Backed by top GOP leaders including House Speaker John Boehner, Republican Rep. Mike Turner is introducing a constitutional amendment to ban the federal government from owning corporations in whole or part following aggressive intervention by the Treasury Department during the financial crisis.
The proposal, like all constitutional amendments, faces major hurdles to becoming law.
But, part of a flurry by constitutional activity by congressional Republicans, the proposal could signify a new reluctance in Congress to grant the Treasury Department broad powers to intervene in private businesses like it did with the Troubled Asset Relief Program (TARP) bailouts.
Turner voted against TARP, which he thought would give Treasury only the authority to purchase “toxic assets.” But he watched with increasing alarm as the Obama administration used the law to take over entire companies, including General Motors, where his father worked for 42 years.
“My father’s a General Motors retiree and lost his health care as a result of General Motors’ bankruptcy and as a result of the decisions that were made down in Sec. [Timothy] Geitner’s office,” Turner said in an interview.
Turner’s constitutional amendment “would stop a bailout where the end result is that the federal government owns a private company. The federal government would still be able in financial crisis situations to step in and provide loans, loan guarantees. But I think it’s particularly troublesome to Americans that the federal government could end up owning private industry,” he said.
Turner said the actions of the government during the financial crisis were an affront to the American capitalist system.
“Owning private enterprise is really something that goes against the heart of our American values,” Turner said.
He also pointed to potential problems that arise when the federal government directly owns part or all of a corporation.
“What happens when the federal government owns companies that do business with the federal government? There are clear conflicts of interest there,” he said.
The amendment text says, “The United States shall not own, subscribe to, or otherwise have any interest in the stock or equity of any company, association or corporation: Provided, That the foregoing prohibition shall not apply to any investments through any pension funds.”
For a proposed amendment to become a part of the Constitution, the House and Senate must pass the amendment with 2/3 majorities and 3/4 of state legislatures must ratify it.
Though facing significant hurdles, Turner already has the support of key GOP lawmakers in the House, including Boehner, Majority Leader Eric Cantor, House Financial Services Committee Chairman Spencer Bachus and the Chairman of the House Ways and Means Subcommittee on Select Revenue Measures, Pat Tiberi.
No Democrats have signed onto the proposal.