The US Government may take an equity stake in corporations that want coronavirus aid from taxpayers.
The access to credit, and even solvency, of much of corporate America is top of mind for Wall Street. As such, a federal backstop could help break the fever that’s gripped equity markets during their fastest descent into a bear market in history.
The government could step in and take equity stakes in Boeing, United and others, with substantial preferred equity positions to stabilise the situation.
While deeply controversial politically, taxpayer backstops for the financial, automotive and housing-finance industries during the 2007-09 crisis were a key component of averting another Great Depression. While there were losses in some cases, equity stakes helped the government come out ahead on many of the transactions.