WASHINGTON — President Donald Trump said Thursday that his administration's plans to provide economic assistance to U.S. businesses hit hardest by the coronavirus pandemic will extend to the auto industry "at least a little bit."
According to Bloomberg, Trump told state governors on a call Thursday that his administration is "watching the auto industry very much.”
“We’re going to be helping them out at least a little bit, and they’ve sort of requested some help, and it wasn’t their fault what happened. So we’ll be taking care of the auto industry,” he said.
Trump 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. That money came from the $426 billion Troubled Asset Relief Program, or TARP. Ford did not ask for a bailout, but it received other forms of assistance.
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. Automakers emerged from the recession and bailout profitable once more, and the government recovered all but $9 billion. What was the alternative? The nonprofit Center for Automotive Research calculated that 3 million jobs would be lost in a ripple effect if the Detroit Three went out of business.
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."