's bill will be popular with the Republican Party base, said Larry Sabato, the director of the Center for Politics at the University of Virginia. But with their depleted numbers in the Senate, Sabato thinks the bill has little chance of passing.

"The Democrats aren't going to permit Thune and the Republicans to tie Obama's hands in that way," Sabato said. ...