Federal Ownership

In the NYT piece today, David Leonhardt covers a bunch of Q&A on the latest round of government bail outs. This one seemed particularly interesting.

Fannie and Freddie are in a conservatorship; the government clearly controls them. A small part of the assets of Bear Stearns are owned outright by the Fed; it controls them.

The A.I.G. situation is a bit more complicated. It’s still a private company, not one technically controlled by the federal government. But the Fed does have the ability, clearly, to veto dividends, among other things.

And I think it’s safe to assume that the Fed also has a significant degree of power that hasn’t been fully spelled out. After all, the chief executive of A.I.G., Robert B. Willumstad, stepped down at the request of the Treasury secretary, Henry M. Paulson Jr. That may have been a request that Mr. Willumstad couldn’t refuse.