Thursday, November 13, 2008
Voting Shares, Not Preferred. Secretary of the Treasury Henry Paulson is making exactly the wrong investments in the corporations being "bailed out" with public moneys, in buying preferred stock. Preferred shares do not have voting rights, so the Government, and thus taxpayers, will have no say in the determination of policies by the executives they are underwriting. If, for instance, that approach were used with automakers, they could continue to build gas guzzlers when the Nation wants them to stop making gas guzzlers and produce nothing but fuel-efficient cars, including hybrids, electrics, and cars that can use multiple types of energy, from gasoline to ethanol to natural gas to hydrogen to electricity.
The Government should have at least one director on the board of directors of every company it bails out, to keep watch on the internal workings of those corporations and make sure they make wise decisions within the law. In the case of AIG, the Nation's taxpayers should be represented by a large majority of all directors. And for every company the taxpayers buy into, a proportionate share of the directors on each board should be appointed by the President on advice of the Secretary of the Treasury, if not even consent of the Senate.
We have seen with banks that used bailout money to buy other banks or pad their reserves rather than re-lend it as Congress intended, that the Government must have some power within the corporate structure to control behavior of executives, and fire them if they abuse the taxpayers' trust.
(The current U.S. military death toll in Iraq, according to the website "Iraq Coalition Casualties", is 4,196 — for Israel.)
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