The U.S. plans to lend $500 billion to large companies. It won't require them to preserve jobs...

[Newest Reality]

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

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.

“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.”

https://www.washingtonpost.com/business/2020/04/28/federal-reserve-bond-corporations/

[gratuitous]

1. Oh, we don't want to stifle the free market (All Hail!)

So we'll just pump half a trillion dollars into these companies, they'll know how best to use it. Just like they knew best how to use the 2017 tax cut windfall. I think our captains of industry have suffered enough, and they just need to cut loose a little bit, for the good of us all.

[mr_lebowski]

2. Pardon me while I buy stock in all the major Yacht Building companies real quick (nt)

[kentuck]

3. It's a scam dreamed up by Mnuchen and Trump...

to collect the interest from different companies who buy back their stock and drive the market back up. The interest is small potatoes compared to the higher stock prices.


Who knows where the "interest" will go? Into the Treasury or into the Trump business?

[Newest Reality]

4. Maybe we should ask...

Maybe we should ask Jared. He's on the Cash In Task Force right now.

[Faux pas]

5. Kickin' with disgust!