Stephanie Moulton

Charles Wise
Ohio State University

Shifting Boundaries between the Public and Private Sectors: Senior–Junior

Exchange
Implications from the Economic Crisis

What are the differences between the public and private
sectors as well as their interrelationships in light of the
recent financial crisis? Has the global economic crisis
fundamentally shifted the boundaries between the two
sectors? This essay examines the nature and extent of the
shift. The authors present an analysis of the Troubled
Asset Relief Program (TARP) to highlight the massive
transformations that are taking place and to introduce
At the height of the “privatization era,” Wise pointed
out that the fundamental question was not which was
better, public or private, but rather “what configuration
of organizations, public and private, is needed and what
arrangements between them provide the most effective
relationships to perform the needed functions” (1990,
142). Too often, policy makers have restructured public
organizations and public service programs without
Stephanie Moulton is an assistant
professor in the John Glenn School of Public
Affairs at the Ohio State University. Her
research focuses on the publicness and
performance of nongovernmental organiza-
tions engaged in public service, including
nonprofit organizations and organizations
implementing low-income housing policies
and programs.
E-mail: moulton.23@osu.edu

lessons for future policy initiatives. an adequate conceptualization and understanding of

Between financial rescue missions and the economic
stimulus program, government spending accounts for a
bigger share of the nation’s economy—26 percent—than
at any time since World War II. The government is
financing 9 out of 10 new mortgages in the United
the “configuration of organizations impacting public
services, and also without considering the modes of
interaction that the public organizations will have with
significant officials and organizations” (Wise 1990,
142). Now, the “object” has been turned around—it is
not public services but private goods and services that
Charles Wise is founding director of the
John Glenn School of Public Affairs at the
Ohio State University. He previously served
as managing editor of Public Administra-
tion Review and received the William E.
Mosher and Frederick C. Mosher Award for
best article in PAR three times.
E-mail: wise.983@osu.edu

States. If you buy a car from General Motors, you are
buying from a company that is 60 percent owned by the
government. If you take out a car loan or run up your
credit card, the chances are good that the government is
financing both your debt and that of your bank.
are the central focus. However, the question is quite
analogous: what is the most effective configuration of
public–private organizations to bring about particular
outcomes in the private economy while still observing
the requisites of democratic government?

—Edmund Andrews and David Sanger, New York As public administration scholars, it is critical that we
Times, 2009 evaluate the public–private configurations that are em-
ployed, not only for the problem at hand, but also for

