Is the gov. allowed to bailout?

[zNelson24]

Im just curious. I didnt think that the government was allowed to fund a single corporation or industry. They could contract projects and buy shit from other companies, but I didnt think they were allowed to bail one out. I thought the rule was that if a corperation runs out of cash, it dies. Whatever happened to that?

[Wonderful]

If said company plays a major part in the economy, and would leave the economy in a mess if they went bankrupt, then a bailout would be a huge help for the country.

[ThheJoe]

It's basically just that theres nothing that says they can't do it. Every government official interprets laws and the constitution differently, I'm afraid, so if its even somewhat ambiguous they can usually find a way to make it work, provided theres a solid reasoning for it. In this case there is reason, if all these companies tanked in the recession the unemployment rate would skyrocket.

[Der-Lowe]

At 5/1/09 06:55 PM, zNelson24 wrote: Im just curious. I didnt think that the government was allowed to fund a single corporation or industry. They could contract projects and buy shit from other companies, but I didnt think they were allowed to bail one out. I thought the rule was that if a corperation runs out of cash, it dies. Whatever happened to that?

That was never a law or a Constitutional article. Governments from all around the world own companies, and so does the US Government.

[Proteas]

At 5/2/09 08:07 PM, Der-Lowe wrote: and so does the US Government.

But does the government actually own the companies they gave these bailouts to, or are they simply just creditors, now?

[Jagos]

More that they own stock and have a little more pull in the agenda of a company.

[aviewaskewed]

At 5/2/09 09:45 PM, Proteas wrote: But does the government actually own the companies they gave these bailouts to, or are they simply just creditors, now?

From what I understand they'd now be the largest creditor should a bankruptcy occur. I understood it to be more like the last guy said, they've basically made themselves the majority shareholder and now have a lot more ability to say "get your shit together!".

[Der-Lowe]

At 5/2/09 09:45 PM, Proteas wrote:

At 5/2/09 08:07 PM, Der-Lowe wrote: and so does the US Government.

But does the government actually own the companies they gave these bailouts to, or are they simply just creditors, now?

Some of the bailouts were exchanged for actual ownership of the company, for example the nationalization of banks. Each approach has its pros and cons, but if they go bankrupt the govt is screwed anyway: by having worthless stock or a worthless right against the company.