In response to a new $600 billion loan program to bail out thousands of mid-sized businesses and a new $850 billion program to bail out large corporations during the coronavirus pandemic, Sen. Elizabeth Warren sent two letters addressed to both Treasury Secretary Steve Mnuchin and Federal Reserve Chairman Jerome Powell. The senator also urged Chairman Powell and Secretary Mnuchin to include specific requirements for companies that receive bailouts to protect workers, taxpayers, and the economy.
On Thursday, Sen. Warren wrote in her letter about the Main Street Lending Facility for mid-sized businesses: “I write to you in regard to last week’s announcement that the Federal Reserve System (Fed), in conjunction with the Department of Treasury (Treasury), will provide $600 billion in loans to small and mid-sized businesses with up to 10,000 employees using funds provided in the Coronavirus Aid, Relief, and Economic Security (CARES) Act. I am concerned that, in establishing this new program to bail out thousands of medium-sized companies, you did not use your authority to appropriately protect workers and taxpayers, and that you chose not to use a specific provision in the CARES Act that gave you explicit recommendations on how to do so. Congress provided you with this funding to protect workers, taxpayers, and the economy, and I urge you to reconsider program requirements to make sure that these funds are used for those purposes.”
Warren added, “In other words, the Federal Reserve is handing out billions of dollars with little oversight and failing to require basic protections that companies retain workers and maintain payroll, failing to include protections against outsourcing, and failing to retain basic protections for union workers. Absent these protections, it is not clear how these bailouts will help American families and workers.”
Senator Warren also sent a separate letter to Chairman Powell and Secretary Mnuchin regarding the Fed’s announcement that it will provide $850 billion worth of loans to large corporations through the new Primary and Secondary Market Corporate Credit Facilities and the Term Asset-Backed Securities Loan Facility. In this letter, the senator criticized Chairman Powell and Secretary Mnuchin for doing “virtually nothing” to assure that these bailouts help workers, taxpayers, and the economy, and called on them to incorporate the principles she outlined in her March 31, 2020 letter to achieve these goals.
In the second letter to Mnuchin and Powell sent Thursday, Warren wrote, “Although you did implement the CARES Act conflict of interest requirements for loan recipients, you did not take any action to protect workers from layoffs, prevent outsourcing, punish corporate criminals, end stock buybacks, or prevent executives from enriching themselves at workers’ and taxpayers’ expense.
“You can and must do better for American workers, taxpayers, and the economy.”