W
hile understanding the longer-term reconfiguration
the interrelatedness of the public management sys-
of the public and … what are the key tem. Essentially, what are the key
private sectors has been perhaps considerations that should guide considerations that should guide
one of the most essential and the emerging reconfiguration of the emerging reconfiguration of
enduring challenges for public public and private institutions? public and private institutions?
administration over the past In this analysis, we consider one
few centuries (Bozeman 1987, particular case: the Troubled
2007; Dahl and Lindblom [1953] 1976; Dewey Asset Relief Program (TARP). Though initiated as a
[1927] 1954; Lindblom 1977; Wamsley and Zald series of targeted, short-term public investments of up
1973), recent events in the nation’s economy have to $700 billion in private institutions, TARP inter-
elevated a fundamental questioning and reordering of ventions have resulted in a reconfiguration of public
the relationships between public and private. In the and private institutions with long-term implications.
current economic crisis, lines between the public and This paper proceeds as follows. First, we briefly review
private sectors are rapidly being redrawn through new recent reforms targeting public–private configura-
organizations, policies, programs, and regulations. tions. Then, we present the public interest, economic,
Questions arise about the systemic effects, intended and management dimensions as analytical frames by
and unintended, that ultimately will result from these which to evaluate public–private configurations. Next,
initiatives. we employ the dimensions to evaluate two initiatives
Shifting Boundaries between the Public and Private Sectors 349
in the Troubled Assets Relief Program. Finally, we conclude with Table 1 Core Dimensions and Key Questions
implications for research and practice moving forward. Dimension Question
Public Interest How will the public interest, including substantive public
Background values and democratic accountability, be preserved and
Over the past two decades, the privatization movement has enhanced through this public–private configuration?
(re)defined the relationship between public and private institutions Economic What coordinated inputs between government and the
private sector are necessary to achieve the desired public
in many countries. Privatization refers to a variety of phenomena (and private) outcomes?
in the arrangement of government–business relationships, from Management Is the government capacity and authority in place to
contracting to load shedding (Wise 1990). The emphasis in this initiate, manage, and evaluate the configuration?
movement has been on the superiority of business operations, bring-
ing businesses principles into the operations of government, and/or organizations are public” to some extent (Bozeman 1987). The
turning over areas of government responsibility to private businesses long-term success of public–private configurations in ensuring
altogether. The Grace Commission report presented to Congress democratic governance and achieving desired objectives is contin-
during the Ronald Reagan administration and the National Per- gent on the appropriate balance between overlapping public inter-
formance Review conducted by the Bill Clinton administration est, economic, and management dimensions (Wise 1990). When
both promised greater efficiencies through the integration of mod- there is a shift in the configuration-—such as through the addition,
ern business methods. The George W. Bush administration adopted reduction, or alteration of government authority—it is essential
rules for putting federal jobs up for competition with private firms to reevaluate each dimension. Here we provide key considera-
(OMB 2003). tions under each dimension (with key questions summarized in
table 1), followed by a discussion of the complementary role of the
Recent policies adopted since the onset of the economic crisis have dimensions.
been based on a quite different premise—that business organizations
have failed and that government organizations must be involved Public Interest, Economic, and Management Dimensions
in business operations to curb their excesses, to improve them, to First, because of the extension of government authority, public–pri-
prevent further failures and harm to the public, and to foster greater vate configurations should be aligned with the public interest. The
economic development for the nation as a whole. Other coun- key question from the public interest dimension is, how will the
tries, such as Great Britain, have adopted similar stances. Like the public interest, including substantive public values and democratic
privatization of public organizations, the increasing influence of the accountability, be preserved and enhanced through this public–
public sector on the private sector is not an easily identified strategy. private configuration? Determination of the precise meaning of the
Rather, it comprises diverse instruments or tools of government public interest has long been considered problematic (Dewey [1927]
(Salamon 2002), ranging from the regulation of private sector eco- 1954; Pesch 2008; Shubert 1961), but as Bozeman points out, it
nomic activity or management practices (such as executive compen- continues to carry significant meaning “because legislators continue
sation), to an infusion of public funds (as with the Capital Purchase to make laws citing the ‘public interest,’ regulators continue to regu-
Program), to direct ownership or “takeover” of privately held firms late in the ‘public interest,’ and courts continue to rule in the ‘public
(such as in the auto industry). interest’ (2002, 148). Rather than a clearly defined objective, the
public interest is a normative ideal that includes both substantive
In the short term, certain government interventions may have been values and procedural aspects (Bozeman 2007; Dewey [1927] 1954;
effective in preventing a more severe economic crisis. For example, Wise 2002). Substantive values may be derived from a nation’s
if large U.S. financial institutions and automakers had been al- founding documents, or “fundamental laws” (Bozeman 2002, 2007;
lowed to fail, there is no doubt that the short-term impact on the Jørgensen and Bozeman 2002). In the United States, substantive
economy would have been substantial. This is not to deny that there values include, but are not limited to, such things as civil rights,
is significant debate about the proper role of government in private liberty, limited government, and equal treatment (Jørgensen and
enterprise. That debate is ongoing, and perhaps has been intensified Bozeman 2002; Wise 2002). Procedural aspects of the public inter-
by recent government actions. Nonetheless, rather than engage that est in a democracy seek to enhance democratic accountability by
issue or the short-term effects of government intervention, our point consent of the governed, the responsiveness of public officials to the
of departure is to consider the resulting reconfigurations of pub- governed, and the appropriate use of sovereign power (Bovens 2005;
lic–private institutions and the long-term implications for public Wise 1990; Wise and Freitag 2002).
administration.
Second, the economic dimension of public–
Public–Private Configurations: Public–private configurations private configurations is of critical impor-
Dimensions for Analysis exist wherever government tance. Broadly speaking, the economic dimen-
Public–private configurations exist wherever sion refers to the coordination system for
authority is extended to private
government authority is extended to private producing outputs, or the task environment
firms for the production of outcomes that firms for the production of (Scott 2003; Wamsley and Zald 1973). The
achieve public (as well as private) objectives. outcomes that achieve public question is not whether government should
There are a variety of tools of government (as well as private) objectives. intervene in the private sector, but “[w]hat
action (ranging from regulation to contracts coordinated inputs between government and
to direct ownership) that extend government authority to private the private sector are necessary to achieve the desired public (and
firms (Salamon 2002). Indeed, one might make the case that “all private) outcomes?” Two important considerations help guide the
350 Public Administration Review • May | June 2010
development of this coordinated system: (1) economic assumptions,
or hypothesized relationships between means and ends; and (2) the
“institutions” included directly in and implicated by the configura-
tion and the effects on the broader economic system. While in some
task environments, there is a very clear relationship between inputs
and outputs, in other, more complex task environments, there may
be several, sometimes conflicting hypothesized relationships between
the appropriate means to accomplish desired ends (Scott 2003;
Wamsley and Zald 1973). Identifying the operational assumptions
between means and ends thus becomes an important component of
the economic dimension of public–private configurations. Further,
while specific initiatives may be targeted at a specific “set” of firms,
all firms are part of a larger institutional environment (Scott 2003).
The success of public–private configurations depends in part on the
set of institutions that exist in an environment at any given point
in time and on the ability to coordinate, design, and reform the
institutions (Olsen 2006; Przeworski 1997).
Third, whereas the economic dimension focuses on the coordination
system for public–private configurations, the (public) management
dimension refers to the coordination ability of public administra-
tion. The key question becomes, is the government capacity and au-
thority in place to initiate, manage, and evaluate the configuration?
Public–private configurations require uniquely equipped public
management capacity that includes knowledge of and skill with the
appropriate management tools (Mosher 1980; Salamon 2002), an
“energetic executive” equipped to carry out ongoing management
responsibilities (Light 2008), and the authority (and credibility) to
provide direction and shape outcomes (Koppell 2001; Moe 2001;
Moe and Stanton 1989).
Public–private configurations are more complex than ideal-type gov-
ernment institutions that are responsive only to hierarchical political
controls or ideal-type market-driven firms that are responsive to cus-
tomers and, ultimately, to shareholders (Moe 2001; Mosher 1980;
Salamon 2002). The combined authority relations in public–private
configurations make strategic behavior on the part of the participat-
ing institutions inevitable (Agarwal et al. 2009; Leone 1981; 1986;
Oliver 2008; Shaffer 1995). Government institutions charged with
coordinating such configurations must have the prerequisite capac-
ity and authority to anticipate strategic behavior and make adjust-
ments as needed in line with the public interest.
dimension to ensure that the “means–ends system” selected is work-
ing toward publicly desired ends through publicly acceptable (and
accountable) means. Further, without the capacity and authority in
place to initiate, manage, and evaluate the configuration, even an
appropriately selected economy in line with the public interest will
not be sustained and will fail to meet its objectives.
Case Study: Troubled Asset Relief Program
The recent economic crisis in the United States has resulted in a
myriad of public initiatives and programs to prevent systemic failure
of the entire economy. Many of the public initiatives have been
targeted at the private sector, resulting in new or revised public–pri-
vate configurations that have transformed our understanding of
public–private relations. While there are a plethora of case studies
to consider, perhaps one of the best known public initiatives that
encompasses many of the complexities of the new configurations is
the Troubled Asset Relief Program. TARP was initiated in October
2008 under the Emergency Economic Stabilization Act (EESA) to
purchase, sell, and manage “toxic” assets; however, TARP quickly
was refocused to include a much broader purview. A quarterly
report from the Special Inspector General for TARP in April 2009
comments on the magnitude of its coverage: “From programs
involving large capital infusions into hundreds of banks and other
financial institutions, to a mortgage modification program designed
to modify millions of mortgages, to public/private partnerships
purchasing ‘toxic’ assets from banks using tremendous leverage pro-
vided by Government loans or guarantees, TARP has evolved into a
program of unprecedented scope, scale, and complexity” (SIGTARP
2009b).
Table 2 provides a summary of the $474.70 billion in TARP funds
spent on various programs as of November 30, 2009, reported by
the Congressional Oversight Panel (COP 2009a). Here, we will
focus on two of the largest programs under TARP, which together
represent 59 percent of the total funds allocated to date
(see figure 1). The largest portion of funds (43 percent) was spent
on the Capital Purchase Program (CPP), which invests in qualified
financial institutions, such as banks and bank holding companies,
that are viewed as important to stabilizing and growing the U.S.
Table 2. TARP Disbursements and Commitments as of November 30, 2009
(Billions of Dollars)

