Trump says he would support government taking stake in certain companies

[webfact]

Trump says he would support government taking stake in certain companies

By Alexandra Alper

 

U.S. 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

 

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.

 

PRECEDENT

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.

 

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 seem inevitable.

 

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 companies.

 

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 Hepinstall)

 

-- © Copyright Reuters 2020-03-20

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[keith101]

So would his companies would be number one on his list ?

[geriatrickid]

Sometimes the companies screw the government and ultimately the tax payer. GM did that to both the US and Canadian governments. Cost them billions. Some companies will require too much money denying a greater number of smaller companies in need  the money. 

[Logosone]

That's the big problem with government bail outs, the government always prefers to fund the big players, the small players will be allowed to bite the dust.

 

The logic is 'why save companies that would fail anyway', so only the strongest get the real aid. Those that truly need it will be denied loans because their figures don't look good enough.

[Chomper Higgot]

Crony Socialism.

 

 

[Tug]

And there I thought republicans wanted small government silly me

[Tug]

42 minutes ago, keith101 said:

So would his companies would be number one on his list ?

Oh you can bet he will be first in line at the hotel bailout trough 

[Logosone]

Well, who would want to be on the board of Boeing now? Or British Airways? 

 

 

[Nyezhov]

18 minutes ago, Tug said:

Oh you can bet he will be first in line at the hotel bailout trough 

Bet you he wouldnt. No realistic person thinks he would. I simply cannot understand why an important subject like this cant be debated without the playground Trump bashing. Do you and others do that to convince yourselves? Because you arent convincing anyone else.

 

[Susco]

1 hour ago, webfact said:

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."

Read: The tax payer will be helping to bail out these industries.

 

And why would the airline industry get any help. They have spent all their cash reserves on stock buy backs, and now they gone rely on the tax payer?

 

Disgusting

[Eric Loh]

14 minutes ago, Logosone said:

Well, who would want to be on the board of Boeing now? Or British Airways? 

 

 

I can say all the board directors are hanging around except Nikki. They have been assured a bailout by POTUS. Not so lucky for BA; still waiting for Boris to made a decision. 

[Rimmer]

Unattributed post removed

[Cory1848]

3 hours ago, Nyezhov said:

Bet you he wouldnt. No realistic person thinks he would. I simply cannot understand why an important subject like this cant be debated without the playground Trump bashing. Do you and others do that to convince yourselves? Because you arent convincing anyone else.

 

He's already funneled millions of taxpayer dollars to his personal businesses. Why stop now? As for the "importance" of the subject, Trump himself was downplaying the virus as a "hoax" until just a short time ago, when the numbers of infected got into the thousands and he could no longer pretend it didn't exist. The best thing for the US right now would be for Trump to quarantine himself in a corner of his own playground, where he can bawl about the Fed Chair and the stock market and the Chinese until his face turns blue, and let state governors and other adults manage things the best they can.

[muzley]

6 hours ago, Nyezhov said:

Bet you he wouldnt. No realistic person thinks he would. I simply cannot understand why an important subject like this cant be debated without the playground Trump bashing. Do you and others do that to convince yourselves? Because you arent convincing anyone else.

 

They aren't convincing me. Just glad DT is in charge and not that senile, corrupt Joe "China" Biden or else Chinese travel to the USA would still be allowed and god knows how many more would be infected and dead. Way to go CIC!!

[simple1]

6 hours ago, Susco said:

Read: The tax payer will be helping to bail out these industries.

 

And why would the airline industry get any help. They have spent all their cash reserves on stock buy backs, and now they gone rely on the tax payer?

 

Disgusting

Have to be pragmatic - once share price falls to an point that makes a company not viable, in the current environment, government needs to step in to sustain strategic industries & jobs. Government can enforce Board / management changes & other conditions for intervention. IMO the problem is lack of trust in the trump administration in general, to put in place appropriate management for supported companies (not cronies), policy to address the consequential increasingly massive national debt.

 

https://www.usdebtclock.org/

[Sujo]

Trump the commie socialist. Oh what repubs have become.

[OneMoreFarang]

Isn't that what they do in communist countries? But obviously he can't mention that word...

[Thomas J]

6 hours ago, Susco said:

And why would the airline industry get any help. They have spent all their cash reserves on stock buy backs, and now they gone rely on the tax payer?

Susco, 

Companies use stock buy backs because the damn government taxes ordinary income twice.  The company earns the money pays its income tax on it, then distributes it to the shareholders and it is taxed on the same income again.  Buy backs are intended to boost the share price so that hopefully the owner only pays the smaller capital gains tax rather than the income tax on the income earned by the company he/she owns as a shareholder. 

Secondly, with all of the suits companies face from things like Boeing airplanes, or Bayer's purchase of Monsanto and its associated Glysophate, the last thing companies want on their balance sheets is huge amounts of cash that can be easily picked off.  

