“Since January 2025, the US government has announced $27.7 billion across 39 transactions involving direct ownership or equity-like stakes,” write Phillip Cornell and Stephen Rodriguez — a fact that frames a quiet but consequential shift in Washington’s role in industry.
Since January 2025: $27.7 billion across 39 transactions
Cornell and Rodriguez cite the Council on Foreign Relations’ US Government Deal Trackers to quantify the change: $27.7 billion committed across 39 transactions. These investments span critical minerals, semiconductors, manufacturing, infrastructure and other strategic sectors. That tally, they argue, marks an erosion of the long-standing American practice of keeping direct company ownership to a handful of exceptional circumstances — development finance, financial crisis interventions, and similarly extraordinary moments.
When equity should replace loans, guarantees, or procurement
The authors set a clear test: the federal government should assume equity only when less intrusive tools — a loan, a guarantee, an offtake agreement, a procurement contract, or a conventional subsidy — cannot reasonably achieve the objective. If public capital is truly necessary to bridge a gap that private capital will not fill, the intervention must be accompanied by rigorous due diligence on company selection and valuation, a clear articulation of the strategic benefit to the public, and, critically, an exit strategy.
They stress that public capital should not become a substitute for private investment where markets can deliver the same outcome. And they warn against governments acting as political patrons dispensing capital to favored companies or as passive shareholders accepting protections a sophisticated private investor would reject.
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The piece draws on concrete transactions to show how equity is already being layered into industrial policy. The Pentagon’s $400 million investment in MP Materials combined equity with loans, price support and an offtake agreement. The Department of Energy took warrants in Lithium Americas and its Thacker Pass joint venture as part of a restructuring intended to reduce taxpayer risk. And in a Canada-based deal, the US government secured governance rights when it invested in Trilogy Metals: the right to designate an independent third-party director, a non-voting board observer while it remained a shareholder, and a consent right over very large increases in indebtedness.
Baseline governance expectations for foreign companies
Cornell and Rodriguez argue that recurring investments abroad require a consistent baseline of investor protections comparable to what the government would expect investing in an American public company. They list minimum protections that should be codified and adaptable to local corporate structures: independent board and audit oversight, scrutiny of related-party transactions, protections against inappropriate dilution, transparent financial reporting, and clear remedies when agreed governance standards are breached.
They caution that these protections need not mechanically export American corporate or securities law to other jurisdictions; different legal systems can meet equivalent standards. The objective, they write, is to ensure American public investment carries credible investor protections — the same prudence any sophisticated institutional investor would demand before committing substantial capital.
What this means for the Pentagon, the Department of Energy, and foreign companies
- The Pentagon: As shown by its MP Materials investment, equity can be combined with loans, price supports and offtake agreements. The department will need to define what strategic outcomes justify mixed packages that include equity and how to coordinate those with procurement and regulatory roles.
- The Department of Energy: The DOE’s use of warrants in the Lithium Americas/Thacker Pass restructuring illustrates a tool intended to reduce taxpayer risk; the department will face pressure to pair such instruments with clear valuation work and exit planning.
- Foreign companies receiving US capital: Expect a new baseline of negotiated protections — independent director rights, audit oversight, dilution safeguards and consent rights for large indebtedness increases — as the government seeks consistent protections across jurisdictions while avoiding wholesale imposition of US corporate law.
Cornell and Rodriguez conclude with a practical admonition: if Washington is going to be a shareholder, it should act like one — by doing rigorous due diligence, clarifying the public purpose and valuation, insisting on a credible off-ramp, and securing governance protections appropriate to the risks taxpayers are asked to bear. That discipline, they argue, serves taxpayers, is fairer to American companies, reduces uncertainty for recipients, and makes strategic industrial policy easier to defend to Congress, auditors and future administrations.
Read the original analysis: https://breakingdefense.com/2026/09/if-washington-is-going-to-be-a-shareholder-it-should-act-like-one/
