Acton Institute Powerblog

PBR: Government Bailout Control

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It made headlines last week when General Motors CEO Rick Wagoner was asked to resign by representatives of President Obama. Fritz Henderson, G.M. President, was announced as Wagoner’s successor to the top spot in the troubled car-manufacturer.

Henderson faces a series of directives from the Obama administration intended to retool G.M. As New York Times reporter Bill Vlasic notes, “The government has mandated that at least two-thirds of the debt of bondholders be swapped for G.M. stock, and that half of the retiree trust obligation also be financed with company stock.” If Henderson is unable to meet these demands, then the Obama administration has made it clear that bankruptcy is the alternative.

“We will either do it out of court or we will do it in court,” Mr. Henderson said. “But we will get the job done in terms of recreating and reinventing General Motors as a competitive enterprise.” In the sacking of Wagoner and the hands-on approach to forming G.M.’s future the federal government has flexed its muscles, refusing to be a passive partner following the extension of bailout funds to a host of corporations.

Given the precedent this might set, this week’s PBR question is: “Should the government control bailed-out companies?”

Jordan J. Ballor Jordan J. Ballor (Dr. theol., University of Zurich; Ph.D., Calvin Theological Seminary) is a senior research fellow and director of publishing at the Acton Institute for the Study of Religion & Liberty. He is also a postdoctoral researcher in theology and economics at the VU University Amsterdam as part of the "What Good Markets Are Good For" project. He is author of Get Your Hands Dirty: Essays on Christian Social Thought (and Action) (Wipf & Stock, 2013), Covenant, Causality, and Law: A Study in the Theology of Wolfgang Musculus (Vandenhoeck & Ruprecht, 2012) and Ecumenical Babel: Confusing Economic Ideology and the Church's Social Witness (Christian's Library Press, 2010), as well as editor of numerous works, including Abraham Kuyper Collected Works in Public Theology. Jordan is also associate director of the Junius Institute for Digital Reformation Research at Calvin Theological Seminary.


  • Life and Liberty GR

    From the beggining the government should have kept its nose and checkbook out of private enterprise. Now that the executive and legislative branches have colluded to step over the bounds of their respective offices some taxpayers are demanding the opportunity to controll “their investment.” Government should not have begun the process of socializing the banking and auto industries. At this juncture the elected “leaders” need to end their destructive meddling. There is no reason to continue down this path because of past mistakes.

    If the present administration hopes to gain any credibility to its bumper sticker slogans of “Hope and Change” they had best wake up quickly to realize that they are continuing the path to an authoritarian state. On the other hand it is much more likely that the administration does not care what we the people need or desire. The actions taken in the past 70 days most likely grow from their desire for complete power.

  • Rod Merrill

    If these was ever a time for the American people to show their distaste for the direction the Obama Administration is taking us, it will be this April 15th when TEA Parties across the country are assembled. This is a grassroots effort that is growing rapidly via the Internet and dozens of other communication methods. I believe it could be the gathering of people on this day that could very well provide the springboard for a 4th of July that we’ve not seen since 9/11. Except this time it will be visual displays in parades across the country calling for a change in direction of a Congress we’ve been saddled with until 2010.

    Although not tied to the TEA Parties, Dave Ramsey’s Town Hall for Hope presentation that will be broadcast in many churches and other venues on April 23rd is just one more example of people wanting to join together to take fiscal responsibility and dismiss what the mainstream media reports. We may be going through a recession but we don’t need to keep buying into the idea that this is the worst since who knows when and that having the government borrow money from our future is the way to solve this cyclic downturn.

    The bailout and government control of GM seems to be the final straw that has raised the ire of the many silent who have been content to sit along the sidelines for years. Our country was built on the entrepreneurship of individuals wiling to fail with the knowledge that we simply must keep trying harder to succeed. I believe that counting on the government taking care of our personal needs and that of our private corporations is a recipe for disaster.

  • daniel

    Should investors and creditors exercise control over their investments?

  • daniel,

    That’s the question that strikes at the heart of the issue. But does the government function just like any other investor or creditor?

  • Neal Lang

    Query: Should an entity (the US Government) which would be bankrupt were it not capable of printing worthless script (A.K.A. US Dollars) be allow to control private enterprise? Does such an entity have the expertise, qualifications and temperment to do so effectively? Does the US Government have the Constitutional authority to do this, or even “bailout” private enterprise? If not, how does a “government of laws, and not of men” justify such an unlawful measure?

  • David Robertson

    I thought the original argument from the politicians was that “GM is too big to go bankrupt”. Now the government is telling GM it must go bankrupt?

    What has changed?