If you bitch about the money earned by the airline companies, and pharmaceutical companies and I assume Walmart as well, perhaps you will change your mind, when you can't fly anyplace, have no medicines to cure the diseases you have, and nothing to eat because Walmart is closed. 

[Peterw42]

8 hours ago, geriatrickid said:

Sometimes the companies screw the government and ultimately the tax payer. GM did that to both the US and Canadian governments. Cost them billions. Some companies will require too much money denying a greater number of smaller companies in need  the money. 

GM screwed the Australian government as well, probably worse than US/Canada, taxpayer funds equal to $20k per vehicle they manufactured.

[Caldera]

His orange tan looks more ridiculous than ever. What's much more concerning, however, is that he's now embracing Socialist ideas. The government shouldn't own companies. Help them get through this crisis, sure. Buy a stake, HELL NO.

 

[Basil B]

Anything to do with Boeing shares being in free fall???

[Susco]

2 hours ago, Thomas J said:

Companies use stock buy backs because the damn government taxes ordinary income twice.  The company earns the money pays its income tax on it, then distributes it to the shareholders and it is taxed on the same income again.  Buy backs are intended to boost the share price so that hopefully the owner only pays the smaller capital gains tax rather than the income tax on the income earned by the company he/she owns as a shareholder. 

Isn't that what I said?

 

They don't want to pay taxes, yet when there is an issue they want bailout with tax money, paid by the working class.

 

Yet they can pay the CEO and other board members many million dollars in salary every year.

 

Disgusting

[bristolboy]

10 hours ago, keith101 said:

So would his companies would be number one on his list ?

I've been trying to find out if Mar a Lago is closed for the duration. So far, I haven't found any news about that.

[Cryingdick]

10 hours ago, Logosone said:

That's the big problem with government bail outs, the government always prefers to fund the big players, the small players will be allowed to bite the dust.

 

The logic is 'why save companies that would fail anyway', so only the strongest get the real aid. Those that truly need it will be denied loans because their figures don't look good enough.

 

Okay so you are suggesting the USA can function without airplanes and airlines? The big players get bailed out because the country can not function without them. Bob's Beach Burger Stand doesn't get bailed out because somebody else can come in and simply open another burger shop.

 

There isn't enough money to bail out everybody.

[Cryingdick]

2 hours ago, OneMoreFarang said:

Isn't that what they do in communist countries? But obviously he can't mention that word...

 

He is compromising with Pelosi to get anything done. If he didn't go with it you would say he is a cold capitalist, if he compromises you bash him anyway. If he turned water to wine you would criticize him for doing something Jesus does.

[Chomper Higgot]

5 minutes ago, Cryingdick said:

 

Okay so you are suggesting the USA can function without airplanes and airlines? The big players get bailed out because the country can not function without them. Bob's Beach Burger Stand doesn't get bailed out because somebody else can come in and simply open another burger shop.

 

There isn't enough money to bail out everybody.

For the record are you still a Boeing stock holder or did you get out on the crest of the wave?

[bristolboy]

4 minutes ago, Cryingdick said:

 

Okay so you are suggesting the USA can function without airplanes and airlines? The big players get bailed out because the country can not function without them. Bob's Beach Burger Stand doesn't get bailed out because somebody else can come in and simply open another burger shop.

 

There isn't enough money to bail out everybody.

But that doesn't mean it can't go bankrupt and its sharelholders lose everything. Let the Feds fund it and when the shares recover they can be sold. With stipulations banning buybacks and other irresponsible corporate behavior.  Otherwise, it just another welfare program for the wealthy.

[Chomper Higgot]

4 minutes ago, Cryingdick said:

 

He is compromising with Pelosi to get anything done. If he didn't go with it you would say he is a cold capitalist, if he compromises you bash him anyway. If he turned water to wine you would criticize him for doing something Jesus does.

I think what we’ll actually do is ignore the words and watch the action - let’s see who gets the money and how much they get.

[Cryingdick]

Just now, Chomper Higgot said:

For the record are you still a Boeing stock holder or did you get out on the crest of the wave?

 

You can look up my posts Boeing traded at around $375 when I sold out. Go look up the posts the dates and you can see that. I sold out when the first mention of criminal allegations were brought up. I don't like to do business with companies that are potentially open to criminal investigations. Because of my upstanding morals in that regard I am often rewarded by not losing money when things get ugly.

 

Is there any particular reason I should have to put up with the three posters like you that continuously call me a liar?

[Cryingdick]

Companies that don't need help should be allowed to do what they want. If your company needs the government tit to stay afloat maybe buybacks shouldn't be allowed. That's fair enough. However if you don't allow buybacks or dividends you aren't going to find many investors interested in it's stock in the future. 

 

Why would I buy something like American Airlines knowing the stock is going to stagnate forever when you can buy a company like Apple that has something like $100 billion to keep it's stock high?