American companies wait for clarity on historic aid package
WASHINGTON: As the US government on Friday began processing financial aid for small businesses under the $2.2 trillion coronavirus relief legislation that US President Donald Trump signed into law last week, some large businesses and corporations are waiting for more clarity on the conditions attached to these payments.
They are anxious about the possibility of the government picking up equity in borrowing firms in exchange.
Boeing, which is looking at a substantial assistance package, has already opposed it, saying it will explore other options if forced to part with equity.
The US administration is actively weighing acquiring stakes in borrowing companies the major ones - as compensation. US treasury secretary Steve Mnuchin said on Thursday the matter was being discussed in the context of relief for the airlines industry. “I’ll be working very closely with the president, and we’ll make sure that we strike the right balance. This is not a bailout and taxpayers should get compensated,” he said.
The Trump administration is eager to ensure the terms of the relief package - called the CARES Act - were not as lenient as assistance put together by the Obama administration after the 2008 financial crisis, which has been used by some of the borrowing companies to buy back their own stock to boost them on the exchange and to make hefty payments to top executives.
“We don’t let them buy back the stock. We don’t let that happen,” Trump had said when signing the legislation into law, “(with) tough limits on executive compensation.”