Should Governments Take Equity When Bailing Out Companies?

Governments should support progress by funding research and sharing innovations. They can offer below-market loans, but only temporarily. Such loans must be repaid or converted to equity. It makes more sense for government to own equity than to keep giving cheap loans. No investor puts money into a business without expecting ownership shares. The US could turn its 2008 bank bailout funds into equity stakes. It could also include any unpaid dividends and negotiate terms with bank boards. If executives award themselves bonuses and shareholders collect jumbo dividends in boom times, taxpayers should not cover losses in a meltdown. That, in my view, is corporate welfare taken too far.

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