Trump’s Federal Reserve opened the floodgates to big oil in a decision that will allow financially unsustainable oil and gas corporations to pay down their upside-down balance sheets with taxpayer-backed loan monies intended for small and mid-sized businesses. This decision adds to new data from Trump’s Treasury Department and Small Business Administrations that revealed over one-third of all extractive resource corporations and related industries have been awarded some $3.9 billion bailout funds through the Payroll Protection Program.
The decision, which also doubles the revenue eligibility cap on Federal Reserve loans to $5 billion in annual revenue and expands employee caps to 15,000, mirrors the request the Independent Petroleum Association of America (IPAA) sent to the Trump administration two weeks ago. Several oil state senators followed the lobby association’s lead with a similar request. IPAA is a former client of mega-lobbyist turned-Interior Secretary David Bernhardt and has been exposed bragging and joking about their direct access to the administration.
“Big oil and their lobby arm IPAA are laughing all the way to the bank after the Trump administration handed them another blank check to shore up their upside-down balance sheets,” said Jayson O’Neill, Director of Western Values Project. “Once again the Trump administration showed its true colors by serving up another taxpayer-funded bailout to its billionaire big oil corporate pals while ignoring needed help for American families and small businesses.”
Western Values Project previously obtained this partial IPAA membership list, which includes the likes of Shell Oil Company and other big oil corporations, through a Freedom of Information Act request. These are not necessarily the ‘small and mid-sized producers’ the lobbying association tries to brand itself as representing.
Big oil corporations have spent nearly $377 million on federal lobbying since the start of the Trump administration and have showered Trump’s campaign with $9.7 million in donations. It’s already paid off. Seventeen oil and gas corporations reported $25 billion in direct, one-time benefits from Trump’s 2017 tax cuts.
Accountable.US Action released updated information on TrumpBailouts.org about small business awards under the Small Business Administration’s PPP. The database includes several corporations that are defined as ‘Mining’ by the federal government, which includes oil and gas corporations. Accountable.US Action has identified PPP bailouts totaling over $100 million that have gone to big oil, gas, coal, mining, and related industries.
Filings compiled by The Washington Post found that publicly traded corporations have received more than $1 billion in funds meant for small businesses. Nearly 300 public corporations, including 43 with more than 500 workers and several that pay top executives millions in compensation, have reported receiving bailouts through Trump’s Small Business Administration.
The Trump administration and the Interior Department have been desperately trying to find ways to bail out big oil and extractive corporations despite the industry’s boom-bust cycle and negative balance sheets. The Interior Department is also still plowing forward with oil and gas leasing, with leases often going for less than a cup of coffee, and major policy decisions despite repeated requests for a pause during the pandemic.
The Trump Federal Reserve Creates A New Type Of Loan, Granting IPAA’s Request That The Fed Remove Rules Prohibiting Using The Funding To Pay Down Debts Incurred Before The Beginning Of The Pandemic
Two Weeks Ago, IPAA Asked The Federal Reserve To Change Its Borrowing Rules To Allow Its Members To Pay Down Their Existing Debt Using Main Street Lending Program Funding…
On April 15, 2020, The Independent Petroleum Association Of America Asked The Trump Federal Reserve For “Flexibility” On A Provision Of The Main Street Lending Program Barring Recipients From Using The Funding From “Repaying Other Debts.” “The Eligible Borrower must commit to refrain from using the proceeds of the Eligible Loan to repay other loan balances. The Eligible Borrower must commit to refrain from repaying other debt of equal or lower priority, with the exception of mandatory principal payments, unless the Eligible Borrower has first repaid the Eligible Loan in full. IPAA asks that you consider providing flexibility on this provision to otherwise Eligible Borrowers, such as independent producers.” [IPAA Letter to the Federal Reserve, 04/15/20]
The Federal Reserve Did Just That, Announcing They Would Offer A New Type Of Main Street Program Funding Allowing Borrowers To Refinance Any “Existing Debt” They Owe To Any Lender…
On April 30, 2020, The Federal Reserve Announced A New Type Of Main Street Program Loans Called “Priority Loans.” “There will be a new type of ‘priority loan’ in which the Federal Reserve will buy 85% of the loan made by a bank, as opposed to the 95% the Fed will buy through its Main Street New Loan Facility and Main Street Expanded Loan Facility, announced earlier this month.” [Washington Business Journal, 04/30/20]
This New Priority Loan Program Now Allows Borrowers To “Refinance Existing Debt” They Owe To Any Lender. “The Eligible Borrower must commit to refrain from repaying the principal balance of, or paying any interest on, any debt until the Eligible Loan is repaid in full, unless the debt or interest payment is mandatory and due. However, the Eligible Borrower may, at the time of origination of the Eligible Loan, refinance existing debt owed by the Eligible Borrower to a lender that is not the Eligible Lender. The Eligible Borrower must commit that it will not seek to cancel or reduce any of its committed lines of credit with the Eligible Lender or any other lender.” [Federal Reserve Main Street Priority Loan Facility, 04/30/20]
IPAA Maintains Very Close Ties To The Trump Administration And Was Even Caught Secretly Boasting About Their “Direct Access” To David Bernhardt, Trump’s Secretary Of The Interior.
Interior Secretary David Bernhardt Used To Work For IPAA, And The IPAA CEO Said Of Bernhardt Being Of Interior, “That’s Worked Out Well.” “In that Ritz-Carlton conference room, [IPAA CEO Barry Russell] also spoke of his ties to Bernhardt, recalling the lawyer’s role as point man on an [IPAA] legal team set up to challenge federal endangered species rules. ‘Well, the guy that actually headed up that group is now the No. 2 at Interior,’ he said, referring to Bernhardt. ‘So that’s worked out well.’” [Politico, 03/23/19]
IPAA’s Political Director Bragged They Had “Direct Access” To Bernhardt In His Role In Trump’s Administration, And Would Allow IPAA’s Priorities To “Be Heard At The Highest Levels Of Interior.” “Gathered for a private meeting at a beachside Ritz-Carlton in Southern California, the oil executives were celebrating a colleague’s sudden rise. David Bernhardt, their former lawyer, had been appointed by President Donald Trump to the powerful No. 2 spot at the Department of the Interior. Just five months into the Trump era, the energy developers who make up the Independent Petroleum Association of America had already watched the new president order a sweeping overhaul of environmental regulations that were cutting into their bottom lines — rules concerning smog, fracking and endangered species protection. Dan Naatz, the association’s political director, told the conference room audience of about 100 executives that Bernhardt’s new role meant their priorities would be heard at the highest levels of Interior. ‘We know him very well, and we have direct access to him, have conversations with him about issues ranging from federal land access to endangered species, to a lot of issues,’ Naatz said, according to an hourlong recording of the June 2017 event in Laguna Niguel provided to Reveal from The Center for Investigative Reporting.” [Politico, 03/23/19]