WASHINGTON - The White House's top economic adviser, Mr Larry Kudlow, said the administration may consider asking for an equity stake in corporations that want coronavirus aid from taxpayers.
"The government could step in and take equity stakes in Boeing, United, etc, and take substantial preferred equity positions to stabilise the situation," wrote Mr Matt Rowe, chief investment officer of Headwaters Volatility, in an e-mail on Wednesday.While deeply controversial politically, taxpayer backstops for the financial, automotive and housing-finance industries during the 2007-09 crisis were a key component of averting another Great Depression.
The hit to would-be retirees who lose benefits tied to one-time employers could also be a consideration for Washington.During the financial crisis, some Republicans decried a tilt toward European-style socialism. With US jobless claims poised for a historic surge as the coronavirus wreaks havoc on the economy, government action that appears to give a priority to corporations over households may be seen as politically unpalatable.
The government took preferred equity positions in a host of financial institutions. The programme ultimately turned a profit on those, thanks in part to the equity stakes.
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