Editing Conservatorship (section)

==Conservatorship of organizations==
In the United States, in some states, corporations can be placed under conservatorship, as a less extreme alternative to [[receivership]]. Whereas a receiver is expected to terminate the rights of shareholders and managers, a conservator is expected merely to assume those rights, with the prospect that they will be relinquished.<ref>{{cite book |title=Preventing Financial Chaos: An International Guide to Legal Rules and Operating Procedures for Handling Insolvent Banks |isbn=90-411-8848-7 |page=32 |first1=Robert Lee |last1=Ramsey |first2=John W. |last2=Head |year=2000 |publisher=[[Kluwer]] }}</ref> Robert Ramsey and John Head, law professors who both specialise in financial issues, suggest that an [[Insolvency|insolvent]] bank should go into receivership rather than conservatorship to guard against false hope and [[moral hazard]].<ref>{{harvp|Ramsey|Head|2000|p=37}}</ref>

At the federal government level in the United States, in July 2008, the failing [[IndyMac Bank]] was taken into [[administrative receivership]] by the [[Federal Deposit Insurance Corporation]] (FDIC) and its assets and secured liabilities transferred to a specially established [[Bridge bank (United States)|bridge bank]] called [[IndyMac Federal Bank, FSB]] which was placed into conservatorship, also by the FDIC.

Again, in the U.S. at the federal level, in September 2008, the chief executive officers and board of directors of [[Fannie Mae]] and of [[Freddie Mac]] were dismissed. Then, the companies were placed into the conservatorship of the [[Federal Housing Finance Agency]] (FHFA) via the determination of its director [[James B. Lockhart III]], with the support and financial backing of U.S. Treasury via Treasury secretary [[Hank Paulson]]'s commitment to keep the corporations [[Solvency|solvent]].<ref>
{{Cite news |last1=Soloman |first1=Deborah |last2=Reddy |first2=Sudeep |last3=Craig |first3=Susanne |title=Mounting Woes Left Officials With Little Room to Maneuver |newspaper=The Wall Street Journal |pages=A1 |date=September 8, 2008 |url=https://www.wsj.com/articles/SB122083060663308415?mod=relevancy}}
</ref> The intervention leading to the conservatorship of these two entities has become the largest in government history, and was justified as necessary step to prevent the damage to the financial system that would have been caused by their failure. Entities like this are considered "[[too big to fail]]".<ref name='Treasury-Paulson-2008-09-07'>
{{cite press release
 |first=Henry M. Jr. 
 |last=Paulson 
 |title=Statement by Secretary Henry M. Paulson, Jr. on Treasury and Federal Housing Finance Agency Action to Protect Financial Markets and Taxpayers 
 |date=September 7, 2008 
 |publisher=United States Department of the Treasury 
|url=http://www.treas.gov/press/releases/hp1129.htm 
 |access-date=September 7, 2008 
  
|archive-url=https://web.archive.org/web/20080909082552/http://www.treas.gov/press/releases/hp1129.htm 
 |archive-date=September 9, 2008 
}}
</ref><ref name=FHFA-Lockhart-2008-09-07>
{{cite news
 |first=James B. III 
 |last=Lockhart 
 |title=Statement of FHFA Director James B. Lockhart 
|url=http://www.ofheo.gov/newsroom.aspx?ID=456&q1=0&q2=0 
 |publisher=Federal Housing Finance Agency 
 |date=September 7, 2008 
 |access-date=September 7, 2008 
  
|archive-url=https://web.archive.org/web/20080912172510/http://www.ofheo.gov/newsroom.aspx?ID=456&q1=0&q2=0 
 |archive-date=September 12, 2008 
}}
</ref><ref name='FHFA-Conservatorship-2008-09-07'>
{{cite news |title=Fact Sheet: Questions and Answers on Conservatorship |date=September 7, 2008 |publisher=Federal Housing Finance Agency |url=http://www.ofheo.gov/media/PDF/FHFACONSERVQA.pdf |access-date=September 7, 2008  |archive-url=https://web.archive.org/web/20080909183946/http://www.ofheo.gov/media/PDF/FHFACONSERVQA.pdf |archive-date=September 9, 2008}} 
</ref><ref name = 'Washington Post-Goldfarb, Cho & Appelbaum-2008-09-07'>
{{cite news |first=Zachary A. |last=Goldfarb |author2=David Cho |author3=Binyamin Appelbaum |title=Treasury to Rescue Fannie and Freddie: Regulators Seek to Keep Firms' Troubles From Setting Off Wave of Bank Failures |date=September 7, 2008 |url=https://www.washingtonpost.com/wp-dyn/content/article/2008/09/06/AR2008090602540.html?hpid=topnews |newspaper=[[The Washington Post]] |pages=A01 |access-date=September 7, 2008}}
</ref>

An even more ambitious use of the conservatorship model has been proposed by Duke University professors Lawrence Baxter, Bill Brown, and Jim Cox. They suggest that the troubled U.S. banks be placed in conservatorship, that some of their "good assets" be dropped into newly created "good bank" subsidiaries (presumably under new management), and the remaining "bad assets" be left to be managed under the supervision of a conservatorship structure.<ref name="huffingtonpost" />