By Valerie Volcovici
WASHINGTON (Reuters) – A group of Democratic lawmakers, including three former presidential candidates, called on the chair of the Federal Reserve on Thursday to cut oil and gas firms out of a federal lending program designed to aid the “Main Street” economy through the coronavirus pandemic.
The lawmakers, led by Michigan Congresswoman Rashida Tlaib, Oregon Senator Jeff Merkley and including former candidates Bernie Sanders and Elizabeth Warren, raised concerns about an April 30 move by the Fed that expanded the Main Street Lending Facility to companies with up 15,000 employees and $5 billion in revenue – up from a cap of 10,000 workers and $2.5 billion in revenue when the program was first announced on April 9.
That expansion allowed a larger number of oil and gas drillers to access the program.
The letter to Fed Chairman Jerome Powell said the expansion was a “back-door bailout of the oil and gas sector, done at the urging of President Trump.”
“We request that you undo this lending facility’s expansion and refrain from engaging in future actions targeted at any industry, especially the oil and gas industry,” they wrote.
They argued that the Fed, an independent body, should “guard itself” against lobbying and political pressure and that extending lending to oil and gas companies could harm financial stability because of volatility in the oil markets.
“These companies have created systemic-level risks to the U.S. financial system,” they wrote.
The lending program has not yet been launched, so no companies have yet applied for financial assistance.
The American Petroleum Institute, which represents the oil and gas industry, said its member companies should have access to federal programs designed to help companies survive the economic upheaval due to the pandemic.
“We are focused on ensuring that our industry has the same access as other industries to these economy-wide programs that Congress authorized to provide systemic liquidity and promote employment during this period of economic decline,” Frank Macchiarola, senior vice president for Policy, Economics and Regulatory Affairs at API said in an email.
Energy Secretary Dan Brouilette told Bloomberg TV on Wednesday that the Trump administration had asked the Fed to “ensure that there is access for these energy industries to those programs.”
(Reporting by Valerie Volcovici; Editing by Dan Grebler)
