Washington Occupies Detroit
James Gattuso /
Congratulations. If you are a U.S. taxpayer, you will soon be a part owner of a car company. Under the latest reorganization plan released by General Motors, Uncle Sam would take ownership of 50 percent of the challenged automaker in return for forgiveness of $10 billion of debt now owed to the Treasury. The deal would give Washington controlling ownership of a major industrial corporation for the first time since Conrail was sold in 1986. And the first time the U.S. has ever owned an automaker — joining China and several European governments in that club. In fact, as one industry analyst put it: “They are going to control more of GM than the government of Lower Saxony owns of Volkswagen or France owns in Renault.”
Word of nationalization came as General Motors made otherwise welcome moves toward streamlining its operations — announcing that it would drop four moribund brands, including Pontiac, and cutting back it workforce and bloated dealer network. It also offered bondholders 10 percent of the reorganized firm in exchange for cancellation of debt, as well as equity to the UAW in exchange for health coverage claims.