This doesn't really make sense. If the company owes more in fines than it's worth, existing shareholders get nothing and the company belongs to its creditors. If it owes large amounts to the government, those claims convert into ownership too.

Rather than converting the liquid operating budget into paid fines, it converts the shares retained by the company.

A company this big doesn't need to sell shares to get operating capital. This should apply to any company that does stock buybacks to inflate stock price, rather than reinvesting into their company, employees, etc.

Depending on the details, this is the same as charging a fine in money or it's worse.

Say the company is worth $1B and has 10M shares that are trading at $100 each. Now there's an accident that will lead to a $100M fine. This get priced in, the value of the company is now $900M, and the stock goes to $90/share. Whether they send $100M to the government in cash or by issuing 11M shares, either way the stock price stays at $90 and investors are equally affected.

On the other hand, if the amount of the fine is higher than the value of the company you'd much rather be a creditor than a shareholder, since in bankruptcy the stock goes to zero.

That creates an incentive structure for regulators to fine valuable companies and to do no harm to their long term value. It’s the opposite incentive structure you want in regulators.

the federal government can step in and nationalize the railroad at any point as it has done in the past (woodrow wilson era iirc)

Oh I'm aware, this is more a general idea for "too big to fail" companies in general. Our infrastructure is rotten and often privatized. No one has the funds and ability to hold companies like this accountable except for the federal government.

Look at Steven Donzinger. He reported on toxic spills by Chevron in Nicaragua that poisoned indigenous water supplies. Chevron hired a private prosecutor and found a judge in their favor to force him into house arrest(for over a year) for not supplying a document.

Large corporations have the cards stacked in their favor.

It's almost like we shouldn't allow companies to grow so large, and that a company being larger than most countries doesn't provide any benefit to the consumer.

"Can" is doing a lot of heavy lifting here. I do not find it a credible threat, and doubt any of these companies do either. Perhaps one could argue that the 2008-2009 TARP handling of some banks or automobile manufacturers was a "light nationalization", as the US took control of _some_ stock of the affected companies. (This stock was later sold off for a profit.) But other than that, and _maybe_ the creation of the TSA in 2001, there isn't a nationalization in my living memory.

The nationalization of railroads under Wilson lasted from December 1917 to March 1920. During this time, operation (including expansion and maintenance) of all railroads was organized by the federal government. When the nationalization was repealed in 1920, the US paid rail companies for lost profits.

This is a great idea. And I like the idea of fines being X% shares outstanding, not X dollars as that proportionally penalizes shareholders for not being good corporate owners. It's a win in so many ways.

This probably doesn’t do the thing you want it to do

1) if there is a demand to have something, it usually raises price of that thing. You could interpret this as a forced buyback, which may raise prices of shares (and thus reward bad behavior)

2) what does the govt do with the stock after it has the stock? It doesn’t have a system for processing it, as it does with USD

Also, why shouldn’t you penalize shareholders? In the future they’ll think twice about investing in companies that cut corners to juice short term gains

"Also, why shouldn’t you penalize shareholders? In the future they’ll think twice about investing in companies that cut corners to juice short term gains"

+1

Losses speak louder than words.