Complementary Role of the Dimensions Program Disbursed Committed

The public interest, economic, and management dimensions are not Capital Purchase Program $204.7 218.0
mutually exclusive; rather, there is substantial overlap between the Targeted Investment Program 40.0 40.0
dimensions that is critical to the success of the configurations (Wise Capital Assistance Program TBD TBD
1990). Under the political economy perspective, market mecha- Systematically Significant Failing Institutions 69.8 69.8
nisms are viewed as a means to achieve publicly desired ends—not Term Asset-Backed Securities Lending Facility 20.0 20.0
as ends in and of themselves (Dahl and Lindblom [1953] 1976; Asset Guarantee Program 5.0 5.0
Lindblom 1977; Wamsley and Zald 1973). In their discussion of Automotive Industry Financing Program 77.6 77.6
the political economy of public administration, Wamsley and Zald Supplier Support Program 3.5 3.5

(1973) point out that there are multiple “economies” that can be Making Home Affordable Program 27.4 50.0
Consumer and Business Lending Initiative 0.0 15.0
selected to transform inputs into outputs; one can think of several
Public Private Investment Program 26.7 30.0
different mechanisms that could be employed, for example, to
Total committed $474.70 $528.90
produce military equipment or to provide food to hungry children.
Total uncommitted N/A 169.80
The selection of the economy (or the means to produce desired
ends) is as much a political decision as an economic decision. In this TOTAL $474.70 $698.70
regard, the public interest dimension complements the economic Source: Congressional Oversight Panel (2009a).

Shifting Boundaries between the Public and Private Sectors 351

 from additional capital for lending activity or stability. As of No-
vember 2009, preferred shares and subordinated debentures of 692
financial institutions were purchased for $205 billion, 50 financial
institutions had redeemed their preferred stock, and 30 had also re-
purchased their warrants (U.S. Department of the Treasury 2009e).

The CPP constituted only one component of the federal govern-

ment’s stabilization efforts, which also included programs run by
the Federal Reserve and the Federal Deposit Insurance Corporation
(FDIC). As of December 2009, the Federal Reserve had a maxi-
mum possible exposure of $1.73 trillion, which exposed the Federal
Reserve to potential losses of up to $220.4 billion; the FDIC maxi-
mum possible exposure was $666.7 billion. Altogether, the estimate
of the federal government’s maximum possible exposure was $3.1
Figure 1 TARP Expenditures to Date trillion, including uncommitted TARP funds (COP 2009a, 77).

