Monday, October 19, 2009

Sovereign Immunity for Treasury Incorporated

Via Instapundit, J. W. Verret at The Volokh Conspiracy examines Treasury Incorporated:
To sum up my position: the theory and practice of corporate and securities law are unprepared for the presence of a control shareholder, like the government, that also enjoys sovereign immunity from the federal securities laws and state corporation law.
The legal principal of sovereign immunity evolved at a time when governments were much smaller and un-intrusive. As in healthcare, significant legal problems are created in corporate law by an immune shareholder.

Also of interest from Verret's article:
...if I can establish that the government controls merely the five bailed-out companies in which it has the largest stake (Fannie, Freddie, AIG, Citigroup, Bank of America) then under private sector accounting principles and under government accounting rules (and in these strange times, who knows which is which?) we are currently failing to recognize roughly HALF of the real national debt and HALF of the real budget deficit...

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