A History Of Corporate Nationalization

U.S. Control Of GM Latest In Long Line Of Government Takeovers During Times Of Crisis

(AP)  The U.S. assumption of a controlling interest in General Motors Corp. isn't the first time the government has nationalized a company or an industry. It has taken shares in banks, railways, steel mills, coal mines and foreclosed homes.

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.

[sethcoder2]

"Most nationalizations were during wartime. But the current financial crisis has generated more than a few. " ~
The last time I checked the nation was at war.

[noloyalisti]

The country is the most democratic when there is a strong middle class. When people can go on vacations, afford quality education and health care and have leisure time. Also when most of the people can actually afford to buy cars and homes and eat out.

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.

[noloyalisti]

Why should we not nationalize and socialize these businesses? The corporate control, privatization and de-regulation conspiracy has destroyed the American (and world) economy. We have given these slime corporations the chance and they BLEW IT. Time to move on and forward. Let's nationalize the oil companies and health insurance and drug companies as well. Why should we only get FAILED companies?

[YrSoWrong]

We're almost as progressive as the Palestinian Authority.

[hamiltongrad]

Wasn't this a forced exchange of legal rights for ownership from bond holders to patch up the deficit in the medical and retiree plans for the union ?

[gold_standard]

Americans are to blame for destroying America. They inherited a free country from their forefathers and are passing on the shackles of despotism to their children.

[gunownerdan]

Those dirty democrats and rotten republicans have almost totally destroyed what's left of America but all the brainwashed fools still think only one of them is to blame!

[afrazier1]

frets3 .....let's get something straight about your utter fear of nationalization of corporate America. First off, the Gov't didn't take over anything, these companies came to Washington begging for money. Short of just giving them the money without accountability (like W did), President Obama is opting for a smidgin of accountability. Additionally, WayAround has this story nailed. It's to make us feel better.

[antoniof123]

It seems liberals are always trying to nationalize our industries.
Posted by mrs_trepidatious at 5:47 AM : Jun 2, 2009

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While wacko conservatives try to destory our country.

[babooph]

Nations safety is the most important thing & the govt. cannot do anything right-we must give Citygroup control of the military fast& stop putting tax $ in to save it ?[Maybe GM?]

[bobbyduck1]

Boy I sure wish we could return to those Bush "boom" years..
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.

[babooph]

I cannot help but notice,that under any system of govt. or economy-when in war ,or economic or health failure-THE GOVT> TAKES FULL CONTROL OF EVERYTHING!

[mitdgreenb]

Frets, Andy -- Excellent.

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.)

[omega39-2009]

lmao at conservatives who are completely out of touch with reality
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.

[ddaryl1]

lmao at conservatives who are completely out of touch with reality

[omega39-2009]

Boy I sure wish we could return to those Bush "boom" years..

[frets3]

Along with yesterday's 200+ point rise in the Dow Jones index, this story about "A History Of Corporate Nationalization" is nothing more than psychological balm for a battered American public.
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.

[WayAround]

Along with yesterday's 200+ point rise in the Dow Jones index, this story about "A History Of Corporate Nationalization" is nothing more than psychological balm for a battered American public.

[frets3]

It seems liberals are always trying to nationalize our industries.
Posted by mrs_trepidatious

They're not 'trying' friend, they're DOING!

[frets3]

What a nice, comforting little piece of crud this article is. The message here is, "see, don't worry about the First Black President doing exactly what Chavez or Kim Jong Il is doing, everything is okay." But it's not. Nice to see once again how deep in Obamas/DNC's pocket CBS News really is. I'm sure this article will help comfort a lot of people who are incapable of critical thinking or knowing when they are being manipulated. I'll probably be banned for pointing this out (it's happened before).