Public Interest Dimension

economy. Four qualified financial institutions have received nearly The public interest dimension is concerned with preserving and
one-half of the allocations under the CPP to date—Bank of Amer- enhancing both procedural accountability and substantive public
ica, JPMorgan Chase, Wells Fargo, and Citigroup—although more values. Procedurally, from the inception of the CPP, there have been
than 600 institutions have received some amount of funding under questions about the selection of “healthy” firms to receive capital
the CPP (SIGTARP 2009c). Previously, firms had to wait three years infusions (and the disclosure of selection criteria and processes). A
to repay the CPP funds, but revisions to the legislation now permit committee within the Treasury Department reviewed literally thou-
repayment if the firm can demonstrate its financial sustainability.1 sands of applications from banks, savings and loans, insurers, and
The second-largest investment of TARP funds, representing 16 per- others (deemed eligible by their federal regulator) to select finan-
cent of the total invested to date, has occurred through the Automo- cial institutions for funding. Treasury officials did not disclose the
tive Industry Financing Program, namely, to General Motors and criteria used in deciding which institutions were sufficiently healthy
Chrysler. The purpose of the investment is to prevent a shock to the to warrant assistance and which were not, stressing that the process
U.S. financial markets and the economy more broadly that would had to be confidential so that rejected banks did not suffer damage
result from the failure of these large private firms. The other notable in the markets, further harming the financial system (Landler 2008).
expenditures are investments in specific firms, including investments
in AIG under the Systematically Significant Failing Institutions Pro- With regard to implementation, Congress imbued multiple organi-
gram (15 percent of the total) and investments in Citigroup under zations with accountability mandates under TARP: the Special In-
the Targeted Investment Program (8 percent of the total). spector General of the Troubled Assets Relief Program (SIGTARP),
the Government Accountability Office (GAO), the Congressional
The complexity underlying the public– Oversight Panel (COP), and the Financial
private configurations implicated in the The complexity underlying the Stability Oversight Board (FINSOB). The
Capital Purchase Program and Auto Industry public private configurations challenge in getting the accountability bal-
Financing Program is formidable. Unpack- ance right in the Capital Purchase Program
implicated in the Capital
ing this complexity provides important lies in the trade-offs between investing the
considerations not only for the success of Purchase Program [(CAP)] accountability agents (SIGTARP, GAO, COP,
these particular initiatives, but also for future and Auto Industry Financing FINSOB) with sufficient powers to obtain
public–private configurations moving for- Program is formidable. (adequate) information but not overly intru-
ward. Through a review of these two cases, we sive powers that give financial institutions a
highlight some of the issues that are pertinent to the public inter- disincentive to participate, thereby decreasing the chances of restor-
est, economic, and management dimensions. This information is ing financial stability. This trade-off is exemplified by the informa-
then used to derive implications for future research and practice of tion that must be disclosed by the recipients of TARP funds. While
public–private configurations. the Treasury Department has issued several reports and includes
some data on its Web site, SIGTARP and COP have continually
Capital Purchase Program recommended that the Treasury Department collect additional
The primary vehicle under TARP for the stabilization of financial data from TARP recipients on the actual use of funds, a step that is
markets is the Capital Purchase Program. The purpose of the CPP is necessary to meet the Treasury’s stated goal of bringing transparency
to provide additional capital to healthy financial institutions by pur- to the TARP program and informing the American people and their
chasing preferred shares of the financial institutions in exchange for representatives in Congress about what is being done with their
dividends and warrants. By increasing the capital base of the healthy money (SIGTARP 2009c, 8). The Treasury Department rejected
institutions, the institutions should have increased capacity to lend the recommendation, and claimed that the exact use of federal aid
to businesses and consumers, thereby stimulating the economy. The cannot be tracked because “money in a bank is like water poured
CPP could invest up to $250 billion in viable financial institutions into an ocean” (Appelbaum 2009). The GAO also has continually
(recommended by their federal regulator), which would benefit found that the Treasury has not developed “a means of regularly
352 Public Administration Review • May | June 2010
and routinely communicating its activities to relevant congressional
committees, members of the public, and other critical stakeholders”
(GAO 2009d), speaking directly to the procedural public interest
function of democratic control.
In addition to procedural accountability to the public interest,
substantive public interest concerns have been raised regarding the
executive compensation policies of CPP (and other TARP) recipi-
ents. Ignited by outrage over the $165 million in AIG retention bo-
nuses (Cooper 2009), focus on executive compensation has been a
central component of TARP. According to Section 111 of the EESA,
“TARP Recipients [may] not have pay packages that promote exces-
sive risk” (P.L. 110-343 Division A, codified as 12 U.S.C. 5221).
Since 2008, most all iterations of TARP have included provisions
related to executive compensation. The Interim Final Rule on TARP
Standards for Compensation and Corporate Governance, issued by
the Treasury Department on June 10, 2009, stipulated an annual
compensation limit of $500,000, in addition to limits on bonus
and incentive compensation, until TARP funds are repaid. Further,
a special master (Kenneth Feinberg) was appointed by Treasury Sec-
retary Timothy Geithner to formally review compensation packages
at TARP-assisted firms (U.S. Department of the Treasury 2009b),
thereby increasing perceived public accountability.
For CPP recipients, issues of executive compensation limits are
particularly troubling. Many of the rationales for reform are tied
to the assumption that executive compensation practices are linked
to the performance of a firm (Bebchuck and Fried 2003; Bebchuk
and Spamann 2010), and to allegations that previous compensa-
tion policies within financial institutions led to the type of excessive
risk taking that lies at the very heart of the financial crisis (CNBC
2009). However, because executive compensation restrictions are
limited to those firms receiving TARP subsidies, and because the
restrictions are lifted when TARP funds are repaid under the CPP,
the long-term public interest in reforming executive compensation
may not be substantively addressed (Bhagat and Romano 2009).
In summary, both procedural and substantive public interests under-
lying the CPP have been a motivating force, but have yet to be fully
realized. In the first days, the Treasury Department shifted from its
stated intent to purchase “toxic assets” to direct investment. It did
not disclose its decision criteria for selected institutions to receive as-
sistance, and it has been criticized by the oversight agencies for failing
to track the uses of TARP funds. Further, while there are substantive
public interests driving executive compensation reforms for assisted
firms, the adopted reforms, which apply only to assisted firms par-
ticipating in the CPP, are more likely to result in strategic behavior
on the part of firms (to pay off the TARP funds before they are truly
healthy) than in the substantive achievement of the public interest.
Treasury officials have asserted that the nature and demands of the
financial markets and the need to adapt to such markets have deter-
mined their actions. Such conflicts illustrate the difficulty of striking
the right balance between the requisites of democratic control, public
values, and executive evaluation of market conditions and dynamics.
Economic Dimension
The economic dimension is concerned with the coordinated inputs
between government and the private sector necessary to achieve
desired public outcomes. Since passage of the Full Employment Act
of 1946 (15 U.S.C. sec. 1021), the federal government has assumed
the responsibility for economic stability of the country.2 A primary
rationale for the Capital Purchase Program was to head off the sys-
temic failure of the credit markets and the collapse of the financial
system, which was projected to lead to a serious price deflation and
resultant depression in the economy. The president, the Secretary
of the Treasury, and the head of the Federal Reserve all claimed that
capital support to private financial institutions was needed to pre-
vent these results and to restore growth in the capital markets.
Under the CPP, the government’s intent is to restore financial activ-
ity in the market by directly investing money (in the form of capi-
tal) in financial institutions. “The program is designed to generate
