Note the largely unspent part. A few miscellaneous firms got some money, but it doesn’t seem that important in comparison? I’m thinking that one reason that these businesses probably didn’t want...
Note the largely unspent part. A few miscellaneous firms got some money, but it doesn’t seem that important in comparison?
I’m thinking that one reason that these businesses probably didn’t want the money is that it was easier to raise money by selling bonds, in part thanks to the Fed propping up the corporate bond market. (At least, this was true of Boeing.)
It seems to me that if Congress wants to help people, it should give the money to people, not large businesses that have access to financial markets and can be helped by the Fed.
The Trump administration has used a $17 billion loan fund meant for businesses critical to U.S. national security to help a hodgepodge of little-known companies with unclear importance to national defense, and the fund remains mostly unspent nearly eight months after Congress approved it as part of a $2 trillion stimulus bill.
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The defense industry was largely uninterested in the loan terms offered by Treasury. Only 74 companies have submitted applications, standing in stark contrast to the millions that sought loans from the Small Business Administration. Just a handful of applications are still being reviewed. Treasury Secretary Steven Mnuchin said in an appearance on Fox Business last month that, with congressional approval, the unused national security loan funds could be reallocated to help airlines.
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Manufacturers were discouraged by overly restrictive and shifting requirements, Berteau said. Others, including Boeing, may have found the loan terms unattractive: Publicly traded companies had to give stock or stock warrants to the government to receive a loan, something spelled out by Congress in the Cares Act. Firms also faced restrictions with respect to stock buybacks, executive compensation and layoffs.
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But major aerospace companies did not access the loan fund, opting instead to raise funds elsewhere and cut costs through mass layoffs. Boeing plans to reduce its workforce to roughly 130,000 by the end of 2021; it stood at 160,000 before the pandemic. GE Aviation, a major jet engine supplier, is cutting a quarter of its workforce.
Note the largely unspent part. A few miscellaneous firms got some money, but it doesn’t seem that important in comparison?
I’m thinking that one reason that these businesses probably didn’t want the money is that it was easier to raise money by selling bonds, in part thanks to the Fed propping up the corporate bond market. (At least, this was true of Boeing.)
It seems to me that if Congress wants to help people, it should give the money to people, not large businesses that have access to financial markets and can be helped by the Fed.
From the article:
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