Can the US Government Own American Companies?

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When the federal government agreed to invest $8.9 billion in Intel in August 2025, it bought a 9.9 percent stake in the company. It did not buy a seat in the boardroom. The government accepted a passive role and agreed to follow Intel’s board on most matters requiring shareholder approval.

Owning part of a company and running it are different powers. The federal government can own part or all of an American company when Congress provides legal authority and money, but ownership alone does not put the president in charge. The law and the deal determine what power the government gains, what risk taxpayers carry and how the investment can end.

Ownership is not the same as control

The transaction used $5.7 billion in unpaid CHIPS Act grants and $3.2 billion from the Secure Enclave program. Commerce Secretary Howard Lutnick said the deal would support advanced American chipmaking and national security while letting taxpayers benefit from Intel’s future success. That is the basic case for taking stock instead of simply paying a grant: public money buys a claim on future value. It also exposes the public to the possibility that the company’s value falls.

The agreement gave the Commerce Department a five-year warrant to buy additional shares at $20 each if Intel stops owning at least 51 percent of its foundry business. Intel said the government would have no board representation or other governance or information rights.

A warrant is a right to buy stock later if specified conditions are met, not an immediate transfer of every share it covers. The condition matters because it ties a potential increase in federal ownership to Intel’s decision about a central part of the company. Even a formally passive stake can therefore influence incentives without putting a federal official in the chief executive’s chair.

For workers, customers and competing chipmakers, the contract matters more than the shareholder label. Board seats, voting promises, purchase guarantees and consent rights can shape a company in different ways. The percentage alone never tells the whole story.

Congress supplies the legal authority and the money

The Government Accountability Office (GAO) identifies Section 9902 of the fiscal year 2021 National Defense Authorization Act, as amended, and 15 U.S.C. § 4652 as the authority for semiconductor incentive awards, including Intel’s six projects. GAO reported that Commerce amended Intel’s agreement to provide the agency with 9.9 percent of Intel’s outstanding shares, valued at $8.9 billion at the time.

Under 31 U.S.C. § 9102, a federal agency may establish or acquire a corporation to act as an agency only when a federal law specifically authorizes the action. The Constitution’s Appropriations Clause says money may be drawn from the Treasury only through appropriations made by law.

Federal law generally bars federal officers from spending more than an available appropriation or obligating money before an appropriation unless another law permits it. Together, those rules place the key choices with Congress: create the authority, make money available and set the conditions for its use.

The federal law behind TARP authorized Treasury to establish the Troubled Asset Relief Program and buy troubled assets from financial institutions. The same law required warrants or debt instruments in many transactions so taxpayers could share in equity gains or receive an interest premium and gain additional protection against losses. It also authorized Treasury to manage and sell the assets it acquired. That was a specific statutory program, not a standing presidential power to assemble a corporate portfolio.

The Supreme Court’s decision in Youngstown Sheet & Tube Co. v. Sawyer sets a constitutional boundary. The Court rejected President Harry Truman’s seizure of steel mills because neither a statute nor the Constitution authorized it. Justice Robert Jackson’s concurrence described presidential power as strongest with congressional authorization, uncertain when Congress is silent and weakest when presidential action conflicts with Congress’s will. A voluntary stock purchase under a statute and appropriation sits on a very different legal foundation from a unilateral seizure.

The Fifth Amendment requires just compensation when private property is taken for public use. But compensation answers what the government owes after a lawful taking; it does not create authority for the president to seize a company. Money and power are separate questions, and both need an answer.

Several federal tools can look like ownership

The Government Corporation Control Act defines government corporations through statutory categories that include listed mixed-ownership and wholly owned corporations. A 1983 Government Accountability Office review found that financial-audit, budget-reporting and Treasury-control rules were not applied uniformly across government corporations. A government corporation is therefore an entity built by public law for a public mission, not merely any ordinary company in which Treasury happens to hold shares.

A Congressional Research Service report explains that agencies act under public-law authority, while private companies generally operate under market law and answer primarily to owners who bear financial risk. Government corporations mix those worlds: they pursue a public purpose but often receive more operating flexibility than a conventional department. That hybrid structure is why Congress writes a charter and accountability rules instead of treating the entity like a routine stock purchase.

As conservator, the Federal Housing Finance Agency may succeed to the powers of Fannie Mae, Freddie Mac and their shareholders and operate or rehabilitate the companies. Treasury’s support agreements include senior preferred interests and warrants that would represent 79.9 percent of each company’s common stock if exercised and counted in the total. The original Treasury support agreements were executed on September 7, 2008, one day after Fannie Mae and Freddie Mac entered conservatorship. Conservatorship is active legal control by a regulator, not simply a shareholder waiting for dividends.

Loans are different again. A lender can impose repayment terms and covenants without becoming a common shareholder. Equity can carry upside and voting rights, but it also absorbs losses before many creditors do. A single intervention can combine loans, preferred stock, common stock, warrants and purchase commitments, which is why ownership is too blunt a word by itself.

The GM rescue shows how temporary ownership can work

In June 2009, General Motors entered bankruptcy after receiving federal working-capital support. When the restructured company emerged, Treasury converted its investment from loans into a mix of debt, common stock and preferred stock. The government had become an owner because the rescue and bankruptcy exchanged public financing for claims on the reorganized company. That ownership was meant to stabilize and then end, not turn GM into a permanent federal agency.

