Trump pushes back against congressional oversight for $500 billion bailout fund

Trump’s Friday declaration is one of many statements from the administration in recent days that highlight the lingering questions about the $500 billion fund. Emergency loans could equate to more than $4 trillion in lending power through the leverage of the Federal Reserve, administration officials have said. 

After the Senate added language to the stimulus bill that effectively excluded the ailing cruise lines from aid, Trump told reporters earlier this week he may seek ways to get them money. 

“We’re going to work very hard on the cruise line business and we’re going to figure something out,” the president said. Trump has previously indicated his support of the industry and Carnival chairman Micky Arison.

It remains unclear the exact structure of the financing options. Of the $500 billion the fund offers, it gives $50 billion in aid to passenger carriers, half in direct payments, half in loans and guarantees. It gives $8 billion to cargo carriers, half in direct payments and loans. It also gives $1 billion to $3 billion for the health costs of airline contract caterers.

Because airlines are the only businesses to get direct payments, as a result of their dire financial situation, those payments come with conditions including warrant provisions. 

Trump indicated on Friday the government may take advantage of those warrants or other means of obtaining equity stakes.

“Will we end up owning large chunks, depending on what these geniuses decide along with executives of different companies — its possible. And they’ll make a better deal on the loan,” Trump said. 

What that means for Boeing, the only domestic airline manufacturer, is unclear. The bill allocates $17 billion in loans and guarantees for companies important to national security − a provision that sources say Boeing is eligible at least in part for. Boeing has said it will not accept any money that requires giving up an equity stake, but the administration keeps implying that may be its only option.

“Right now Boeing’s saying they don’t need it,” Mnuchin told Fox News on Friday. 

But Trump has repeatedly offered his intent to support the company.

“Boeing will probably need a hand, and we’re going to bring Boeing back to health,” Trump said at a Friday briefing of the coronavirus task force.

Meanwhile, Trump told reporters Friday the administration has been talking to “the most brilliant financial minds in the world” about helping with the bailouts, including Blackrock’s Larry Fink.

The New York Federal Reserve recently disclosed it has retained BlackRock as an advisor and asset manager in three financing programs. A person familiar with BlackRock said Fink doesn’t comment on discussions with public officials. A spokesperson for Blackrock declined to comment. 

United Airlines warned on Friday that despite government aid, it expects layoffs or furloughs down the line, as demand for travel stays weakened.  As a condition of financial relief, United and all airlines accepting aid agreed to withhold from furloughing or cutting the pay of their workers through Sept. 30. United executives committed to that on Friday.

CNBC’s Leslie Josephs contributed to this report

Article source: https://www.cnbc.com/2020/03/28/trump-pushes-back-against-congressional-oversight-for-500-billion-bailout-fund.html