Do policymakers surrender popular sovereignty by granting public authority to semiprivate institutions? Jonathan Koppell compares hybrid organizations and government agencies in three policy areas—housing, export promotion, and international market development—and concludes that although hybrid organizations are more difficult to control, they are not inimical to democracy.

Koppell defines a hybrid organization as “an entity created by the federal government (either by act of Congress or executive action) to address a specific public policy purpose. It is owned in whole or in part by private individuals or corporations and/or generates revenue to cover its operating costs” (p. 12, emphasis in original). Although a variety of hybrids are discussed, Fannie Mae, Freddie Mac, the Export-Import Bank, the Oversees Private Investment Corporation, and Enterprise Funds receive primary attention. The research design that compares these hybrids to government agencies, such as Housing and Urban Development, the Department of Commerce, and U.S. Agency for International Development, is supplemented by a case study of the Federal Housing Enterprises Financial Safety and Soundness Act (FHEFSSA) of 1992.

Quantitative and qualitative evidence is presented. The qualitative data are drawn from more than 115 interviews and document analysis. The quantitative data are indicators of agency and hybrid output and performance. However, although Koppell terms the quantitative analysis “interrupted time series” and several series are presented in graphic form, no statistical models are presented. Consequently, there is a lack of precision in the evaluation of the quantitative evidence, and the specification of intervention points and terms (critical concerns for hypothesis testing in interrupted time series analysis) is flexible and interpretive.

It is no surprise that The Politics of Quasi-Government concludes that hybrid organizations are more difficult to control than public agencies. Koppell's contribution is his explanation for why hybrids are more difficult to control. In part, this is a consequence of the fact that the relationship between principals and their hybrid agents is essentially regulatory. While administrative and regulatory tools can direct governmental agencies, only regulation is applicable to hybrids. Beyond this, Koppell develops an interesting distinction between “positive” and “negative” regulatory preferences and explains why hybrids are more likely to respond to negative regulation. Negative preferences (instructions to cease some activity) are easier to convey as rules and easier to monitor. However, his insight is that hybrids often are involved in cooperative ventures with other private sector organizations; directions to cease an activity are more likely to be followed than directions to initiate or complete an activity because the hybrid can unilaterally abandon partnerships but cannot unilaterally form partnerships and bring them to fruition.

A case study of the development of FHEFSSA is also presented. That legislation revised the regulatory framework for Fannie Mae and Freddie Mac following the bailout of the savings and loan industry. Koppell presents this material in order to consider whether hybrids are beyond control because they are capable of influencing the frameworks within which they are regulated. He concludes that hybrids have the potential to become more powerful than private- or public-sector organizations because of the unique combination of powers they possess. Those who create hybrids “should not be surprised if hybrid organizations acquire unusual political influence due to their unique combination of public- and private-sector advantages” (p. 121). If so, it is possible that hybrid organizations will become uncontrollable if they use their political muscle to shape the regulatory framework in which they operate.

It is difficult to know what to make of this claim because Fannie Mae and Freddie Mac are not typical hybrids, nor is the behavior they exhibit necessarily characteristic of hybrids in comparison to other organizational forms. Fannie Mae and Freddie Mac “are among the most aggressive and influential organizations in Washington” (p. 119). However, despite their unusual political power, Koppell states that the lessons learned in the chapter “are applicable to all hybrids” (p. 98). The ability of Fannie Mae and Freddie Mac to influence their regulatory context may be a result of the unusual characteristics these hybrids possess, rather than their status as hybrids per se. Beyond this, in presenting the case, the author abandoned the research design he used earlier that explicitly compared hybrids to public agencies, and so it is not possible to know on the basis of the evidence presented whether hybrids are more likely to influence their operating context than are other organizational types. The literature on bureaucratic power suggests that governmental agencies are active participants in the policymaking process that seek to influence the legislative, administrative, and regulatory contexts in which they operate. If so, attempts by Fannie Mae and Freddie Mac to influence their operating contexts may not be exclusive to or characteristic of hybrids.

Although hybrids are more difficult for political officials to control, Koppell does not conclude that hybrids are in opposition to democracy. He argues that there is a difference between democratic accountability and political control. He identifies and discusses five distinct notions of accountability (transparency, liability, controllability, responsibility, and responsiveness) and argues that by some of these standards hybrids are “accountable,” even though they are not under “control.” If so, Koppell believes that hybrids can be a useful tool of government when used for appropriate circumstances and placed within a workable regulatory context.