GOVERNMENT OWNERSHIP of banks, car factories and insurance companies has little or no precedent in U.S. history -- and a poor track record in countries that have tried it. When governments own companies, they succumb to the temptation to manage them according to political rather than economic criteria. Losses mount, and government bleeds the rest of the economy to cover them.

At the moment, the federal government finds itself in possession of large chunks of America's biggest industrial and financial firms. This less-than-optimal situation is the result of economic emergency, not some sort of socialist plot on the part of President Obama, as some would have it. Indeed, though the bailout of both GM and Chrysler favored the United Auto Workers, one of the Democratic Party's key constituencies, since then the president seems to have let the car companies run themselves.

The problem is that there is no institutional guarantee that this will remain the case. The true test of the White House's hands-off approach will come when management wants to do something that touches the president's vital political interests, or those of his supporters. Meanwhile, Congress remains able and willing to meddle. This is why the Troubled Assets Relief Program's congressional oversight panel recently proposed that "to limit the impact of conflicts of interest and to facilitate an effective exit strategy, Treasury should also consider placing its Chrysler and GM shares in an independent trust that would be insulated from political pressure and government interference."

Legislation introduced by Sen. Mark Warner (D-Va.) and a Republican colleague, Bob Corker (Tenn.), would do just that. Under the proposal, any government equity stakes in private companies greater than 20 percent -- currently AIG, Citigroup and General Motors meet that criterion -- would move into a trust managed by three independent, nonpolitical trustees, appointed by the administration but removable only because of serious misconduct. The trustees would have a fiduciary responsibility to maximize return to the taxpayer. They would have to liquidate the government's interests by the end of 2011, but could delay if they can show Congress that it would be in the taxpayers' interests to wait. Even Americans who don't embrace conspiracy theories are justifiably concerned about prolonged federal ownership of major businesses. They need reassurance that the likes of GM and AIG will not become political playthings, and it's in Obama's interest to work with those in Congress who are trying to provide it.