a positive return to the taxpayer while strengthening the backbone
of and providing confidence in our nation’s financial system” (U.S.
Department of the Treasury 2009f ). Before exiting the program and
repaying government, financial institutions have to demonstrate
that they are well capitalized through nongovernmental sources.
The success of the CPP is dependent on at least three economic
assumptions: that selecting financial institutions for capital infusion
will indeed increase lending activity and signal legitimacy/stability
to private market participants, that the taxpayer funds will be paid
back with a return on the investment, and that financial institutions
will remain in the program until they are healthy enough to gener-
ate and sustain private capital and lending activity. If any of these
three assumptions is miscalculated, the CPP may be ineffective.
The success of the CPP is also influenced by dynamic factors outside
of direct government control. For example, the market may respond
in unexpected ways to the capital infusions by government into finan-
cial institutions. “While government intervention has the potential
to stabilize the system by shoring up bank capital, it can also risk
further scaring away private capital by creating new forms of risk
and uncertainty” (COP 2009c, 7). This risk is largely attributable to
the propensity of government to pay below-market prices for assets.
Indeed, although the government is being repaid and earning a de-
cent return on its investment (estimates at the end of August total $4
billion repaid at an equivalent of 15 percent annually), some financial
experts say that the Treasury paid too much for the assets, and could
have earned three times the amount of return (COP 2009b, 2).
Numerous other institutions—independent of the CPP—also
drive the success (or failure) of the market. As the GAO has noted,
isolating and estimating the effect of the CPP (and other TARP
programs) includes discerning the influence of other large capital
infusion programs initiated separately by the Federal Reserve, and
the dynamics of world markets and money flows. In June 2009, the
GAO noted that indicators of risk in credit markets had improved
since March, although the cost of credit had risen in some markets
(GAO 2009b, 68; 2009c). However, determining the role that the
CPP played in this, as one of several interdependent institutional
influences, is extremely difficult.
The COP concluded that while TARP’s effects are impossible to iso-
late, the consensus is that TARP was an important part of a broader
government strategy that stabilized the U.S. financial system by re-
newing the flow of credit and averting a more acute crisis. However,
the COP also stated, “It is apparent that after fourteen months the
TARP’s programs have not been able to solve many of the ongoing
Shifting Boundaries between the Public and Private Sectors 353
problems Congress identified. Credit availability, the lifeblood of implementation and oversight bodies were instituted, and the
the economy, remains low. In light of the weak economy, banks acquisition of sufficient expertise to manage a complex and shifting
remain reluctant to lend, while small businesses and consumers are investment program. The first decision for policy makers is whether
reluctant to borrow. In addition, questions remain about the capital- to assign the new responsibility to an existing organization or to cre-
ization of many banks, and whether they are focusing on repairing ate a new organization; generally, policy makers favor the creation of
their balance sheets at the expense of lending” (COP 2009a, 112). a new, “less rigid” organization (Johnson 1990; Wise 2002).4 In the
The panel also found that bank failures continue at a nearly unprec- case of the CPP, the Emergency Economic Stabilization Act of 2008
edented rate, toxic assets remain on the balance sheets of many large mandated that an Office of Financial Stability (OFS) be established
banks, and the foreclosure crisis continues to grow (COP 2009a, 5). within the Treasury Department to administer the funds appropri-
ated under the act, a hybrid between the old and new.
With regard to the goal of recouping taxpayer money, by the end of
2009, financial institutions that had received CPP funds had paid In effect, the Treasury Department was required to create a new
back $164 billion. Financial institutions still owing the government organization that immediately had to distribute hundreds of billions
money included Citigroup, to which the government had provided of dollars, somewhat like building an airplane while flying it. The
$45 billion, of which $25 billion was provided in exchange for financial stability effort was put into place by appointing an interim
common stock, making the federal government the largest single assistant secretary for financial stability and other interim officials.
shareholder with 36 percent of shares. Toward the end of 2009, Coming in the last days of an outgoing presidential administration,
TARP realized its first direct losses of $2.63 billion as a result of the appointment of permanent officials who would bear continu-
failures of three financial institutions. In addition, 38 banks have ing responsibility for the program was not realistic. The slowness
missed dividend payments, and six others have deferred dividends of the political appointments and confirmation processes further
(COP 2009a, 31). The COP observed, “In addition to costing tax- constrained the capacity of the Treasury Department to provide
payers, the recent bank failures call into question Treasury’s assertion political and policy leadership for the program at the departmental
that CPP funds were only available to ‘healthy’ or ‘viable’ banks” level.5 As a result, the major policy decisions involved in the CPP,
(2009a, 31). The Special Inspector General provided additional cor- as well as the numerous other programs, were made by the Treasury
roboration through his audit, which found that “Treasury and other Secretary and a group of unofficial senior advisors who had not been
regulators’ descriptions of the financial conditions of the first nine appointed by the president or confirmed by the Senate (Andrews
institutions as ‘healthy’ were inconsistent with the private beliefs and Labaton 2009). Sheila Baird, chair of the FDIC, observed,
of decision makers at Treasury and the Federal Reserve, and later “There are a couple of go to people trying to do five different jobs. I
proved to be inaccurate” (SIGTARP 2009d, 8).3 do think that’s a real issue . . . I think being unable to get their own
people has hampered their ability” (Cho 2009).
In summary, the Capital Purchase Program may have contributed to
averting an acute financial crisis, but the jury is still out on whether The Treasury Department also faced a number of challenges in hiring
it can sufficiently increase lending activity, how much return on professionals with sufficient expertise to staff the OFS and oversee the
investment taxpayers will receive, and whether financial institu- CPP (GAO 2009b, 2009c).6 Because of the skills needed to manage
tions were kept in the program for a sufficient amount of time to a complex investment program such as the CPP, candidates who had
generate and sustain healthy lending activity. the right skills often worked for a financial
While several banks have paid back their CPP A noteworthy issue in any new regulator that could offer a more competitive
funds, the largest bank, Citibank, has not. At government initiative, including salary than the OFS (GAO 2009b, 2009c).
this time, it remains uncertain whether those Conflict of interest considerations increased
the CPP, is whether the focal
banks exiting the program are really “healthy” the time needed to recruit and hire personnel
enough to withstand further economic tur- government agency has the for the OFS and, in some cases, caused quali-
moil or to increase their lending to businesses management capacity to achieve fied individuals to withdraw from consider-
and home owners (or whether their exit is the desired impact. . . . In the ation. To supplement the efforts of the profes-
simply strategic to reduce public interference, case of the CPP, the Emergency sional staff, the Treasury Department turned to
as with executive compensation practices). The Economic Stabilization Act contractors, and by June 1, 2009, it had com-
federal government’s leverage, while substan- pleted 40 TARP financial agency agreements,
of 2008 mandated that . . .
tial, is not controlling and must be assessed contracts, and blanket purchase agreements
within a system in which trillions of dollars [a new agency] be established (GAO 2009b, 2009c). Of course, employing
are circulating according to the actions of a within the Treasury Department private sector contractors to be involved with
myriad of institutions—hedge funds, sover- to administer the funds. . . . In activities that fund and regulate other private
eign wealth funds, and government lenders. effect, the Treasury Department sector organizations poses potential conflicts of
was required to create a new interest, a matter of significant concern to the
Management Dimension oversight agencies (GAO 2009b, 2009c).
organization that immediately
A noteworthy issue in any new government
initiative, including the CPP, is whether the had to distribute hundreds of In summary, an assessment of the apparatus
