The Washington Post reports that the Federal Reserve is handing out $500 billion (that’s BILLIONS, not millions) to large corporations, without requiring them to save jobs or limit executive compensation.
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. “
I am struck that the administration is relying on the good will of the companies receiving this assistance,” said Eswar Prasad, a former official at the International Monetary Fund and economist at Cornell University. “A few months down the road, after the government purchases its debt, the company can turn around and issue a bunch of dividends to shareholders or fire its workers, and there’s no clear path to get it back.”
Treasury Secretary Steven Mnuchin defended the corporate aid program, saying that the lack of restrictions on recipients had been discussed and agreed to by Congress. “This was highly discussed on a bipartisan basis. This was thought through carefully,” he said in an interview with The Washington Post. “What we agreed upon was direct loans would carry the restrictions, and the capital markets transactions would not carry the restrictions.”
Democrats asked for restrictions on how companies can use the money from the central bank’s bond purchases but were rebuffed by the administration during negotiations about the Cares Act, said a spokesman for Senate Minority Leader Charles E. Schumer (D-N.Y.). The spokesman said Democrats won meaningful concessions from the administration on reporting transparency in the final agreement. (Transparency requirements do not apply to the small-business loans, the biggest business aid program rolled out to date.)
As usual, the big corporations are protected. Small businesses, not so much.
On a personal note: my brother runs a small business in Florida, booking cruises for customers around the world. His business is closed down since no one is booking cruises. He has eight employees. He applied for a loan as soon as the small business program was authorized. He was approved by the bank but the program ran out of money. He is paying his employees out of his own savings but can’t do so for months on end.
Too bad he is not running a major corporation! He could double his salary and fire his employees.
Diane Ravitch's blog 
How big is a billion? Well, if you started counting to a billion when you were a child and did nothing else for the rest of your life, you would finish sometime in your 80s. A million seconds is a little over 11 and a half days. A billion seconds is almost 32 years.
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Democrats asked for restrictions on how companies can use the money from the central bank’s bond purchases but were rebuffed by the administration during negotiations about the Cares Act, said a spokesman for Senate Minority Leader Charles E. Schumer (D-N.Y.)
Why is it always the Republicans who win? The Democrats should stand up to the Republicans and use their public blowhards to let the public know that they are NOT keeping businesses from getting stimulus money. They are working to protect taxpayers from deceitful practices. Now it’s the same old game…more money for the wealthy corporations and nothing for individuals or small businesses.
I watched the documentary put out by Michael Moore. He said that Republicans work against our better good, and so do the Democrats. The Democrats just speak a better game but don’t follow through. I’m beginning to wonder if this is really what is happening.
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Unfortunately, the Democrats have lost their working class roots. They socialize with the Aspen & Davos crowds. If they betray their people with tax increases and, horrors, more funding for public schools, they’ll be shunned by their intimate circle of influencers who love the idea of segregating black children into charter schools, as long as their own children don’t attend those same schools.
Democrats are also horrible negotiators. Every time Republicans throw out something evil and outrageous, Democrats have failed time & time again to counter from the opposite, progressive position. Whether that’s by design or are simply incompetent, it’s tough to know their motivation.
Take for example, just this week from McConnell who said he thinks states that have mismanaged their funds should go bankrupt. Cue the outrage.
Enter Newt Ging-grinch. He appears o TV saying states that have overly generous public pensions need to be more responsible by cutting those before they get bail out money. See what the R’s have done? McConnell staked out the Republican negotiating starting point for COVID bail out – 4.
What are the Dems offering? A plan to fully fund all state public pensions? ANYTHING to draw Republicans further away from a compromise that does cut public pensions? Nope. Only outrage & horror. Pelosie told Jake Tapper to “calm down” when asked about her failure to have a counter strategy. And, then there’s Joe Biden still in his basement.
THIS is why we can’t have nice things.
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Congress is a mess. Lobbyists are allowed to help write the bills. People will never be represented as long as corporations and the 1% have all the influence.
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Even people I consider to be “kinda good” people want to get on the LOBBYING GRAVY TRAIN.
I listen and watch and am always “shocked” at those who want to line their pockets with money and political favors.
What a RACKET.
I do NOT support lobbyists.
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Wow. The Hill is actually reporting this:
GOP faces pressure to get tougher with Trump
Republicans in the Senate are under growing pressure to take the administration to task for its response to the coronavirus.
GOP senators, with a few exceptions, have been reluctant to criticize the administration, but they are starting to re-evaluate that kid-glove treatment amid public frustration over the lack of virus testing kits and protective equipment and reports of taxpayer dollars going to questionable causes.
Some GOP strategists say it would be smart for Republican senators to use oversight to distance themselves from some of the administration’s problems and to burnish their reputations with independents.
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“Democrats have failed time & time again to counter from the opposite, progressive position. Whether that’s by design or are simply incompetent, it’s tough to know their motivation.”
A NYC “mind reader” gassed it out:
“Why win and get the blame, when one can loose, blame the others, and still get the money…”
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It’s really just the Corporate Owned Republican Party’s way of funding their next election campaign (read that “media brainwash blitz” and “voter suppression drive”) at taxpayer expense by sending mass quantities of cash to donors who will give half of it back to the RNC.
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money laundering at it’s best…done all the time by both sides of the aisle. And now that Bernie is out of the race, we will continue to have this mess….. from both sides.
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