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JPMorgan, Wells Fargo, Citigroup and Fossil Fuel Industry Get Bailed Out Under Fed’s “Main Street” Lending Program

Courtesy of Pam Martens

Dirty Dozen -- Worst Banks Funding Fossil Fuels Industry

By Pam Martens and Russ Martens

U.S. Treasury Secretary Steve Mnuchin and Federal Reserve Chairman Jerome Powell have apparently never walked down a Main Street in America. We make that statement because there is a huge disconnect between what’s really located on a typical Main Street and what’s in the bailout program they’ve designed and are calling the Main Street Lending Program (MSLP).

Americans need to sit up and pay attention to what’s going on here because the U.S. Treasury has committed $75 billion of taxpayers’ money to support this program under the illusion that it’s going to mom and pop operations on a typical Main Street in America. That initial $75 billion will be levered up to $750 billion under the Fed’s ability to create money out of thin air, with taxpayers eating the first $75 billion of losses. Once the loans are originated by a lender, they will then be bought up by a Fed-created Special Purpose Vehicle, thus removing bad loans from the balance sheets of banks like JPMorgan Chase, Wells Fargo, Citigroup and the like.  The banks will only have to retain 5 percent of the exposure.

We’ve walked down plenty of Main Streets in America: in West Virginia, downstate and upstate New York, New Hampshire, Connecticut, Florida and in ski towns from coast to coast. We’ve seen plenty of boutique gift shops, family-owned restaurants and ice cream parlors, hair and nail salons, sole-proprietor bake shops, and locally-owned breweries. What we’ve never seen on any of these streets is a shop or restaurant with “15,000 employees or up to $5 billion in annual revenue” or one that needed to refinance $200 million in debt. And yet, that describes businesses that will be able to apply for loans under the Fed’s “Main Street” Expanded Lending Program that has been approved by both Treasury Secretary Mnuchin and Fed Chair Powell.

You have to ask yourself this: if this was really about helping Main Street, why wouldn’t that $750 billion have simply been added to the Paycheck Protection Program (PPP) which is restricted to businesses with 500 or fewer employees – the Small Business Administration’s definition of a small business? The second round of funding to that program by Congress is likely to run out sometime this week. Just under half of all American workers are employed by a small business that has less than 500 workers according to the most recent government data.


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