with Brent D. Griffiths
Bharat Ramamurti wants to ring the alarm over the lack of strings attached to $500 billion in corporate rescue funds the federal government is poised to hand out as it seeks to stabilize an economy rocked by the novel coronavirus.
But the former top economic aide to Sen. Elizabeth Warren (D-Mass.) faces limitations of his own.
As the sole member of what should be a five-person panel overseeing that federal effort, there are questions about how much he can do until congressional leaders appoint fellow commissioners. Even then, the commission lacks subpoena power and may need to get creative as it seeks transparency from an administration that has systematically opposed requests for information.
“It’s imperative that the commission get up and running quickly because there's a lot for us to dig into already,” Ramamurti tells me in an interview. “I think it is concerning that a chunk of the money is going to support lending to big businesses, and that money comes with, as far as I can tell, zero strings attached in terms of restrictions on executive compensation, restrictions on stock buybacks and restrictions on dividends.”
The Federal Reserve announced Thursday it will leverage $195 billion in taxpayer funds to make up to $2.3 trillion in loans to midsize businesses and state and local governments. The move represents the central bank’s first step to tap a half-trillion dollars that Congress handed it and the Treasury Department to provide relief to various sectors of the economy. Much of the rest is expected to help major corporations pushed to the brink by the pandemic-induced economic shutdown.
Ramamurti’s commission is charged with overseeing the entire bundle — but his appointment last week by Senate Minority Leader Charles E. Schumer (D-N.Y.) is so far the only one by a congressional leader. Now, Senate Majority Leader Mitch McConnell (R-Ky.), House Speaker Nancy Pelosi (D-Calif.), and House Minority Leader Kevin McCarthy (R-Calif.) must all announce their own appointments, and Pelosi and McConnell must agree on a fifth member to serve as chair.
Ramamurti says the clock is ticking.
By his reading of the $2 trillion emergency response package lawmakers approved late last month, the move by the Fed and Treasury started a 30-day countdown to what should be the commission’s first report on how the administration is using the funds. He says it’s less clear whether the law requires all members of the commission to be named before it begins holding hearings and issuing reports.
“I think that work should move forward regardless of whether all of the commission members are named or not,” he tells me. “But obviously, my hope is that you get a full commission, and that it works in a cooperative bipartisan basis to try and do this oversight.”
A top concern for Ramamurti: Congressional Democrats said they secured tough conditions in the relief package, including requirements executives taking them keep workers on their payrolls, skip bonuses and avoid moves to enrich shareholders. Those strictures apply to airlines and firms deemed critical to national security (which likely means Boeing) benefiting from direct grants the feds will dole out from a separate pot of money in the measure.
But the rules don't appear to bind big businesses in line to receive the rest of the $4 trillion in taxpayer-backed loans and loan guarantees the Fed will extend using $454 billion that Congress handed it. “It would be a step forward if the Fed and Treasury were to provide support for other companies in a way that's more analogous to the support they are providing to airlines,” Ramamurti says.
And even if the law doesn’t specifically require the government to hold the companies to such a standard, he says leaders at the Fed and Treasury can elect to apply it anyway.
The administration is already resisting oversight.
Besides the congressional panel, the law provides for two other oversight authorities. President Trump already has meddled with both. Without providing details, Trump fired Glenn Fine, a Defense Department inspector general slated to head a committee of fellow IGs overseeing the entire coronavirus relief package. The president also tapped White House lawyer Brian Miller to focus on the corporate portion of the bill, a decision that raised eyebrows on Capitol Hill, where Miller still faces Senate confirmation. And he asserted he can control what Miller tells Congress.
Ramamurti demurred when I asked if he thinks Miller deserves confirmation, saying senators “will have to decide whether he has the qualities that are appropriate for that position.”
But it’s dubious at best whether Ramamurti and his panel can expect to enjoy the sort of working relationship with Miller as their predecessors overseeing the federal response to the financial crisis over a decade ago.
Oversight of the financial crisis could still provide a model.
Then, Elizabeth Warren, in her first high-profile public role, headed the congressional panel digging into the Troubled Asset Relief Program. Her counterpart in the inspector general’s post, Neil Barofsky, was appointed by President Bush. But he was a Democrat. And he had chops prosecuting Wall Street crimes as assistant U.S. attorney for the Southern District of New York. They quickly established a close working relationship. (In their first appearance testifying before Congress together in their oversight roles, Barofsky writes in “Bailout,” his account of his work in the post, “I was so pleased that Elizabeth soaked up some of the trickier policy questions… that at one point I wrote her a note saying, ‘Thank God you’re here.’”)
