WASHINGTON, June 2, 2009
A History Of Corporate Nationalization
U.S. Control Of GM Latest In Long Line Of Government Takeovers During Times Of Crisis
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Play CBS Video Video GM Files For Bankruptcy General Motors has filed for bankruptcy; the company has plans to close 14 plants and give the government 60% ownership. Russell Pearlman, Sr. Markets Editor for Smart Money Magazine, weighs in.
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If GM can emerge from bankruptcy protection in the 60-90 days it projects, it could take months or even years for it to unwind its shares, industry leaders suggest. (AP Photo/Paul Sancya)
Continuing news and analysis of the financially troubled U.S. automaker.
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Opinion
Interactives
Most nationalizations were during wartime. But the current financial crisis has generated more than a few.
Last year, the government took effective control of mortgage giants Fannie Mae and Freddie Mac.
It stopped short of nationalizing insurance giant American International Group, but forced a major restructuring and leadership change with a $180 billion taxpayer bailout.
During World War I, the government nationalized railroads, telegraph lines and the Smith & Wesson Co. During World War II, it seized railroads, coal mines, Midwest trucking operators and many other companies including, briefly, retailer Montgomery Ward.
President Harry S. Truman tried to nationalize the steel industry in 1952 to avert a strike he claimed threatened the Korean War effort, but he was blocked by the Supreme Court.
Most nationalizations have been temporary. But at least one has endured - Amtrak rail passenger service. The National Railroad Passenger Corp. was established in 1971. Five years later, the Consolidated Rail Corporation (Conrail) was created with a federal takeover of six bankrupt rail lines. In 1987, it was privatized.
In the financial sector, Washington seized the failing Continental Illinois Bank and Trust. The government operated it until 1994, when it was acquired by what is now Bank of America - one of many troubled banks in which the government has taken a non-controlling equity stake.
In fact, nearly 600 banks nationwide have received a total of $199.2 billion under the government's $700 billion bailout fund, which was designed to boost their capital reserves and get banks to resume more normal lending.
In 1989, the Resolution Trust Corp. was established to deal with the savings and loan crisis. The government-owned corporation took over more than 1,000 failed S&Ls and acquired an array of bad loans and foreclosed homes. It took six years and $125 billion to clean up that crisis.
In 2001, the airport security industry was nationalized under the Transportation Security Administration as a response to the Sept. 11 terror attacks.
Under terms of a proposed bankruptcy agreement, the U.S. and Canadian governments will own nearly 75 percent of General Motors, with the U.S. holding a 60 percent controlling stake and Canada with 12.5 percent. The UAW would get a 17.5 percent stake and bondholders would end up with the remaining 10 percent. Existing stockholders would be wiped out.
President Barack Obama said Monday at the White House that the U.S. takeover is temporary. "What I have no interest in doing is running GM," he said.
However, even if GM can emerge from bankruptcy protection in the 60-90 days it projects, it could take months or even years for it to unwind its shares, industry leaders suggest.
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The secrets of tennis legend 
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See all 24 CommentsThe last time I checked the nation was at war.
Instead what we have now is a fascist political system where there is a HUGE gap between rich and poor. Big corporations run the government, the media and the military and write the laws.
Posted by mrs_trepidatious at 5:47 AM : Jun 2, 2009
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While wacko conservatives try to destory our country.
Posted by omega39-2009 at 6:16 AM : Jun 2, 2009
This is still them. It's the second half, where the bill comes due and now we have to pay it.
St Gen -- I will not label anyone (including current POTUS) as "socialist". I will point out that most examples of nationalizing hings in this country have been downright failures. AMTRAK can't seem to make money. Fannie/Freddie -- which were overextended through the cooperation of Democrats and Republicans in Congress -- can't get to a good outcome. GM is now owned by the UAW, setting up a battle between retirees (whose pensions depend on the "new" common stock) and current workers (whose salary depends on a strike). Conrail is one exception, but generally government interference in the capitalist process of creative destruction leads only to a high bill for taxpayers. Bailing out GM with only "hope" that the government's stake will be worth something some day is as unwise as going into a war with only the hope that the troops will get to come home. (See, I am critical of all administrations! That's what's wonderful about being a moderate in these times.)
Posted by ddaryl1
Oh yeah???? Well the laugh is on you because it was almost a certainty that deregulated, trickle down outsourcing was just getting ready to pay off for the middle class jobholder in fantastic, unimaginable ways.
Posted by WayAround
You are entirely correct. Toss in a pinch of manipulation, and a dash of good ol' socialist endoctrination and the uber-gullible public can go back to sleep.
Posted by mrs_trepidatious
They're not 'trying' friend, they're DOING!
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