When Government Takes a Stake in Private Companies
Key takeaways
- The government has owned parts of private companies before, mainly in emergencies: the RFC bought bank stock in the 1930s, and in 2008 the Treasury took stakes in hundreds of banks, AIG, and General Motors.
- Those 2008 stakes were sold within about five years, the bank and AIG investments made a profit, and the auto rescue lost money.
- Agencies also invest for national security, through the CIA's In-Q-Tel, the Pentagon's Office of Strategic Capital, and the Defense Production Act.
- In 2025 the government took stakes in Intel, MP Materials, Lithium Americas, Trilogy Metals, and others, and a golden share in U.S. Steel, mostly outside an emergency.
- The government became Intel's largest shareholder in August 2025 by converting about 8.9 billion dollars of chip subsidies and other funds into a 9.9 percent stake.
- Supporters call the stakes smart industrial policy that pays taxpayers back, while critics in both parties call them state capitalism that picks winners.
Americans usually think of business and government as separate, with government regulating companies but not owning them. In practice, Washington has lent to, insured, and sometimes owned parts of private companies, especially in crises and when national security was at stake.
This guide traces that history, explains the new wave of government stakes that began in 2025, and lays out the arguments for and against.
Starting in 2025 the government took stakes in companies it considered strategic, mostly outside an emergency. The Defense Department became the largest shareholder of MP Materials, the only U.S. rare earth miner, with about 15 percent in July. In August the government took a 9.9 percent stake in Intel by converting about 8.9 billion dollars in chip subsidies and other funds. Later stakes included 5 percent of Lithium Americas and its Nevada lithium project, 10 percent of Trilogy Metals in Alaska, a share of a planned Korea Zinc smelter in Tennessee, and a share of future profits from the nuclear company Westinghouse. In June the government received a golden share giving it veto rights over key decisions at U.S. Steel when Nippon Steel bought it.
Security agencies have their own investment tools. The CIA created In-Q-Tel in 1999 to take small stakes in startups with useful technology. The Defense Production Act of 1950 lets the government finance private production of critical goods. The Pentagon's Office of Strategic Capital, created in 2022, lends to companies making critical technologies and materials, and the Development Finance Corporation can take equity stakes in projects abroad. The 2022 CHIPS and Science Act gave about 39 billion dollars in grants to build chip plants at home.
The Reconstruction Finance Corporation, created in 1932, lent to banks and railroads and bought preferred stock in thousands of banks during the Depression, and in World War II it built and owned war plants. Congress guaranteed 1.5 billion dollars in loans to save Chrysler in 1979, which were repaid early. The government created Conrail in 1976 from bankrupt railroads and sold it to the public in 1987, and it still owns Amtrak. Government-sponsored enterprises such as Fannie Mae and Freddie Mac began as public creations later sold to shareholders.
Supporters say stakes let taxpayers share in the gains of companies they subsidize, secure supply chains for chips and critical minerals against China, and revive key industries, and they note that allies such as Japan, France, and Germany hold stakes in strategic companies. Critics across the spectrum warn of state capitalism, say government owners may favor politically connected firms or punish others, worry about conflicts when the government regulates and buys from companies it owns, and point to past losses. Others ask how and when the government will sell, and who oversees the investments.
There is no general law authorizing the government to buy stock in companies. The 2025 stakes were built on existing programs, including CHIPS Act grants, Defense Production Act funding, Pentagon and Energy Department loans, and foreign investment reviews, and some legal experts question whether those programs allow equity. A February 2025 executive order called for a plan for a U.S. sovereign wealth fund, and officials have described the stakes as a step toward one, but Congress has not created a formal fund. The government has generally said it will vote its shares with company boards and not seek board seats.
In the 2008 financial crisis, Congress authorized the Troubled Asset Relief Program, and the Treasury bought stakes in hundreds of banks. The government came to own about 92 percent of the insurer AIG and about 61 percent of General Motors, and placed Fannie Mae and Freddie Mac in conservatorship with rights to nearly 80 percent of their stock. It sold its AIG and GM shares by the end of 2013. The bank and AIG investments returned profits, the auto rescue lost about 10 billion dollars, and the Congressional Budget Office put the program's overall cost at about 31 billion dollars. Fannie Mae and Freddie Mac remained under government control in 2026.
See how the government buys from companies in how the government buys things, companies the government created in government corporations explained, or the Federal Reserve's role in crises in the Federal Reserve explained.