Ramamurti, fresh off a stint advising Warren’s presidential campaign, says he has studied her performance from that time. One lesson he has drawn: It can pay to be innovative both in the hunt for information and the effort to get it out to the public.
For example, while his panel lacks subpoena power, House Democrats on the Oversight and Financial Services committees — or a select oversight committee Pelosi is establishing — could help fill the gaps. And he points to Warren’s 2009 appearance on the Daily Show in a bid to explain the panel’s work to a broader audience.
“This is fundamentally about explaining to the public what's happening with your money,” he says. “And so that requires asking tough questions, fighting to get real answers, and then distilling the information into a format that’s accessible to the public.”
There are warning signs ahead as the White House and states disagree on who can reopen the economy.
Governors team up, but Trump says he has sole power: “Trump declared Monday that he has ‘total’ authority and ‘calls the shots’ when it comes to deciding how and when to lift the pandemic restrictions and reopen the economy, even as governors on both coasts proceeded with their own plans and asserted their own powers,” Tim Craig and Brady Dennis report.
“The contrary approaches hinted at what could become a fractured response from state and federal officials in the coming weeks and months, marked by disagreements over who has the authority to dictate when, whether and how to begin the nation’s slow return to normalcy. ‘The authority of the president of the United States, having to do with the subject we’re talking about, is total,’ Trump said… That was not the view of two groups of governors, one on the East Coast and one on the West, who announced Monday they were forming multistate committees to explore how and when to lift the restrictions.”
- Cuomo slammed Trump's claim, saying he was acting like a “king”: “[New York Gov. Andrew] Cuomo said he would challenge the White House in court if Trump pushes to reopen businesses without enough safeguards to protect public health. Earlier in the day, Cuomo was joined via phone by governors from New Jersey, Connecticut, Pennsylvania, Delaware and Rhode Island as they formed a pact to coordinate on an eventual end to their states’ restrictions. Later, Cuomo announced that Massachusetts, led by Gov. Charlie Baker (R), was joining the group."
- California, Oregon and Washington announced a West Coast group: “ As home to one in six Americans and gateway to the rest of the world, the West Coast has an outsized stake in controlling and ultimately defeating covid-19,” the governors of the three states said in a joint statement.
Outside groups are pushing to reopen.
“Multiple leading conservative advocacy groups plan to announce a joint coalition to demand the reopening of the U.S. economy despite the ongoing coronavirus pandemic,” Jeff Stein and Bob Costa report.
“The outside effort from conservative groups is expected to be led by Stephen Moore, a conservative at the Heritage Foundation who is close with White House economic officials; Jenny Beth Martin, co-founder of the Tea Party Patriots; Adam Brandon, president of FreedomWorks, a conservative advocacy organization; and Lisa Nelson, chief executive of the American Legislative Exchange Council, a conservative organization with ties to the Koch brothers."
But it's still not clear who will serve on the White House council on reopening. “By Monday afternoon, the White House still had not articulated who within the administration would lead the group and how it would differ from existing infrastructure such as the National Economic Council, which coordinates economic policy across the administration,” Politico's Nancy Cook reports. The administration drew jeers on Twitter after Fox News reported Trump's daughter Ivanka and son-in-law Jared Kushner would serve on the panel, but Trump said Monday night neither would, per Cook.
Companies are trying to find their own way back: “… Everyone from small manufacturers to major brands such as Whirlpool and retailing giant Amazon are taking steps to get their workers back on the job,” Steven Mufson and Juliet Eilperin report.
“Mostly that involves testing on a scale that is, for now, out of reach … Two types of tests are in demand. One is a diagnostic test to determine whether a person has covid-19, the disease caused by the novel coronavirus. Another, still being developed, is designed to tell if one has developed immunity to the virus. Both will be needed to ease the current U.S. lockdown. But even if the number of tests expands significantly, the nature of the virus and the design of the American workplace make coming up with a back-to-work plan difficult.”
In the U.S.:
- Nearly 600,000 have been infected. And the confirmed death toll is approaching 25,000.
- White House tries to tamp down speculation Trump will fire Fauci: This comes after “concern over an Easter presidential retweet attacking Anthony S. Fauci continued to reverberate as many of the president’s allies and critics warned that such a move would be counterproductive,” Toluse Olorunnipa, Seung Min Kim and Josh Dawsey report.
