Trump says he would support government taking stake in certain companies
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[March 20, 2020]
By Alexandra Alper
WASHINGTON (Reuters) - President Donald
Trump on Thursday opened the door to a radical shift in the U.S.
government's relationship to private industry as the coronavirus
outbreak upends the nation's economy, saying he would back the
government taking stakes in certain companies.
Asked if he supported the federal government moving to take an equity
stake in some companies, Trump said: "I do. I really do."
Trump, speaking at a news conference at the White House, added: "We will
be helping the airline industry. We will be helping the cruise ship
industry. We probably will be helping the hotel industry."
The White House did not immediately respond when asked if purchasing
shares in battered companies was really under consideration. The U.S.
government rarely invests in public companies except in the case of
bailouts to save ailing firms and jobs.
The COVID-19 disease caused by the novel coronavirus, which originated
in China late last year, has sickened more than 11,000 people in the
United States and killed more than 180, upending American life as it
shutters schools, restaurants and businesses across the country.
Bailout requests related to the spread of health crisis, in the form of
direct grants, loans, loan guarantees and tax relief, have topped $2
trillion. Companies generally do not welcome government ownership for
fear they would lose control of their business, however.
Taking stakes in companies is not without precedent in times of crisis.
The Bush and Obama administrations loaned the auto industry, including
General Motors and Chrysler, which is now controlled by Italy’s Fiat,
$80 billion to avoid the collapse of the industry that they felt would
result in the loss of millions of U.S. jobs.
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President Donald Trump stands with members of the administration's
coronavirus task force as he addresses the coronavirus response
daily briefing at the White House in Washington, U.S., March 19,
2020. REUTERS/Jonathan Ernst
The U.S. government spent about $50 billion to bail out GM alone. As
a result of the company’s 2009 bankruptcy, the government’s
investment was converted to a 61 percent equity stake in the
Detroit-based automaker, plus preferred shares and a loan. The
government no longer has a stake in the company.
Just last month, U.S. Attorney General William Barr said the United
States and its allies should consider taking a "controlling stake"
in Finland’s Nokia and Sweden’s Ericsson to counter China-based
Huawei’s dominance in next-generation 5G wireless technology.
The Trump administration accuses Huawei of being able to spy on
customers and has led a global campaign to convince allies to keep
the blacklisted company out of their 5G networks.
Even if the idea of ownership stakes is ultimately discarded,
sweeping measures to mitigate the economic fallout from coronavirus
Treasury Secretary Steven Mnuchin on Thursday urged Congress to pass
a $1 trillion economic relief measure by early next week, adding the
government was focused on being able to provide liquidity to
Asked if a trillion dollar stimulus is enough, Trump said: "We will
know about that later. We'll see what happens. It depends how long,
so much depend on what's going on in this room, in terms of the
medical. If we can stop it in its track the virus, it's plenty. If
we can't, we'll have to go back and talk."
(Reporting by Jeff Mason and Alexandra Alper; additional reporting
by David Brunnstrom; writing by Susan Heavey; Editing by Sonya
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