Subcommittee staff found that the beneficiaries of the Fed's bond purchases during the pandemic have mostly benefitted corporate executives and investors, instead of workers.
In September 2020, Select Subcommittee on the Coronavirus Crisis staff analyzed the Fed’s most recent disclosures about its corporate bond purchases and compared the transactions to public data on layoffs, dividend payouts, and legal violations. Staff found that the companies that issued bonds purchased by the Fed conducted substantial layoffs and paid billions in dividends to shareholders during the pandemic. Staff also found that the Fed bought bonds issued by companies who had been accused of illegal conduct, and that Fed bond purchases were disproportionately weighted towards oil, gas, and coal companies.
The Select Subcommittee’s analysis indicates that many large layoffs have occurred among the companies whose bonds were purchased by the Fed, suggesting that the primary beneficiaries of the program have been corporate executives and investors, not workers. Their report found that the Fed bought corporate bonds issued by companies that laid off a total of more than one million workers since March 2020; 383 companies that paid dividends to their shareholders during the pandemic; 227 companies accused of illegal conduct since 2017; and a disproportionate number of fossil fuel companies, which accounted for 10% of the Fed’s bond purchases but employ just 2% of workers at larger companies.
This report cites a BailoutWatch blog post from September 2020.
The Select Subcommittee on the Coronavirus Crisis was established by the U.S. House of Representatives on April 23, 2020 to investigate matters related to COVID-19. It is currently chaired by Rep. Jim Clyburn (SC-6).