Treasury said it would avoid GM’s day-to-day management and vote only on core matters such as directors, charter changes, mergers, liquidation, major asset sales and significant stock issuances. Those limits preserved a real shareholder role while leaving ordinary business decisions to private management. The approach also acknowledged a conflict: political management could reduce the value taxpayers were trying to recover.

Treasury used four prearranged trading plans to complete the sale of its GM common stock on December 9, 2013. Treasury reported that taxpayers recovered $39 billion from the GM investment. Recovery is not the same as profit because it must be compared with the original assistance. Treasury argued that not supporting the auto industry would have caused substantial damage through lost jobs, tax revenue and economic production. That public benefit does not appear on a stock-sale ledger.

The AIG rescue produced a still more concentrated position: after a January 2011 recapitalization, Treasury owned about 92 percent of the company’s common stock and roughly $20 billion in preferred interests. Treasury sold its remaining AIG common shares in December 2012 for about $7.6 billion.

It reported that the combined TARP and non-TARP AIG position produced a net gain for Treasury overall. GM and AIG show that the same government can be a reluctant rescue investor, limit its operating role and later dispose of the stake, with different financial results.

For assets acquired under TARP, federal law directed sale proceeds and other revenues to the Treasury’s general fund for reducing the public debt. The proceeds did not become a private bonus for the agency that managed the investment. Taxpayers collectively carried the exposure and collectively received the statutory proceeds.

Strategic stakes can shape production

Intel reported that it released 13 million shares that had been held back under the agreement until it received Secure Enclave payments during the six months ended June 27, 2026. As of that filing, the Intel position was still changing under the original agreement rather than frozen at closing. Its warrant could expand the government’s position if the foundry condition is triggered.

In July 2025, MP Materials Corp. (MP) issued 400,000 preferred shares to the government for $400.0 million. The broader package included other financing for a domestic rare-earth magnet supply chain. The arrangement included a 10-year price floor for neodymium-praseodymium products and a 10-year magnet offtake agreement. An offtake agreement is a commitment to buy future production. That means the government’s influence comes not only from stock but also from its roles as financier and customer.

At closing, MP Materials said the convertible preferred stock and warrant together represented 15 percent of its outstanding common shares on an as-converted and as-exercised basis. In plain terms, that percentage treats the preferred shares as converted and the warrant as exercised for common stock. The agreement also gave the Defense Department consent rights over specified board nominations and major transactions during the covered period. That is more direct governance influence than Intel’s no-board-seat, board-following arrangement, even though both are described as public-private investments.

The filing covering the six months ended June 30, 2026, still reported 400,000 Series A preferred shares issued to the government for $400.0 million. Those preferred shares were convertible at the government’s election into 13,320,013 common shares at an initial price of $30.03 per share. Current filings matter because conversion, escrow releases and warrants can change the government’s actual common-stock position over time.

The case for equity and the case against it

Commerce Secretary Howard Lutnick framed the administration’s case around advanced American chipmaking, national security and letting taxpayers benefit from Intel’s future success. MP Materials’ filing reported that global production of rare-earth permanent magnets was highly concentrated in China and that the package included a $400 million equity investment and other financing for U.S. production.

The affirmative case is that public money can build strategic capacity while giving taxpayers a financial claim if the company succeeds.

The MP agreement included a 10-year price floor and a 10-year government purchase commitment. In a policy critique, the American Action Forum argues that those protections can reduce the incentive to operate efficiently under normal market pressure. Its objection is not merely that the government owns stock. It is that ownership, purchasing power and price support can protect a selected company from the discipline its rivals still face.

An Illinois Law Review analysis identifies a separate conflict when the government acts at once as regulator, investor and political actor. The analysis warns that officials could favor regulations that support the company’s share price or pressure the company to serve political interests. That risk exists even when a contract calls the stake passive, because the government possesses powers no ordinary shareholder has. The same overlap can complicate an exit if selling at the best price conflicts with a policy goal or if officials resist acknowledging a poor investment.

GAO has recommended disclosing initial offers, final prices and independent valuations when the government disposes of warrants. Transparency cannot eliminate the conflict, but it lets Congress and the public test whether officials protected taxpayers rather than a favored company. The policy choice turns on whether the expected security and taxpayer benefits justify the financial exposure and the risk of political favoritism.

Read the deal, not the label

The examples reveal different kinds of federal power. Intel said its government shareholder would have no board representation. The MP agreement gave the Defense Department consent rights over specified decisions. Federal law allows the housing regulator to operate Fannie Mae and Freddie Mac as conservator. TARP law sent proceeds from government-owned assets to the Treasury’s general fund for reducing the public debt.

Four questions make almost any federal corporate stake easier to understand. First, what law authorizes the action and what appropriation pays for it? Second, what does the government actually hold: debt, common shares, preferred shares, a warrant or conservatorship powers? Third, which rights come with that position, including votes, board seats, consent rights, price guarantees and operating conditions? Fourth, who carries the downside, where do sale proceeds go and what event ends the arrangement?

Those questions separate financial exposure from governance influence and governance influence from day-to-day control. They also explain why Intel, MP Materials, GM, AIG and Fannie Mae and Freddie Mac cannot be placed in one simple category. The federal government can be shareholder, lender, customer, regulator or conservator, and sometimes several at once. What matters is not the word ownership, but the authority, contract and exit path behind it.