The AP headline read across the country today reads: “GM to shed 21,000 U.S. factory jobs, shed Pontiac.” But the bigger story is that America’s largest corporation is being nationalized.

“Nationalize,” says UCLA law professor Lynn LoPucki, one of the nation’s foremost experts on bankruptcy law, means to “bring under government control. If the government obtains 50 percent of the common shares of GM, the government will control GM.”

Though General Motors has been working closely with Treasury since accepting government loans in December, the company — not the feds — is pro-actively asking Washington to take control by way of a debt-for-equity swap. In effect, this is self-nationalization.

Why would a privately held corporation invite government control?

Likely because the feds will be less demanding than bondholders whether inside or outside of bankruptcy court. Despite whittling its brands from eight to four, cutting its dealer network in half, and asking wage concessions from the UAW under its latest plan, GM will still have twice the number of dealers as Toyota and higher labor costs — even as Toyota has the same market share as the General.

Bondholders might be impatient with such halfway measures, while Congress will be more likely to accept GM’s argument that its plan is enough to get it through the current credit crisis. If the nationalization of GM is completed, it will draw inevitable comparisons to England’s nationalization of its largest carmaker, British Leyland, in 1968. The company became a financial drain on Britain’s government as well as a source of labor unrest and ultimately disappeared by the mid-1980s as its individual divisions were sold off.