Today, GM declared bankruptcy, thus making the American taxpayers owners of the automaker. Naturally, I'm not so keen on the idea, and I don't have that much faith in the federal government being able to run a car company because, well, I've seen how they handle the federal checkbook. But I got to thinking about it today and I came up with a different take, one that I'm sure the Obama Administration hadn't considered before taking the tack it did.
When a company does poorly, the shareholders can hold the Board of Directors accountable. After all, the shareholders have a vested interest in the success of the company, and under their bylaws, they usually have a say in who represents them on the Board. If someone does a crummy job, the shareholders can vote them out, not unlike they can vote out bad politicians.
Let's say GM comes out of bankruptcy and continues to do poorly. Since Americans now own 60% or more of GM, we can call the Board of Directors on the carpet. And since President Obama effectively becomes the CEO of GM with his plan and with GM filing for bankruptcy, that means we, the new GM stockholders, can fire the President as head of GM if he fails to perform.
And I don't think there's a golden parachute waiting for Obama should we do that.