- More than 2,100 cities brace for budget shortfalls, “and many are planning to slash programs and cut staff in response, according to a new survey of local officials released Tuesday, illustrating the widespread financial havoc threatened by the coronavirus pandemic,” Tony Romm reports.
- Trump administration seeks to delay Census: “Under the new plan, the Census Bureau would reactivate field offices in June and extend the window for data collection from mid-August to Oct. 31," Tara Bahrampour reports.
- Education leaders say millions of students will suffer from school closures: “Some experts suggest holding back more kids, a controversial idea, while others propose a half-grade step-up for some students, an unconventional one. A national teachers union is proposing a massive national summer school program,” Laura Meckler, Valerie Strauss and Joe Heim report.
- Government holding firm on airline aid plan: “The U.S. Treasury Department is holding firm on the terms of a $25 billion offer for government aid to airlines to help them meet payroll during the coronavirus downturn, officials said … and the plan could give the government more than 3% of American Airlines Group Inc.,” Reuters's Tracy Rucinski and David Shepardson report.
- Amazon begins to ease curbs on nonessential items: “[The company] will begin allowing third-party sellers on its platform to resume shipping so-called nonessential items this week, a signal that the company is ramping up to meet broader consumer needs, according to people familiar with the matter,” the Wall Street Journal's Dana Mattioli reports. (Amazon CEO Jeff Bezos owns The Washington Post)
- Ford expects shutdown to cause $600 million quarterly loss: The automaker saw a 21 percent drop in vehicle sales to dealers versus the same quarter in 2019, Reuters's Nick Carey and Rachit Vats report. Only Ford's joint ventures in China are currently producing vehicles. In the meantime, a Michigan plant will begin producing respirators for health-care workers in a collaboration with 3M.
- Firms are pulling guidance: “[The WSJ], with help from data tracker MyLogIQ, analyzed public filings for companies in the S&P Composite 1500 Index—which covers about 90 percent of U.S. market capitalization—to assess the impact thus far. Among the findings: Almost 300 companies withdrew their financial guidance. About 175 companies suspended stock buybacks or cut their dividend,” Inti Pacheco and Stephanie Stamm report.
- David Calhoun faces trial by fire as new Boeing chief. The aerospace giant's new CEO took the helm amidst the firestorm over its handling of the 737 Max. Now the coronavirus fallout threatens the firm's survival, forcing layoffs and the closure of four major plants, Christian Davenport and Aaron Gregg report.
Around the world:
- Modi extends India's lockdown: “India will extend its nationwide lockdown until May 3 to slow the spread of coronavirus infections in this country of 1.3 billion people where the number of confirmed cases has soared above 10,000,” Joanna Slater and Niha Masih report from New Delhi. “Prime Minister Narendra Modi made the announcement Tuesday morning in a televised address, which he began with his face covered by a white scarf.”
- Macron extends France's lockdown through May 11: “[French President Emmanuel] Macron aims to gradually begin opening up the economy and schools again from May 11, he said in a televised address. … The extension follows a similar decision in neighboring Italy,” Bloomberg News's Ania Nussbaum and Geraldine Amiel report.
- Confusing regulations prevent China from exporting masks: “Chinese exports of much-needed N95 respirators, surgical masks and other personal protection equipment were delayed for a fourth day on Tuesday as China’s customs agency left unresolved a crucial regulatory issue,” the New York Times reports.
Markets brace for a rough week of earnings reports even with oil deal.
Dow falls 300: “The Dow Jones Industrial Average and the S&P 500 fell for the first time in three sessions on Monday as investors continued to weigh the coronavirus outlook while bracing for the start of the corporate earnings season,” CNBC's Fred Imbert reports.
“The 30-stock Dow closed 328.60 points lower, or 1.4 percent, at 23,390.77. The S&P 500 dipped 1 percent to 2,761.63. Caterpillar was the worst-performing stock in the Dow, falling more than 8 percent. The stock was pushed lower by a downgrade from a Bank of America analyst. Financials and real estate led the S&P 500 lower, with both sectors falling more than 3.5 percent.”
- But tech stocks bucked the trend: The tech-heavy Nasdaq Composite rose “.5 percent to 8,192.42 as Netflix jumped 7 percent to a 52-week high while Amazon advanced 6.2 percent. Intel rose 2.7 percent while Advanced Micro Devices climbed more than 5 percent.”
