Barney Frank is up to his old self-dealing tricks again. He's the politician who, more than any other (and there were many many others), pushed Freddie Mac to subsidize more sub-prime mortgages. He did this for one or both of these reasons: (1) he was genuinely concerned about providing better, more affordable housing for people who otherwise couldn't afford it, or (2) he wanted the votes of these people. You be the judge of motive, but the results were economically ruinous.
Well, he's at it again now. JUST after General Motors declared bankruptcy and gave a majority of its equity to the US Government, Barney Frank called GM's CEO personally to dissuade him from closing a distribution center they had been planning to close, in Mr. Frank's home state of Massachusetts. Apparently, his effort was successful, and CEO Fritz Henderson changed the plan after talking with Mr. Frank.
Now before the government took over GM, Congressmen did this kind of thing all the time. They would call companies and ask for favors for their constituents. It was unseemly, in my opinion, but it was common. Now that the government owns a controlling stake in General Motors, however, calling GM's CEO to ask for a favor amounts to a naked conflict of interest.
Imagine what would be said if a member of the board of directors of a publicly held company were to call the CEO of that company and argue against closing a facility in the director's own home town. This would be a gross violation of the director's fiduciary responsibilities and possible grounds for a shareholders' suit.
In fairness to Mr. Frank, perhaps he just didn't think through the implications of his actions. Nevertheless, if we're going to let the government own businesses, then we have to hold our politicians to the same high ethical standards as we apply to business executives.
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