focal government agency has the manage- billions of dollars, somewhat within the federal government to manage a
ment capacity to achieve the desired impact. like building an airplane while program as large and unprecedented as the
The primary management issues with the flying it. CPP reveals significant management capacity
CPP relate to the speed with which the issues, including the extremely short time to
354 Public Administration Review • May | June 2010
establish a new organization and to secure sufficient personnel with
the requisite expertise to manage the program. The program has
been largely managed on an ad hoc basis, with insufficient staff and
many staff assigned on a temporary basis. The establishment of man-
agement systems and authority relationships is an ongoing process.
Automotive Industry Financing Program
Beginning in late 2008, the U.S. Treasury launched the Automotive
Industry Financing Program (AIFP) to prevent a catastrophic failure
of two of the largest U.S. automakers.7 Such a failure was expected
to cause “systemic risk” to market stability and the economy at large
(U.S. Department of the Treasury 2009a). Specifically, the Treasury
Department provided $79 billion in loans and equity investments to
General Motors (and its lending arm, GMAC) and Chrysler (and its
lending arm, Chrysler Financial) by November 30, 2009, resulting in
government ownership of 61 percent of General Motors and 10 per-
cent of Chrysler (COP 2009a, 71). As a result of their participation
in the AIFP, both companies have taken on a government-advised
restructuring program and adhere to “rigorous standards” to protect
taxpayer interests (U.S. Department of the Treasury 2009a). GMAC,
to which the Treasury Department originally committed $12.5 bil-
lion in AIFP funds, received an additional $3.8 billion at the end of
December 2009, making the federal government the majority stock-
holder with 56 percent of shares. As a result of the increase in owner-
ship, the Treasury Department will appoint four of the nine members
of GMAC’s board (U.S. Department of the Treasury 2009c).
Public Interest Dimension
The public interest dimension, including both substantive and pro-
cedural components, is critical in the AIFP. First, based on author-
izing statutes, there is some question as to whether the expenditure
of TARP funds through the AIFP is legitimate. The EESA does not
explicitly state that TARP is available to provide assistance to the
automotive industry or to any specific industry except the financial
and banking industry.8 When asked before the House Financial
Services Committee about auto companies and TARP, Treasury
Secretary Henry Paulson testified, “I don’t see [preventing the failure
of one or more auto companies] as the purpose of TARP. Congress
passed legislation that dealt with the financial system’s stability”
(2008, 18–19). In fact, the House of Representatives passed a
specific bill to appropriate $14 billion for the auto companies, but
the bill was defeated in the Senate. At that point, the administration
reversed its position and claimed that EESA’s definition of “financial
institution” was broad enough to include automotive companies,
whose failures “would pose a systemic risk to financial market stabil-
ity and have a negative effect on the economy of the United States”
(U.S. Department of the Treasury 2009d).
Both constitutional and statutory issues potentially arise from
the use of TARP funds under the AIFP. The COP concluded that
“[w]hile Treasury (and President Bush) have made various state-
ments regarding their interpretations of the statute and the au-
thority to use TARP in this way, it is not clear that any of these
statements is sufficient to qualify as speaking with the force of law,
especially since there has not been one coherent statement but a mix
of court filings, oral argument, and statements by Treasury officials”
(COP 2009d, 77). The panel recommended that “Treasury provide
a legal opinion justifying the use of TARP funds for the automotive
bailouts” (COP 2009d, 115).
Another substantive public interest issue lies in the public objectives
of the government in investing in these two companies. The COP
found that the Treasury Department’s public statements cited differ-
ent objectives at various times and had not clarified them, making
it difficult to evaluate the success of the AIFP (COP 2009d).9 The
panel recommended that the Treasury Department clarify its policy
objectives, reasonable expectations, and the implications of these
policy decisions in the automotive bailouts, and that if the objec-
tives included more than the rescue of the two companies but also
other aims such as environmental improvement, support for pen-
sion obligations, or continued employment, the department should
make that clear and provide transparency on the costs of such objec-
tives (COP 2009d, 112).
Procedurally, potential for conflicts of interest exists by virtue of
the government’s dual ownership and regulator roles in the two
companies. Can the government safeguard the public interests as
a regulator, and ensure the viability of the firm as an owner? The
COP pointed out that most courts have found that the controlling
shareholder has a fiduciary duty to the corporation, but that the
pursuit of public policy objectives using an investee corporation
could violate these duties. Even under the best of intentions, the
potential for conflict exists, and the longer the government plays
the role of both regulator and regulated, the greater the opportunity
for a conflict to occur (COP 2009d). The panel pointed out that
a further complicating factor is the risk of political interference in
government-owned entities. The risk was realized when Congress
passed legislation to give arbitration rights more than 2,000 auto
dealers whose franchises had been withdrawn by General Motors
and Chrysler in moves to cut costs and reorganize their sales. The
legislation allows dealers to have their cases considered by an arbitra-
tor, who can make a binding decision to reinstate the franchise.
The interest of the dealers seeking to have their franchises restored
likely conflicts with the viability interests of the auto companies and
the government, and could also conflict with other private interests
(competitors) that in many cases benefit from rejected franchises
(Wilson and Roland 2009).
Thus, in summary, the Auto Industry Financing Program reveals
significant issues related to the public interest dimension, beginning
with the decision to use TARP funds to purchase stakes in and lend
to automobile companies in the first place. The legality of this re-
mains in question. The issue of what public objectives are being pur-
sued in the implementation of the program also remains. The issue
of what special interests will be able to influence decisions affecting
the companies remains. Procedurally, conflicts of accountability arise
between the dual role of government as both owner and regulator.
Economic Dimension
The public–private configurations in the AIFP have critical eco-
nomic dimensions that will largely determine the success (or failure)
of the entire intervention. In December 2008, the Treasury De-
partment issued “bridge loans” to General Motors and Chrysler
totaling $22.9 billion, with the caveat that the auto companies
would present restructuring plans to the Treasury in February.
After reviewing the plans, the Treasury Department deemed that
the companies needed to undergo serious restructuring (eventually
initiated through bankruptcy) before they could be on a financially
viable path and thereby receive additional federal dollars (GAO
Shifting Boundaries between the Public and Private Sectors 355
2009d). A series of economic assumptions underlie the probability to manage the federal government’s investment in General Motors
of the AIFP’s success: that the challenges for achieving “financial and Chrysler, the president created an interagency structure, the
viability” can be appropriately identified, that these challenges can Presidential Task Force on the Auto Industry, co-chaired by the
be overcome through restructuring and federal investment, and that secretary of the treasury and the director of the National Economic
the actions taken by the government to help restructure General Council and including four other cabinet secretaries, as well as the
Motors and Chrysler—if successful—will have a positive net effect directors of the Office of Management and Budget, the Environ-
on the auto industry and the economy. mental Protection Agency, and the White House Office of Energy
and Climate Change and 10 other staff of various White House
In an April 2009 report on the AIFP prior to the restructuring, the and departmental entities. In addition, he named two advisors (Ron
GAO noted several challenges facing General Motors and Chrysler Bloom, a former investment banker and advisor to the president
that, though perhaps beyond their control, will impede the effort to of the United Steelworkers, and Steven Ratner, the cofounder of a
achieve financial viability. These include weak economic conditions, private equity firm) to lead the now-defunct Treasury Department
frozen credit markets, the solvency of suppliers, the costs of devel- “auto team,” which had responsibility for evaluating the companies’
oping advanced technology vehicles, reductions in the number of viability plans and negotiating terms of assistance.11
dealerships to align with sales volumes, uncertainty over future fuel
