Our Nation and GM and Citigroup ... worth fighting against

By Steve Collier, Colorado Springs

Two disturbing reports are circulating this morning about the fate of both two, large entities in American business and financing: the fate of General Motors and Citigroup. Both entities, as being reported by Yahoo! Finance and Bloomberg.com, have such a huge stake by the federal government in them, it's almost impossible to see these companies in the near future without the government involved in financing their every move.

In the case of GM, dubbed 'Government Motors' by many of the pundits, as of 8 a.m. EST this morning, the company, which once dominated the world-wide landscape of vehicle sales, filed Chapter 11 bankruptcy protection in a New York federal court. As reported by Yahoo!, "The plan is for the federal government to take a 60 percent ownership stake in the new GM. The Canadian government would take 12.5 percent, with the United Auto Workers getting a 17.5 percent share and unsecured bondholders receiving 10 percent. Existing GM shareholders are expected to be wiped out." (I placed the "bold" emphasis)

Existing GM shareholders are people who purchased common stock in the company over the many decades it did business. If those people did not sell their stock as of 8 a.m. this morning, their money literally went belly up. But frightening are two factors here: our government, which is supposed to be built on free-market economics, owns a staggering 60 percent take in the "new GM". But also, a foreign nation, Canada, has a 12.5 percent. What the heck is going on here? In simple words, the Congress, in just a few, short months, has totally reversed the course of this nation onto a quasi-socialist bearing not one of us wants to go.

But it gets worse. Citigroup's situation us just as dire. As Bloomberg reports, Citigroup, versus its largest financial competitors, is facing a situation where the government's TARP program may be converting the TARP money into common stock of the company. What does this mean? It means the U.S. will have voting rights within the company, with the ability to force Citigroup to bend to its ever will and force out board members and employees who disagree with it. While many in the Administration will not say this, the end of all benefit for Obama having control over Citigroup allows him to mold the company's future like a piece of clay. Once again, this is NOT government's role.

Already several Congressmen have written Treasury Secretary Geithner, asking him to intervene on their "constituents" behalf. Wells Fargo is expected to liquidate a men's clothing store in its holdings, a store based out of Chicago. As reported, "a May 21 letter sent by Illinois congressmen to Geithner urging him to pressure TARP recipient Wells Fargo not to push for a liquidation of Hartmarx Corp., the ailing Chicago-based menswear maker."

Which means Congress is already meddling in the affairs of businesses under the TARP program. As long as bureaucrats think companies with TARP money can bend to the will of every Congressman/woman or Senator, then the essence of the TARP bailout program is simply just many strings on a puppet, being played and manipulated by as many politicians as possible. It's just sickening to think our nation has plunged this far into interfering with the free-market system.

So what is to be done? CALL YOUR CONGRESSMAN/WOMAN and SENATORS! DEMAND they voice their opposition to continued bailouts of corporations, including GM and Citigroup. DEMAND they publicly denounce the use of YOUR tax money for these purposes! Small businesses, numbering in the thousands, close their doors every month. Why should a big business be treated any differently. The government can't handle bailing out small businesses everywhere, even though those businesses make up the majority of hiring in our country. Why should there be a separate standard for the perceived "fat cats" on Wall Street and in Detroit?