Ownership Stake

The NY Times reports on the possibilities of the Treasury taking an ownership stake in banks in order to free up credit markets. 

Paul Krugman approves, giving credit to Chris Dodd and Gordon Brown. Nobel Prize winner Gary Becker dissents, saying: 

"There are many illustrations of the bad influence on corporate governance exerted by the governments of France, Italy, Russia, and many other countries that own shares in private companies…This and other examples of harmful government interference in the running of companies where they have an equity interest provides a very good lesson for the United States. Avoid taking any equity interest in private companies when buying assets of banks under the bailout bill."

No comments: