Elizabeth Warren proposes conditions for bailouts of big firms due to COVID-19 impacts

No more blank checks for you, Wall Street!

That’s the mes­sage Sen­a­tor Eliz­a­beth War­ren says that Con­gress must deliv­er to the nation’s “cap­tains of indus­try”, many of whom are now send­ing their lob­by­ists to Capi­tol Hill to plead for fis­cal aid. The avi­a­tion indus­try, the hos­pi­tal­i­ty indus­try, and oth­ers are all reel­ing from the effects of the rapid­ly wors­en­ing coro­n­avirus pan­dem­ic, and want tax­pay­er assis­tance to avert catastrophe.

War­ren says it would be irre­spon­si­ble to offer fed­er­al aid with no con­di­tions, as Con­gress unwise­ly did twelve years ago. The bank bailout suc­ceed­ed in sta­bi­liz­ing the banks, and they repaid the Unit­ed States Trea­sury, but the oppor­tu­ni­ty to com­pel them to change their behav­ior was squan­dered. Today, the banks are even big­ger and they con­tin­ue to engage in preda­to­ry lend­ing practices.

Les­son learned. Con­gress must insist upon con­di­tions for any bailout pack­age. And since the pres­i­den­cy and the Unit­ed States Sen­ate are cur­rent­ly con­trolled by Repub­li­cans friend­ly to Wall Street, it will assured­ly be up to Speak­er Nan­cy Pelosi and her cau­cus to put togeth­er leg­is­la­tion that does­n’t write a blank check.

Here are War­ren’s pro­posed con­di­tions for a bailout pack­age:

We’re not writ­ing blank checks to giant cor­po­ra­tions. Any tax­pay­er dol­lars that go to help big busi­ness­es dur­ing the coro­n­avirus cri­sis should come with the fol­low­ing min­i­mum requirements:

1. Com­pa­nies must main­tain their pay­rolls and use funds to keep peo­ple work­ing or on payroll.
2. Com­pa­nies must pro­vide a $15 min­i­mum wage with­in one year of the nation­al emer­gency dec­la­ra­tion ending.
3. Com­pa­nies are per­ma­nent­ly pro­hib­it­ed from engag­ing in share repurchases.
4. Com­pa­nies are pro­hib­it­ed from pay­ing out div­i­dends or exec­u­tive bonus­es while they are receiv­ing any relief and for three years thereafter.
5. Com­pa­nies must set aside at least one seat – but poten­tial­ly two or more, as the amount of relief increas­es – on the board of direc­tors for rep­re­sen­ta­tives elect­ed by workers.
6. Col­lec­tive bar­gain­ing agree­ments should remain in place and should not be reopened or rene­go­ti­at­ed pur­suant to this relief program.
7. Cor­po­ra­tions must obtain share­hold­er and board approval for all polit­i­cal expenditures.
8. CEOs must be required to per­son­al­ly cer­ti­fy a com­pa­ny is in com­pli­ance and face crim­i­nal penal­ties for false certifications.

Con­gress must set up an over­sight body, mod­eled on the Con­gres­sion­al Over­sight Pan­el and the SIGTARP pro­gram for the bank bailout, but with real fund­ing & sub­poe­na pow­er. We need real account­abil­i­ty to make sure these con­di­tions are met.

These are great ideas and we’re thrilled to see Sen­a­tor War­ren step­ping up to pro­vide bold pro­gres­sive lead­er­ship in a time of crisis.

In the 1930s, when Franklin Delano Roo­sevelt came into office, he did­n’t just work to sta­bi­lize Amer­i­ca’s soci­ety and and econ­o­my. He worked to imple­ment reforms to pro­tect the coun­try from a future depres­sion or recession.

That’s how we end­ed up with Social Secu­ri­ty, with the Glass-Stea­gall Act, with fed­er­al deposit insur­ance through the FDIC, and with new infra­struc­ture built by the Works Progress Admin­is­tra­tion and the Civil­ian Con­ser­va­tion Corps.

A cri­sis like this is an oppor­tu­ni­ty to build a more inclu­sive, equi­table, and broad­ly pros­per­ous soci­ety, and it must not be squandered.