Trump says he supports government taking equity stake in certain companies
President Trump discusses stock buybacks.
President Trump said Thursday he’s open to attaching strings to coronavirus relief aid, including placing stricter limits on executive bonuses and stock buybacks.
Continue Reading Below
“As far as I'm concerned conditions like that would be OK with me,” Trump said during a White House press briefing on the administration’s updated response to the coronavirus pandemic.
Administration officials are working with Senate Republicans to pass a $1 trillion stimulus package that includes $300 billion for small businesses to hire people and keep workers on the payroll; $200 billion for more facilities with the Federal Reserve for secured lending to hard-hit industries like airlines; and $500 billion in money "direct deposited" for most Americans.
CORONAVIRUS OUTBREAK TO CAUSE SHARP CONTRACTION IN US ECONOMY: GOLDMAN SACHS
Part of that would allow $50 billion in secured loans for the airline industry, which has been hard hit by the spread of the virus, and may include limits on increases in executive compensation until the White House is repaid. But the proposal drew some criticism from some Democrats and the head of one of the biggest U.S. unions for flight attendants.
"Is this a joke?" tweeted Sara Nelson, the head of the Association of Flight Attendants-CWA in response to the White House plan. "No more buybacks. No more bonuses. We need to make sure money goes to workers — period."
As the airlines look for government aid to deal with plummeting sales from the coronavirus pandemic, their massive share buybacks are coming under increased scrutiny. American Airlines has spent about $12.4 billion on stock repurchases since 2014. Southwest has spent $10.7 billion buying back its own stock.
HOW TO NAVIGATE CORONAVIRUS BEAR MARKET IN STOCKS
“If there is so much as a DIME of corporate bailout money in the next relief package, it should include a reinstated ban on stock buybacks,” Rep. Alexandria Ocasio-Cortez, D-N.Y., wrote in a tweet.
According to a Bloomberg News analysis, the biggest U.S. airlines, including American, United, Delta and Southwest have spent 96 percent of free cash flows to repurchase stock over the past decade. All of the major airlines have announced in recent days that they’ll suspend stock buyback programs.
But Trump insinuated on Thursday that he would include provisions preventing the airlines from using the money to repurchase stock.
“We don’t want that,” he said. “Some companies did stock buybacks, and I was never happy with that. It’s very hard to tell them not to, but I would tell them not to.”
CLICK HERE TO READ MORE ON FOX BUSINESS
Source: Read Full Article