I’m delighted to report that J.W. Verret, a law professor at George Mason University School of Law, will be guest-blogging this week about his new law review article, Treasury Inc.: How the Bailout Reshapes Corporate Theory and Practice. Prof. Verret has written extensively on corporate law topics, and was invited to testify before various House and Senate Committees four times during the financial crisis of 2009 regarding all of the central provisions of the Obama Administration’s 2009 financial regulatory reform proposals; and he’s a regular guest contributor to three of the most noted corporate law and financial regulation law blogs: the Harvard Law School Corporate Governance and Financial Regulation Forum, Deallawyers.com, and The Conglomerate. Here’s a summary of his article (the entire draft can be downloaded from SSRN):
Corporate law theory and practice considers the implications of ownership by shareholders separated from control by Boards of Directors. Yet through the TARP bailout and the government’s resultant shareholding in private companies, ownership and control at many companies has merged, leaving corporate theory and practice for the financial and automotive sectors in chaos. This article … updates the six central theories of corporate law to reveal that none are prepared for a controlling government shareholder that enjoys sovereign immunity from corporate and securities law. Government ownership of shares will also bring a tectonic shift for current understanding about insider trading, securities class actions, share voting, and state corporate law. The article closes with three recommendations, one of which has contributed to Sens. Warner and Corker’s introduction of implementing legislation.