Goldman: The worst of the stock rout may be over. CNN Business: “Goldman Sachs is abandoning its pessimistic short-term view on US stocks. ‘The Fed and Congress have precluded the prospect of a complete economic collapse,’ the Wall Street bank wrote in a note to clients on Monday… That powerful response from Washington means that Goldman's previous warning that the S&P 500 will nosedive in the coming months to 2,000 is ‘no longer likely,’ the report said."
Oil prices still drop after announcement of unprecedented deal: “Oil prices fell … as oversupply concerns continue to pressure prices, even as OPEC and its allies agreeing to cut production by 9.7 million barrels per day. The deal, which was finalized on Sunday after marathon discussions that spanned four days, is the single largest output cut in history,” CNBC's Pippa Stevens reports.
- U.S. suppliers have already been shutting down: “…The dismal economics and strained physics of the oil market are causing U.S. producers to shut down themselves,” WSJ's Ryan Dezember and Vipal Monga report. “Canceled orders were mounting amid the sharp drop in fuel demand when Texland Petroleum LP decided to shut in each of its 1,211 oil wells and cease production by May … The U.S. benchmark is down 63 percent this year and prices have been even worse in Midland, Texas, where a lot of oil extracted from the Permian Basin is priced, and in western Canada, from which most of the country’s output comes. Oil has traded below $10 a barrel in both markets."
Bernie backs Biden as Dems turn their focus to November.
More on Sanders's endorsement: “The carefully choreographed show of support was kept secret until Biden, a moderate, introduced the democratic socialist from Vermont during a live-streamed event billed as an address on the coronavirus crisis. It came five days after [Sen. Bernie] Sanders bowed out of the race — and much sooner than 2016, when it took Sanders weeks to get behind Hillary Clinton,” Sean Sullivan, Felicia Sonmez and Michael Scherer report.
AOC isn't on Team Biden yet: “In a recent phone interview, [Rep. Alexandria] Ocasio-Cortez (D-N.Y.) made clear that she intended to support the Democratic nominee, but said his current overtures to progressives must go further. She made a distinction between supporting Mr. Biden in November and offering a full-throated endorsement of his campaign. Where she lands, she said, is up to him,” the New York Times's Astead W. Herndon reports.
- Key quote: “There’s this talk about unity as this kind of vague, kumbaya, kind of term. Unity and unifying isn’t a feeling, it’s a process. And what I hope does not happen in this process is that everyone just tries to shoo it along and brush real policies — that mean the difference of life and death or affording your insulin and not affording your insulin — just brush that under the rug as an aesthetic difference of style.”
McDonald's faces class action over “pervasive sexual harassment.”
The company has been plagued by allegations for years: “The lawsuit, filed on Friday in federal court in Chicago, says the company fostered a climate of ‘severe or pervasive sexual harassment and a hostile work environment, including groping, physical assaults, and sexually-charged verbal comments,’" Reuters's Brendan Pierson reports of allegations about corporate-owned restaurants in Florida.
“McDonald’s said in a statement that it was committed to ensuring workers were not subject to sexual harassment. ‘The plaintiffs’ allegations of harassment and retaliation were investigated as soon as they were brought to our attention, and we will likewise investigate the new allegations that they have raised in their complaint,’ it said.”
Via Bloomberg's John Authers:
Amid all the talk about when to end the lockdowns, this chart of how behavior has changed since '19 from @DeutscheBank's Torsten Slok rams home that in every way, it's best to avoid lockdowns in the first place. Deaths per million: Japan 1; S Korea 4; USA 67; UK 159; Italy 330. pic.twitter.com/1ACYxjbOUV— John Authers (@johnauthers) April 13, 2020
- The IMF releases its world economic outlook
- Johnson & Johnson, Wells Fargo, JPMorgan Chase and J.B. Hunt Transport are among the notable companies reporting their earnings, per Kiplinger
- March numbers for U.S. retail and industrial production are released
- Bank of America, Bed Bath & Beyond, UnitedHealth Group, Citigroup, Goldman Sachs, Morgan Stanley and Progressive are among the notable companies reporting their earnings
- The Labor Department releases the latest weekly jobless claims
- Abbott Laboratories, Honeywell, Rite Aid, Skechers USA and BlackRock are among the notable companies reporting their earnings
- Kansas City Southern is among the notable companies reporting its earnings