economy standards, and debt reduction (GAO 2009d). Any one of Before disbanding, the auto team noted dual roles for the govern-
these factors might be considered a formidable challenge. Develop- ment’s management strategy in the AIFP: (1) to avoid intervening
ing the appropriate restructuring package to meet these challenges in day-to-day corporate management and refrain from becoming
(and others not anticipated) through “planned interventions” rather involved in specific business decisions, as its role was not to manage
than market processes is daunting. but to serve as a “potential investor of taxpayer resources” with the
goal of promoting “strong and viable companies” (Bloom 2009a);
Further, assuming that General Motors and Chrysler emerge— and (2) to “behave in a commercial manner” (Bloom 2009b). The
which is questionable—what is the intended objective with auto team made conflicting statements about how the Treasury
regard to the larger economy? The ultimate “public end” pur- Department would fulfill the first role—not intervening in day-
sued by the configuration should not be firm specific, but rather to-day management. On the one hand, the Treasury Department
should benefit the economy at large. The market share trend line stated that it would manage its shares in a “hands-off manner,”
for domestic automakers is steadily decreasing (GAO 2009a).10 voting only on core governance issues, including the selection of
By buying shares in only General Motors and Chrysler, it would directors and other major corporate actions and transactions (Bloom
appear that the government is trying to turn the domestic auto- 2009a, 9). On the other hand, the team stated that in order to cre-
maker sales trend line upward—essentially reshaping the market. ate conditions most likely to lead to sustained viability for General
Thus, a successful General Motors and Chrysler emerging from Motors and Chrysler, it was necessary to change the culture within
this crisis would indicate a reallocation of market share from auto the companies (Maynard 2009). The COP questioned this more
companies not receiving federal intervention toward the reconfig- involved management strategy: “The lingering issue is whether the
ured General Motors and Chrysler. Several questions are raised by government can really change the culture of these companies and
this attempt. Is it within the capacity of government to reshape help improve their profitability while it remains a (supposedly)
such a large market by making selective investments? What are disinterested shareholder with a ‘hands-off’ approach to manag-
the criteria for making such investments, other than firms that are ing its investment” (COP 2009d, 83). The panel opined that if the
on the verge of failing? Should other domestic producers (such as government intends to be a silent partner, then it remains to be seen
Ford) receive compensation if they lose market share as a result how it intends to protect the interests of the taxpayers as sharehold-
of government action? This broader industry perspective must be ers (COP 2009d, 83).
taken into account when configuring and evaluating the political
authority interventions. In examining the Treasury’s intent to “behave in a commercial
manner,” the COP found that the department’s performance in
In summary, the economic viability of the two auto firms receiving protecting the interests of taxpayers in the support of auto compa-
direct government support is still uncertain. Their survival will de- nies is somewhat mixed. On one hand, the department negotiated
pend on numerous factors, many of which are not subject to leverage aggressively in the transactions, demanded significant concessions
by the federal government. Beyond viability is the issue of what the from the other stakeholders, and protected taxpayers as if it were a
federal government is attempting to achieve in the U.S. automobile private sector investor. On the other hand, the COP found that the
market as a whole. Can and should the federal government realign decision to enter into the transactions in the first place suffered from
market share in the transportation sector? The a lack of transparency (COP 2009d, 111).
impacts of the attempt will be revealed regard- The management dimension is The panel also observed that the longer the
less of whether the companies survive. concerned with the capacity and Treasury Department lingers on the decisions
of management, the greater the opportunity
Management Dimension
authority to not only initiate a that such decisions could become politicized
The management dimension is concerned public–private configuration, (COP 2009d).
with the capacity and authority not only to but also to manage and evaluate
initiate a public–private configuration, but that configuration toward the In addition to concerns about day-to-day
also to manage and evaluate that configura- desired outcomes. management, there are substantial challenges
tion toward the desired outcomes. In order with evaluating the success of the AIFP. As
356 Public Administration Review • May | June 2010
noted in the public interest dimension, the primary objectives and
the strategy for pursuing them are not clearly stated under the AIFP,
making it difficult to evaluate “success” (COP 2009d). The most
clearly communicated objective was perhaps expressed by the leader
of the now-defunct auto team, who stated that the primary metric
for success of TARP investments (in General Motors and Chrysler)
is whether taxpayers see a return of their money (Bloom 2009a).
However, the COP found that “there are significant obstacles to the
two companies’ ever achieving the level of profitability that would
permit the return of all the taxpayer funds expended, and Treasury’s
best estimates are that some significant portion of those funds will
never be recovered” (2009d, 110). Thus, while measurable, a return
of taxpayer money clearly was not the primary objective for the
AIFP initially.
The loan agreements that the Treasury Department executed with
the companies stated that the funding should be used to enable the
automakers to develop a viable and competitive business and to
develop the capacity to produce energy-efficient advanced technol-
ogy vehicles, among other things. However, the GAO found that
the goals stated in the loan agreements included concepts that
were not defined, such as rationalized manufacturing capacity and
competitive product mix. The GAO also found that in addition to
lacking clear definitions, some of the Treasury’s goals may work at
cross-purposes and require an assessment of the relevant trade-offs
among the goals. Mirroring the findings of the COP, the GAO
concluded that it will be important for the Treasury Department
to clearly articulate what it intends to achieve with this assistance
(GAO 2009a).
In summary, major management challenges, particularly related to
the objectives of the strategies and the metrics for assessing prog-
ress, still remain before the implementing agency. As discussed, the
goals of the program have not been clarified and potentially conflict
with one another. The strategy for pursuing the government’s
goals—both remaining “hands off” and behaving in a “commercial
manner”—are likewise potentially conflicting. Politicization has
already occurred as Congress has legislated over dealer closures, and
that decision sets the precedent for further potential politicization of
management decisions.
Conclusions: Implications for Practice and Research
It has become commonplace to refer to the “blurring” of the public
and private sectors. Indeed, private actors frequently are relied on to
provide public services, and, as demonstrated by the recent econom-
ic crisis, public actors are relied on to ensure functioning private
markets. The idea of a strict dichotomy between sectors is more of
a “straw man” than a reality. However, rather than “blurring” into
a homogenous, autonomous entity, these public–private configura-
tions have critical dimensions that require continuous monitoring
and shaping.
First, these configurations, endowed with varying degrees of “political
authority” through formal institutions of government, have a respon-
sibility to act in the public interest, both substantively serving public
values and procedurally being democratically accountable to the public.
In the case of TARP, the challenges in fulfilling this public interest
responsibility are significant. Many of the initiatives under TARP
have been broadly defined, with even broader executive discretion
to implement the initiatives. Typically, the notion of “popular
control” implies that programs are executed by agencies based on
authority granted by Congress. However, in large part, the Treasury
Department has been responsible for not only defining but also
redefining its own authority to intervene on behalf of the “public
interest.”
This is further complicated by a lack of transparency, reducing the
accountability of both the public agencies and the private partici-
pants. And, perhaps more perplexing, even if there is some degree
of accountability (through reporting on observable indicators),
the bigger question is, accountable to whom and for what? Whose
interests—shareholders, taxpayers, businesses—is the government
responsible to protect, when all are so tightly interrelated? What
defines a successful outcome in the public interest, when there are
competing “publics” and competing interests?
Second, public–private configurations are based on a set of economic
