Tuesday, April 28, 2020

Trump Wants To Give Large Corporations $500 Billion With No Strings Attached:
No Limits On Executive Pay, No Requirements To Save Any Jobs

The U.S. Plans To Lend $500 Billion To Large Companies. It Won't Require Them To Preserve Jobs Or Limit Executive Pay.
The Fed's coronavirus aid program lacks restrictions Congress placed on companies seeking financial help under other programs.
Jeff Stein, Washington Post, April 28, 2020
A Federal Reserve program expected to begin within weeks will provide hundreds of billions in emergency aid to large American corporations without requiring them to save jobs or limit payments to executives and shareholders.

Under the program, the central bank will buy up to $500 billion in bonds issued by large companies. The companies will use the influx of cash as a financial lifeline but are required to pay it back with interest.

Unlike other portions of the relief for American businesses, however, this aid will be exempt from rules passed by Congress requiring recipients to limit dividends, executive compensation and stock buybacks and does not direct the companies to maintain certain employment levels.

Critics say the program could allow large companies that take the federal help to reward shareholders and executives without saving any jobs. The program was set up jointly by the Federal Reserve and the Treasury Department. ...

The corporate debt purchases by the Fed stand in stark contrast with other portions of the federal aid for U.S. businesses that come with requirements to protect jobs or limit spending. ...
The Paycheck Protection Program, which offers $659 billion for small businesses, requires companies to certify that the money will be used to "retain workers and maintain payroll or make mortgage payments, lease payments, and utility payments." ...

The "Main Street" program offering up to $600 billion to "midsize" businesses — with 500 to 10,000 employees — forbids companies from issuing dividends and places limits on executive compensation, according to a term sheet issued by the Fed. ...

Likewise, the $46 billion program for airlines, air cargo companies and national security forbids dividends and limits executive pay. Its requirement on retaining employment is more rigorous, however. Companies are supposed retain at least 90 percent of their employees. ...

The first version of the Fed program to buy bonds from large companies, known as the Primary Market Corporate Credit Facility, probably would have compelled recipients of the aid to limit executive pay and dividends. ...

But on April 9, the Fed altered the design of the program to exclude direct corporate lending. ... [T]he Fed will not be compelled by the Cares Act to ensure that companies abide by the divided and CEO pay rules.

"The change to the term sheet between March and April is the smoking gun on the Fed's own culpability here," said Gregg Gelzinis, a senior policy analyst at the Center for American Progress, a left-leaning think tank. "The basic principle of the Cares Act was that if we're going to provide taxpayer funding to private industry, we need conditions to make sure it is in the public interest. This violates that principle."

Bharat Ramamurti, an aide to Sen. Elizabeth Warren (D-Mass.) who was appointed to the board overseeing the bailout, said in a statement: "Big corporations have shown time and again that they will put their shareholders and executives ahead of their workers if given the choice. That's why I'm so concerned that the Treasury and the Fed have chosen to direct hundreds of billions of dollars to big companies with no strings attached."
This is one of the many reasons why the Trump administration deliberately did nothing for four months after hearing of the coronavirus threat in mid-November 2019 and then purposefully hampered any and all attempts to stop the spread of the virus and save lives once the situation had spiraled totally out of control.

The ensuing nationwide catastrophe gives government the perfect opportunity to redistribute huge amounts of wealth from the poor and working classes to the upper-most classes. These controversial and unpopular decisions are often easily passed without protest because citizens are both emotionally and physically distracted. This has happened time and time again. It's the subject of Naomi Klein's 2007 book The Shock Doctrine.

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