General Question

robmandu's avatar

Is the U.S. government allowed to gain control (thru conservatorship) of any private/publically-traded companies?

Asked by robmandu (21275points) September 8th, 2008

“Effectively, the federal government has now become the nation’s mortgage lender.”

I haven’t yet seen any citation of where in law/Constitution this kind of power is provided. There also doesn’t seem to be a great deal of opposition to the move (i.e. both presidential candidates are in favor of the takeover).

Anyway, I’m interested to know more. Is there historical precedent? Could, for example, the U.S. Government take over Microsoft should their software prove critical to the “safety of the nation”?

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8 Answers

allengreen's avatar

Good question, but Fannie and Freddie were government entities that were also public companies—like your student loan company. Called GSE.

Microsoft is totally private, but then again, so was Bear Stearns—the gov. did not take over Bear, but they did facilitate JPMorgan taking over Bear.

Historically, the gov. could but would not take over a company like Microsoft, but the government we have now acts in ways unpredictible, so God only knows what the Bushies are capable of.

Forget the Constitution, it is gone—gutted. We are a Facisit Nation, embrace it and get used to it—I don’t like it either.

robmandu's avatar

Oh ho! That sounds like a key distinction, that both were government sponsored enterprises. I guess I can see where that would give the gov’t an in to take over.

Still, glad to know I don’t have an FM mortgage… and that the gov’t now therefore doesn’t hold the deed to my home.

allengreen's avatar

Your mortgage may be BACKED by FM and you would not even know it. If it has MI (mortgage insurance, or is FHA—then it is)

marinelife's avatar

This is a special case, because these were government entities already.

jasongarrett's avatar

Mortgage servicing rights and the underlying debt are bought and sold independently. Unless your loan is from a small bank that never sells mortgages, you have no idea who owns yours.

allengreen's avatar

here is an amazing essay about the above topic, causes, reprocussions, and other worthwhil musings

http://jameshowardkunstler.typepad.com/clusterfuck_nation/2008/09/last-ditch.html

marinelife's avatar

@allengreen You predicted this in a thread a while ago, and you have been proven right.

allengreen's avatar

with great sadness, I must say. I’ve spent the last 10 yrs of my life becoming an “expert” on lending guidlines and programs that no longer exist, and my value has evaporated in the market place as a result of this lending credit crisis. Being right also means unemployment in my case, and a case of being a bit bitter and over the line with you and other’s, not to make excuses, but having my profession implode has been a rough ride….but thanks for noticing.

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