Oil and Gas Companies Indirectly Bailed Out by the Fed
A new report shows the U.S. government bought more than $350 million in bonds issued by oil and gas companies and induced investors to loan the industry tens of billions more at artificially low rates since the coronavirus pandemic began, Bloomberg reported.
The Federal Reserve itself bought debt from 19 fossil fuel companies, including 12 that have since been downgraded by independent credit-rating agencies, according to the report, released Wednesday by Public Citizen, Friends of the Earth and Bailout Watch. Since the Federal Reserve began bailing out corporate debt markets in March, a total of 56 oil and gas companies have issued $99.3 billion in debt, including some to companies that have said they may have failed without the cash. By announcing it would buy corporate debts, the reports authors write, the Fed effectively reduced the risk to investors who might otherwise not have purchased the oil and gas companies' debt. "The Treasury and Fed have provided a massive safety net for the oil industry, whose business model was failing before the pandemic," Alan Zibel, research director of Public Citizen's Corporate Presidency Project, told Bloomberg.
According to the report:
"The bailouts engineered by Treasury Secretary Steven Mnuchin and Fed Chairman Jerome Powell are just the latest example of how corporate-friendly Trump appointees have scrambled to help the fossil fuel industry. The dirty-energy sector has been a key source of support for Republicans as well as a consistent pipeline for Trump administration staffers."
- Fed's Corporate Debt-Buying Could Mean Big Oil Bailout - EcoWatch ›
- Marathon Petroleum Takes Bailout Tax Breaks During Pandemic ... ›
- Fossil Fuel Companies Scored Billions in Tax Breaks in 2020 Before Laying off Thousands of Workers ›