Partnering with the Devil

If there is a silver lining to the government’s recent intrusion into the private sector might it be a revitalization of the notion that there is no such thing as “partnering” with the public sector?

The pillorying that Ed Liddy and the bank executives took at the hands of Congress have not gone unnoticed nor has the willingness of Congress to meddle in day to day management decisions as evidenced by the flap over compensation been lost on members of the business community. Banks that received TARP money are leaving no stone unturned in order to escape the warm embrace of the bureaucrats. Hedge funds and money managers have been reluctant to participate in the PPIP for fear they will be faced with unanticipated regulation and several insurance companies when notified that they were eligible for TARP funds said simply, no thanks.

I found this statement in a Bloomberg article about Citi most likely being the only bank that will end up with government ownership compelling:

“The investing community doesn’t welcome long-term involvement by the U.S. government in the private economy,” said Kevin Starke, an analyst at CRT Capital Group LLC in Stamford, Connecticut. “Every time I try to pitch an idea to investors that has some government involvement, the automatic reaction is, ‘I don’t want to get involved.’”

None of this is to say that the clock is about to be turned back decades on government participation in the economy or that business will shun any and all opportunities in which the government plays a role. You only have to look at the lines forming to gain an edge in the “green revolution” largesse that is set to begin flowing. It is to say, however, that business is relearning that the government can be a fickle and demanding mistress. More ominously, government or at least certain of its practitioners seem to be much more willing to use its vast powers to force decisions that in the past were thought to be solely in the purview of the markets.

If there is a reawakening of the risks within corporate America and if that results in not just reluctance to participate but to withhold participation when the government requires the assistance of the private sector then that can only be viewed as beneficial. The concept that there are properly limits on the exercise of governmental power by those who wield it has been sorely diminished and a bit of push back from enterprise would do much to remind everyone that limits are appropriate.

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