assumptions about how government action will affect market dynamics.
These assumptions must be made explicit and open to continuous review
and evaluation to ensure that the intended consequences are maximized
and the unintended consequences are minimized. With regard to
TARP, the two cases demonstrate substantial variation in the
explicability and accessibility of the underlying assumptions. For
the CPP, there is an underlying logic linking capital infusions with
increased lending activity, thereby stabilizing (and stimulating) the
economy at large. Regardless of whether one agrees with the logic
and its assumptions, they are relatively explicit, and thus open to
evaluation. In the case of the auto industry, on the other hand, the
underlying logic might be that intervention is necessary to prevent
systemic failure; however, this logic does not lend itself to evalu-
ation. What is success and what is failure? Is success based on the
lack of “failure” of the two firms targeted for the intervention, or the
success of the auto industry as a whole, including the competitors of
the two assisted agencies?
Indeed, in public–private configurations, public managers must
monitor the impact not only on the targeted firm engaged in the
configuration, but also on the larger economy that will be affected
by the intervention. Organizations operate as part of a larger orga-
nizational field, and they respond to incentives and disincentives
created by other participants in the field. To the extent that govern-
ment extends its authority to shape the direction of a particular
firm’s success (or failure), it reshapes the success (or failure) of other
market participants and the economy as a whole.
Finally, public–private configurations require the requisite capacity of
government—both organizational and human resource capacity—to
initiate, implement, and monitor the configuration toward the intended
impact. As demonstrated through the TARP cases, this requires
clear identification of agencies with specific responsibilities, to be ex-
ecuted in line with clearly defined objectives and strategies. In each
of the cases, a reoccurring challenge is the multiplexity of imple-
mentation “actors” with varying degrees of capacity and authority.
From injecting capital into financial institutions to taking on the
ownership and risk of large auto companies, a first and essential task
is to ensure that the team on the ground is equipped with skilled
players and a game plan. Both seem to be lacking to varying degrees
across the TARP initiatives.
Shifting Boundaries between the Public and Private Sectors 357
A further challenge is matching the strategies 4. Legislators often have a bias toward creating new
and capacities of government with the strate- A . . . challenge is matching organizations under the supposition that the new or-
gies and capacities of the private participants. the strategies and capacities of ganization will pursue the stated program objectives
Private corporations are skilled at harness- with greater vigor than would an existing organiza-
government with the strategies
ing the “tools” of government to create new tion. Often, however, hopes for new agencies are
and capacities of the private soon eclipsed by the realities of organizational life
private strategies and competitive advantage
in the market. The capacity of government,
participants. in government. Start-up times and costs are often
therefore, must be “nimble” enough to predict greater than proponents foresee, and the lack of ex-
and respond to strategic behavior, while still operating under clear perience, expertise, and learning leads to a struggle rather than aggressive pursuit
lines of accountability to the public. The implications of the shifting of policy priorities.
boundaries between the public and private sectors are both retro- 5. By the middle of March 2009, every key political appointee position, with the
spective and prospective. Retrospectively, policy makers, public exception of Secretary Geithner, was either vacant or awaiting confirmation.
managers, and analysts need to monitor and adjust programs such By September 2009, almost a full year after the program’s inception, only 13 of
as those in TARP that are already being implemented to ensure 33 Treasury appointees had been sent to the Senate for confirmation, and only
realignment with public interest, economic, and management seven had been confirmed (White House Transition Project n.d.).
dimensions. Prospectively, policy managers, public managers, and 6. The program had a staff of 48 (only five of whom were permanent staff) as of
analysts need to evaluate the new programs and organizations being November 21, 2008, which grew to 90 (38 permanent staff) by January 26,
proposed that further alter public–private configurations that affect 2009, and 166 (137 permanent staff) by June 2009 (GAO 2009b, 2009c). The
major sectors of the economy. Treasury Department estimated that it would need 225 full-time employees to
operate the OFS at full capacity (GAO 2009b).
While the degree of increased involvement by the federal govern- 7. In addition to the AIFP, TARP also includes allocations to support auto suppliers
ment in the management of private firms by means of TARP is (Auto Supplier Support Program) and automobile warranties (Auto Warranty
substantial and perhaps unprecedented, the readjustment of the Commitment Program). These additional allocations total less than $6 billion.
boundaries between the public and private sectors is by no means The primary focus of this case study is the AIFP.
over. A myriad of proposals are before Congress with the avowed 8. The EESA states, “The Secretary is authorized to . . . purchase, and to
purpose of ensuring that the problems experienced in the economic make and fund commitments to purchase, troubled assets from any financial
crisis do not happen again. Whether they are suited to the task institution, on such terms and conditions as are determined by the Secretary,
should be the subject of careful analysis and debate. Careful analysis and in accordance with this Act, and the policies and procedures developed
of the public interest, economic, and management dimensions will and published by the Secretary” (sec. 101[a][1]). A financial institution is
need to be conducted to guide those deliberations. Lessons learned defined as “[a]ny institution, including, but not limited to, any bank, savings
from the public–private configurations implicated by initiatives such association, credit union, security broker or dealer, insurance company”
as TARP can help inform these future decisions. (sec. 3[5]).
9. The panel stated, “Treasury must be clearer, more transparent, and more
Acknowledgments accountable in its TARP dealings, providing the American people with the
The authors wish to thank Matthew Potoski and the participants information needed to determine the effectiveness of Treasury’s efforts” (COP
at the 2009 Public Management Research Association Conference 2009d, 5).
for their helpful comments, critiques and suggestions on an earlier 10. The overall market for autos decreased from 16.1 million in 2007 to 10.6 mil-
draft. Any conclusions or errors are solely those of the authors. lion in 2009. However, the domestic companies’ market share has been declining
for several years. For example, General Motors’ market share fell from 27.2
Notes percent in 2004 to 22.1 percent in 2008 (GAO 2009a).
1. Further, the largest firms (18 large bank holding companies) were evaluated un- 11. The auto team was to report to the Task Force and its co-chairs, who then would
der the Capital Assistance Program to determine whether they had sufficient capi- report to the president. The Treasury’s auto team, which was actively involved
tal to withstand upcoming economic events (referred to as “stress tests.” From this in recruiting many of the new directors who now sit on the new boards of
evaluation, 10 firms were identified that need an additional $75 billion in capital General Motors and Chrysler and articulated the goals, objectives, and manage-
to bring them to financial health. This additional capital may come through ment strategy of the government’s involvement with the two companies, was
private or public funding under the Capital Assistance Program. As of July 2009, disbanded during the summer of 2009. Given that these were temporary (and
6 of the 10 firms had already raised the additional needed capital through private unconfirmed) officials, it is unclear what staying power attaches to their articu-
channels. Other firms had until November 2009 to raise additional capital. lated positions. Nonetheless, the statements of the leaders of this team constitute
2. The act encourages the federal government to promote maximum employment, the government’s statements about strategy.
production, and purchasing power. Its mandates were reinforced by the Full
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Conference Announcement…

4th International
Public Procurement Conference

August 26–28, 2010

Seoul, South Korea

The Korean Public Procurement Service and an impressive list of international co-
sponsors invite you to attend the 4th International Conference of Public Procurement
(IPPC2010). The conference aims to extend and deepen topics of interest by present-
ing contributions of theoretical, empirical, practical and institutional nature. Get more
information at:

http://www.ippc2010.kr

360 Public Administration Review • May | June 2010